Haunted by an achievement

Politicians of both parties trooped into Boston’s historic Faneuil Hall as a fife and drum corps played. Business titans stood alongside labor and religious leaders. Massachusetts Gov. Mitt Romney even welcomed the man who had once been his bitter foe in a U.S. Senate contest -- Democratic lion Edward M. Kennedy.

As they stood beneath twin banners proclaiming “Making History in Healthcare” that spring day in 2006, the participants had reason to celebrate: They had forged the most comprehensive healthcare reform in the country. Several of the dignitaries chuckled, certain they were standing in the middle of a future Romney-for-president campaign ad.

That picture-perfect television spot may one day come. But for now -- even as he pursues the Republican presidential nomination and a weekend poll shows him pushing into a modest lead in the crucial primary state of New Hampshire -- Romney finds his most renowned legislative accomplishment to be, at best, a mixed blessing.

Nonpartisan analysts continue to celebrate the state’s healthcare reform, but liberals and even some business allies from Massachusetts criticize Romney for not embracing it more wholeheartedly. Conservatives, meanwhile, attack him for too readily adopting what they call the sort of big-government solution typical in this famously Democratic state.

The result is two widely divergent views of the one-term governor. In one, he is the dispassionate and results-oriented manager, a cool hand willing to support new solutions, even at the risk of alienating some of his conservative base. In the other, he is bloodlessly expedient, fumbling relationships with state lawmakers and tailoring his views to suit his next political goal.

To Alan R. Weil, executive director of the nonpartisan think tank National Academy for State Health Policy, the passage of the health measure deserves considerable respect.

“The place he came to in Massachusetts was a big deal, for him to say we are all in this together to solve this problem, including individuals who will have to purchase insurance when it’s available,” Weil said. “It’s definitely . . . created a sense nationally that there is a political center on this issue.”

MIT economist Jonathan Gruber -- who helped Romney lay the groundwork for the law and then won his appointment to the board overseeing its implementation -- also started with a soaring view of the governor’s policymaking chops. But he said he became disillusioned when Romney began to “run away from” Massachusetts reforms, such as the requirement that each individual obtain insurance.

“I worry about someone who would change his position so rapidly for politically expedient reasons,” Gruber said. “I don’t think that’s someone you would want as president of the United States of America.”

Major innovations

The Romney who waded into the complexities of healthcare reform in 2004 already had proven himself a financial and management whiz. He built the private equity firm Bain Capital from scratch into a powerhouse that managed more than $4 billion, then led the team that helped salvage the scandal-tainted 2002 Salt Lake City Olympics.

After taking the Massachusetts governorship in January 2003, Romney found it hard to secure big victories. The data-driven management of the private sector simply couldn’t sway interest groups and legislators, 85% Democratic, who had their own priorities.

Still, healthcare became a concern across the ideological divide in 2004. An estimated 500,000 of Massachusetts’ 6 million residents did not have insurance, and federal officials were threatening to kill $1.2 billion in Medicaid payments over three years.

The feds wanted expanded coverage for more residents on the front end, rather than a continued escalation of back-end payments to hospitals that treated the poor.

Liberal activist groups, meanwhile, pushed a ballot measure that would have levied steep taxes on business in pursuit of universal coverage -- something the venture capitalist governor could not allow.

In his early research and presentations on the healthcare problem, Romney impressed many with his sharp analytical skills. “He had full control of the subject matter. He had it down. It was very impressive,” said Robert Moffit, director of health studies at the conservative Heritage Foundation.

Romney adopted two novel innovations that would reshape the health insurance market in his state. The first, based on Heritage Foundation analysis, called for the creation of an “exchange,” a quasi-public agency called the Commonwealth Health Insurance Connector Authority, that would help make more insurance policies from private companies available, at lower prices.

The Connector helps employees, for example, buy coverage with pretax payroll deductions and allows workers to cobble together full coverage with contributions from multiple part-time employers.

The Connector also promises to bring relatively healthy young people into the market, pooling many single and small-group customers together to create lower rates. (According to the Connector Authority, the broader market means a 37-year-old can now pay $184 a month for a policy with better coverage than the $335 policy available previously.)

Romney’s second major innovation was a “personal mandate,” the requirement that individuals be responsible for their healthcare bills, thereby reducing the flood of uninsured “free riders” whose medical debts forced up costs for everyone else.

The idea of government requiring individuals to buy health insurance was largely untested. It met skeptics on the right, who opposed government mandates, and on the left, who feared the poor would be forced to buy insurance they couldn’t afford.

A free-market Republican seemed an unlikely champion, but Romney felt there was a precedent in Massachusetts -- the state’s requirement that uninsured drivers obtain a bond to protect other drivers they might harm in an auto accident. Romney reasoned that residents could be required to obtain a similar bond to cover unpaid medical bills.

The governor recast the insurance requirement in conservative terms. He said each member of society had a “personal responsibility” to cover their own bills.

“It’s a conservative idea,” Romney said in an interview at the time, “insisting that individuals have responsibility for their own healthcare. I think it appeals to people on both sides of the aisle: insurance for everyone without a tax increase.”

Toward compromise

What started with Romney’s relatively modest bonding requirement expanded in the Legislature to a mandate that every resident hold a comprehensive health insurance policy, with minimum doctor visits and drug coverage.

Together, the two reforms promised to both expand the insurance market and demand that consumers take advantage of the improved policies.

Romney’s plan jump-started discussion. But the Massachusetts House of Representatives wanted a markedly more expansive role for employers. House Speaker Salvatore F. DiMasi, a Democrat, called for businesses to be taxed up to 7% of payroll if they did not provide insurance for their workers.

That difference led to a six-month standoff, as the House insisted that businesses contribute more and Romney argued that employers already bore the vast bulk of healthcare expenses.

“It was crucial in the philosophy of the bill in that it was partnership between individuals, government and employers,” said Rep. Patricia A. Walrath, a Democrat from Stow. “You can’t lose one of the three legs of that stool.”

Romney had gained a reputation for keeping his distance from lawmakers, preferring to use the media to appeal to the public, rather than lobby lawmakers.

So when faced with the logjam over employer responsibilities, the legislative leaders turned to outsiders -- three major business associations and the taxpayers group -- to break the impasse. Using a complex calculation of unpaid medical care statewide, the group proposed charging businesses with 11 or more employees $295 for each uninsured employee.

“There was a sense that this would be fair,” said Richard C. Lord, president of the Associated Industries of Massachusetts, one of the groups that reached the compromise. “Everyone has a little skin in the game.”

John Sasso, a longtime Democratic operative, said: “The whole political culture of the state owns this now.”

That sense of comity, which reached its apex at the Faneuil Hall signing ceremony, suffered a body blow even before the proceedings ended. As Romney finished remarks lauding the state’s spirit of cooperation, his staffers passed out news releases announcing that he had vetoed the $295 employer assessment and seven other provisions.

Although the measures contributed relatively little to the overall cost of reform, Democrats considered an employer responsibility crucial.

“You take out one piece and you ruin that delicate balance,” DiMasi said.

Even Lord, the big-business representative whom Romney would appoint to the Connector board, said he was surprised. “It was like, Why did you do this?” Lord said. “We did not ask you to veto it.”

The Democrats’ preeminence in the state meant lawmakers easily overrode the Romney vetoes. Republicans joined in reversing Romney. The entire compromise, including the employer charge, went into law.

The 11th-hour to-and-fro meant that Romney could be two governors -- the bipartisan compromiser who found a solution and the no-frills executive who tried to block a new tax.

Conservative criticism

But the veto was not enough to shield Romney from some conservatives. The Wall Street Journal editorialized that Romney’s “willingness to compromise in Massachusetts on core matters of principle, and then trumpet those statist policies as a ‘free market’ solution, raises questions about how far and easily he’d bend to a Democratic Congress.”

However, when Romney introduced his proposal for national health reform in August, it bore little resemblance to the Massachusetts law. Gone were the new public agency and its insurance “exchange.” Excised was the demand that individuals buy insurance.

The new plan hinges, instead, on more traditional Republican solutions: allowing expanded tax deductions to encourage more Americans to buy health insurance; increasing the use of pretax health savings accounts; capping punitive damages to limit malpractice payments.

His advisors said the new approach was largely due to the different powers wielded by the president -- particularly the ability to employ the federal tax code.

The Wall Street Journal praised Romney’s national plan, which leaves reform mainly in the hands of the 50 states, as a “step forward.” But those who worked with him back home were not thrilled.

“I have no opposition to states’ rights,” said MIT’s Gruber, “but you have to put money behind it or many of these states . . . will do nothing.”

Lord, of Associated Industries, said he was “a little disappointed to hear Romney nationally ducking or backing away from this. It’s something that we are all still trying to make work, something he seemed so proud of that day, on April 12.”

It doesn’t appear that voters in neighboring New Hampshire, the first Republican primary state, are holding the shift against Romney. He led former New York Mayor Rudolph W. Giuliani, 32% to 20%, in a Boston Globe poll released Sunday, which showed that potential voters gave Romney high marks for experience, trustworthiness and the ability to bring “needed change.”

(In perhaps the poll’s most striking finding, however, only 16% of likely Republican voters said they had definitely decided whom to back.)

Robert Blendon, a Harvard professor who studies health politics, said he sympathized with Romney’s dilemma in shaping a program for liberal Massachusetts and then trying to win over a conservative primary audience.

Don’t be surprised to see Romney turn again if he becomes the Republican nominee -- putting renewed emphasis on his work in Massachusetts, Blendon said.

“His work here, reaching across the aisle to get something big done, could be very helpful to him in a general election with independent voters and moderates,” Blendon said. “Let’s wait and see.”

james.rainey@latimes.com

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Romney’s plan

As governor of Massachusetts, Mitt Romney helped pass the nation’s most comprehensive health insurance law. Here’s how the provisions of that law, signed in April 2006, compare with the proposal he released August for national healthcare. In his new plan, Romney stresses he would leave reforms primarily in the control of the states.

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Massachusetts law

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* Requires all individuals to obtain health insurance; $219 tax penalty for those without insurance

* Requires employers to supply health insurance for workers or pay a $295 annual fee per worker (Romney vetoed fee; Legislature reimposed it with override)

* Establishes a government agency to help facilitate sale of private insurance and lower premiums

* Requires companies that don’t provide insurance to provide pretax deductions to help employees buy policies

* No restrictions on malpractice claims

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Romney’s national plan

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* Includes no “individual mandate”

* Imposes no new taxes or fees on businesses

* No significant new government bureaucracy; establishes federal incentives for states to reduce regulation and costs

* Makes basic medical expenses fully tax-deductible; expands incentives to help workers establish pretax health insurance accounts

* Changes law to cap noneconomic and punitive damages in medical malpractice cases.