New England Public Radio

As Mitt Romney’s opponents continue to compare “Romneycare” unfavorably with “Obamacare,” we decided to take another look at the plans’ similarities and differences. For additional insight, we turned to John McDonough, director of Harvard’s Center for Public Health Leadership.

McDonough brings a unique perspective to the issue. He served as a top adviser on the national health care overhaul plan, and played a key role in advancing and implementing the Massachusetts law. His new book, Inside National Health Reform, details the effort that led to the national overhaul, including his work on the issue with Massachusetts Sen. Edward Kennedy, who died in 2009.

NPR’s Liz Halloran: The major element of both plans is the requirement that individuals purchase health insurance, the so-called individual mandate. What are the bottom-line similarities and differences in the Massachusetts mandate and the mandate included in the federal legislation?

John McDonough: A little context first. When people say that the federal Affordable Care Act (ACA) is modeled after the Massachusetts plan, what they really mean is that Title 1 of ACA is modeled after the Massachusetts plan, and pretty much nothing else [is]. And there are nine substantive titles in the law, so there is a lot in the ACA that has little or nothing to do with Massachusetts reform.

There are four key pillars of the Massachusetts plan that are all included in the ACA: insurance market reforms, the individual responsibility mandate, the premium and cost-sharing subsidies to low- and moderate-income households, and the exchange — known as the “connector” in Massachusetts. Though each of the four is done differently in both plans, the essential architecture is the same. And there is no doubt that the inspiration for Title 1 came from the folks in D.C. learning from the Massachusetts experience.

Of the four, the mandate is perhaps the most similar, and it’s not really a “mandate” in either law. It is a tax penalty, enforced by the respective federal or state tax collection entity, which is imposed on those who can afford to buy insurance and who do not do so. Both have religious exemptions, and neither is imposed on low-income uninsured persons. The dollar penalties vary, though not by a lot. Both are strikingly similar.

Halloran: Former Gov. Romney has said that, if elected, his first act as president would be to issue waivers to every single state, allowing them to opt out of requirements of the federal health care plan.

McDonough: He cannot do that. Romney says he will do it by using the state waiver authority in Section 1332 of the ACA. But that section does not permit the issuance of any state waiver until 2017 at the earliest. There is a bill proposing to move up that date to 2014, but even that would not allow Romney to do what he says he plans to do on day one in January 2013. He’s either misinformed, or he thinks no one will notice the 2017 date. And he’s wrong.

Halloran: What did you learn in helping craft the Massachusetts plan that you brought to the table when putting together the national plan?

McDonough: There were more lessons than you can shake a stick at, and far more than can be relayed here. Here are a few:

• It’s possible to implement an individual mandate and make it work, and improve the health care marketplace as a result.
• It’s vitally important to provide subsidies that make insurance genuinely affordable, not just for premiums, but also for cost-sharing.
• The assumption that you can shift money away from the health care safety net to pay for coverage expansion and not worry about the viability of the safety net is wrong. The need to support a robust health care safety net will not go away.
• It’s important to set up an exchange and put as much distance as possible between the entity/its board and the legislature and other kinds of political interference. There are many groups with an economic interest in making the exchange as ineffective as possible.
• It’s really difficult to create an exchange that provides real value for small business, and much easier to create meaningful value for individuals.

Halloran: How has the plan worked in Massachusetts, and how have residents and taxpayers there responded? I’m looking at the Harvard SPH/Boston Globe poll of 2009 that suggests 59 percent support the Massachusetts universal health insurance law, and nearly 80 percent say the law should be continued, either as it stands or with some changes.

McDonough: An Urban Institute survey pegs public support for the law between 66 and 69 percent. Opposition is low. The plan worked well to accomplish what was intended: to dramatically lower the number of uninsured in Massachusetts. It was not structured to solve the cost problem, which has not been solved, though the law has triggered the most robust cost-of-quality process in any state in the nation. It was not intended to solve workforce shortages, and it hasn’t. Massachusetts still has the highest proportion of medical professionals of any state, and only 11 percent of the state’s doctors think the law should be repealed. A business-supported state budget watchdog says the law increased the state budget by less than 1 percent — not a budget-buster at all.

Halloran: If you were advising Romney, how would you suggest he defend the Massachusetts plan?

McDonough: I would urge him to say: “I am proud that the law I signed did what it was intended to do. It has lowered the number of uninsured in Massachusetts so much that no other state is our peer. Massachusetts proved that this national shame of the uninsured does not have to be, and we can fix it without breaking the bank.”

He could say that, while there is a lot in the national plan that he doesn’t support — new taxes, the big hand of the federal government, the intrusion into state prerogatives — there is a lot in the law that he does support and would not want to repeal. For example, there are provisions to combat violence, neglect and financial exploitation of our senior citizens. There is the Indian Health Reauthorization Act, more than 20 years in the making. There are breakthrough provisions to combat fraud and abuse in Medicare, Medicaid and private insurance. Suggest repeal of what he doesn’t like, but say he won’t throw the baby out with the bathwater.

Copyright 2011 National Public Radio. To see more, visit http://www.npr.org/.

There is a tradition of Republican presidential candidates laying out their foreign-policy views at The Citadel.

John McCain did it four years ago; George W. Bush did it eight years before that. On Friday, it was Mitt Romney’s turn to speak at the South Carolina military academy.

“Since 1842, every tyrant, every petty thug or great power that threatened America learned that if you wanted to take on America, you were going to have to take on The Citadel as well,” the former Massachusetts governor said Friday, surrounded by cadets in front of a big white banner that said “Believe in America.”

Romney described how he plans to keep America from losing supremacy in the 21st century in a speech covering the globe — from Mexico and Cuba, to Afghanistan and Pakistan, Iran, North Korea and China.

That broad sweep is a reflection of the world today, he said.

“There’s no wall that the next president can demand to be torn down,” he said. “But there’s one unifying thread that connects each of these threats: When America is strong, the world is safer.”

Other Republicans in the presidential field have argued that America needs to reduce its military footprint and stop spending so much money on wars overseas — a view the Tea Party has helped bring to prominence.

Romney set himself apart from that camp Friday, arguing that a weaker military and a smaller global footprint will compromise America’s leadership in the world.

“The United States should always retain military supremacy to deter would-be aggressors, and to defend our allies and ourselves,” Romney said.

He wants to increase the military budget, mentioning specific projects from naval shipbuilding to a missile defense system. It’s a traditional Republican view of defense that was music to this crowd’s ears.

“I really enjoyed the speech,” said 19-year-old Sebastian Clark of Pittsburgh. “I believe that what he said is true, that during times when America is not very secure in our finances, we need to upscale our military in order to protect our borders and our allies and our interests worldwide.”

Romney said that while America should work with other nations, it should “always reserve the right to act alone to protect our vital national interests.”

That’s the same position President Obama has taken, but you wouldn’t know it from Romney’s speech. He was unrelenting in attacking the president, saying Obama has weakened America’s economy, defense and values.

“This is very simple,” he said. “If you do not want America to be the strongest nation on Earth, I’m not your president. You have that president today.”

At the White House, spokesman Jay Carney argued that Obama’s track record on national security is unassailable.

“We are stronger, we are safer, we have taken the fight to our principal enemy with a level of aggression and success that is unprecedented,” Carney said. “We have improved our relationships around the world with our allies and our partners, and we have made great strides.”

But in South Carolina, even in this bastion of military values, Romney’s supporters acknowledge that foreign policy will not be what decides this election.

“The war is certainly important, but what touches people personally is the economy,” said Michael Hureda, 20, of Peoria, Ill. “And with people hurting so badly economically, I think that is what voters are going to vote on.”

Friday’s speech came a day after Romney unveiled his foreign-policy advisory team, which includes many top officials from the recent Bush administration.

A Romney campaign official was asked Friday where Romney’s foreign policy differs from that of President Bush. The official replied that it’s not a dramatic departure in policy, but problems like the Arab Spring present challenges today that Bush never faced.

Copyright 2011 National Public Radio. To see more, visit http://www.npr.org/.

First in a series

In the late 1970s, recently out of Harvard Business School, Mitt Romney went to work for the Boston consulting firm Bain and Co. He was successful, but he says his dream was always to run his own business.

In 1984, he got the chance.

The firm’s founder asked Romney to start an investment fund called Bain Capital. The company would put money into small or struggling businesses, help them grow, and then Bain would cash out.

Today, lots of firms do this kind of work, but it was unusual in the early ’80s, says Steven Kaplan, who teaches finance at the University of Chicago Booth School of Business.

“What Bain Capital did — and was among the first, if not the first, to do it — was to look at the operations before buying the company, as well as after,” he says, “and try to figure out, how can we make it better and then help the management team to improve the company.”

In other words, Romney applied business consulting techniques to the investment business.

‘The Best And The Worst Of Capitalism’

“Many venture capitalists write you the check, and if you don’t see them again, that’s a good thing in the entrepreneur’s mind. That was never true for Mitt,” says entrepreneur Tom Stemberg, who had an idea almost 30 years ago to create an office-supply superstore.

His pitch to Romney was that the average white-collar worker consumes about $1,000 a year on office supplies — so there’s huge room for savings.

Romney asked around, and businesses told him, nope — they only spend about $200 a year per worker on office supplies.

Romney called Stemberg with the bad news.

“And I go, ‘Well, Mitt, the reason is that people don’t realize how much they’re spending. And if you went in and added up what they’re actually spending, you’d find out I’m right.’ “

Stemberg figured the deal was dead. But Romney went back to the businesses, this time with a calculator — and he asked for their receipts.

A week later, Stemberg’s phone rang again.

“He said, ‘Gosh darnit, you’re 100 percent right,’ ” recalls Stemberg. ” ‘People just don’t know how much they’re spending. They’re actually spending $1,100 in office products, and therefore saving 50 percent could really be a big idea.’ And it turned out, obviously, it’s become a $25 billion business today, so it was a pretty big idea.”

That $25 billion business is called Staples. It’s one of the earliest Bain Capital success stories — others followed. Domino’s Pizza. Sports Authority. Brookstone. Sealy mattresses. Those deals made Mitt Romney a millionaire hundreds of times over.

Geoff Rehnert was one of Bain Capital’s first employees and left around the time Romney did, 15 years later.

“On all the deals that were done during those 15 years, the rate of return was over 100 percent,” he says. “I don’t believe there’s ever been anyone in the history of investing who for over 15 years has averaged over 100 percent.”

Here’s another indicator of just how good Romney was at his job: The University of Chicago’s Steven Kaplan says most equity firms keep 20 percent of their profits.

“Bain Capital, for a very long time, was one of the only private equity funds, if not the only one, to get a 30 percent share of the profits,” says Kaplan. “And the only way your investors give you a 30 percent profit share is if you have performed very well.”

So what does “performing very well” mean? Romney often equates good performance with job creation.

“We added tens of thousands of jobs through the businesses we helped support,” Romney said during a debate at the Ronald Reagan presidential library last month. “That experience — succeeding, failing, competing around the world — is what gives me the capacity to help get this economy going again.”

But Howard Anderson, a former venture capitalist who teaches management courses at MIT, says even though Bain sometimes created a lot of jobs, that wasn’t the real goal.

“Private equity combines both the best and the worst of capitalism,” he says. “When things go well, there’s wonderful stories to tell about growth. When things went bad, it is not a pretty system — especially since Bain Capital may have personally done well themselves, where both their investors and the employees did not do well.”

Layoffs And Shuttered Factories

Romney’s opponents have seized on those examples where things went south — places where Bain reaped millions from companies that sent jobs overseas, closed factories or plunged into bankruptcy.

Some are familiar names, like KB Toys; others are less well-known, except to the people whose lives were affected — companies like Ampad, DDi, Dade and GST Steel.

Donny Box worked for GST, at a steel mill in Kansas City, Mo., for 32 years. A few years after Bain took over, the company went belly-up and the plant closed. Box says Bain ruined the community and his friends’ lives.

“Guys lost houses, guys lost cars, and I’ll tell you what — the … number of people that had been married 30, 35, 40 years that split up. There were quite a few people that committed suicide,” Box says.

When Romney says Bain taught him how to create jobs, Box says he still makes statements that cannot be played on the radio.

“I just, I think, here’s a guy that just took somebody else’s money and used it to make more money,” says Box. “The guy has never produced a thing in his life. I used to be able to drive by that plant and say, you know, everything that came out [of] that back gate, I had my finger on that somewhere along the line. I made something. We produced something,” he says. “I drive by the old plant probably once or twice a week, and it’s just — I mean, it chokes you up.”

Although Romney was CEO of Bain during that period, he has said he had no involvement in the layoffs and the plant closure. His defenders say focusing on those cases is like condemning a successful heart surgeon who has at times lost patients on the operating table.

In 1999, Romney went to run the Winter Olympics in Utah, and after that, his political career started to take off.

Staples founder Tom Stemberg has remained close with Romney since they first collaborated on the office superstore as young men more than 25 years ago.

Asked how Romney has changed now that he’s a multimillionaire and a presidential candidate, Stemberg replies: “It’s the same guy; he’s still a cheap son of a gun.”

Copyright 2011 National Public Radio. To see more, visit http://www.npr.org/.