Editor’s Note: Aaron E. Carroll is an associate professor of pediatrics at the Indiana University School of Medicine and the director of the university’s Center for Health Policy and Professionalism Research. He blogs about health policy at The Incidental Economist. Follow him on Twitter at @aaronecarroll.
Aaron Carroll: Romney comment on firing people is mostly out of context; smoke, not fire
But it calls attention to his questionable record as "job creator" at Bain, he says
His quote involved firing health insurers; but sick people don't have luxury of doing that
Carroll: In Massachusetts they can, under Romney health law; yet he opposes national reform
Gov. Mitt Romney got himself into a bit of a pickle Monday when he was quoted saying that he liked to “fire people.” Many have jumped onto this line as evidence of the candidate’s callousness toward working people in a bad economy. Even his Republican primary competitors latched onto the comment, especially as it might relate to his work at Bain Capital Ventures, to show that Romney is in the business of making people unemployed.
There’s much more smoke here than fire, but some of it, unfortunately, is Romney’s fault. He was the one, after all, who tried to pitch his time at Bain as evidence of his success as a “job creator.” Specifically, in the GOP candidates’ debate on Saturday he said, “In the business I had, we invested in over 100 different businesses and net-net, taking out the ones where we lost jobs and those that we added, those businesses have now added over 100,000 jobs.” Turns out this isn’t entirely correct.
When pressed, his campaign released figures that showed that a number of companies helped by Bain under Romney’s tenure, such as Staples, the Sports Authority, and Domino’s, have added more than 100,000 jobs since then. But there are two problems with that figure. The first is that it’s the number of jobs in all the time since Romney started at Bain, including many years after he left. The second is that there are no figures that show how many jobs were added or lost at other companies Bain managed, so a claim of a “net” addition is unproven.
Bain could release comprehensive figures, but it’s not likely it will. Nor should it. Bain isn’t running for office, and I’m sure it considers the information proprietary.
The larger issue, though, is that many people were fired through Bain’s work. That is what often happens when venture firms take over businesses through leveraged buyouts. These stories make for compelling campaign commercials and news pieces. They don’t paint Romney in as nice a light.
That’s compounded when he claims to “enjoy” firing people.
But let’s be fair. The governor is having his words taken out of context. Here’s the full quote:
“I want individuals to have their own insurance. That means the insurance company will have an incentive to keep people healthy. It also means if you don’t like what they do, you can fire them. I like being able to fire people who provide services to me. If someone doesn’t give me the good service I need, I’m going to go get somebody else to provide that service to me.”
Romney isn’t talking about his time at Bain. He’s talking about health insurance. Specifically, he’s talking about how he’d like insurance to work. He would rather everyone be personally responsible for buying insurance, instead of getting it from the government. Then, he says, if the insurance company did a bad job, people could fire them.
That sounds much better, right?
Unfortunately, it’s not. The first problem is that Romney ascribes motives to the insurance companies that make no sense. If you would just leave the insurance company if it did a bad job, then there is no incentive for it to keep you healthy. Healthy people are cheap for insurance companies, and sick people are not. If you go from being healthy to being sick, it’s in an insurance company’s best interest that you leave. That’s an economic fact, not a moral judgment. It’s only if you can’t leave, if you have to remain on their books no matter what, that the company has an incentive to keep you healthy.
The second problem is worse, though. Healthy people often don’t know their insurance plans are bad until they get sick. Healthy people, after all, don’t make as much use of their plans. Once they fall ill, though, it means now they have a pre-existing condition, which will make it almost impossible to them to get a new plan if they decide to fire their old insurance company. The way the private insurance market works today, almost no one has the luxury of firing the insurance company once he or she figures out it isn’t doing a good job.
That’s not true in Massachusetts, of course. Thanks to Romney’s legislation there, insurance companies can’t deny you coverage and also can’t charge you more for being sick. There, thanks to Romney, you can fire your insurance company and be assured of finding a better one.
It will also be true for many more people once President Obama’s Affordable Care Act gets fully under way in 2014. Since Romney seems so enamored of firing bad insurance companies, you might think he’d want to protect and promote other people’s ability to do so. Instead, he opposes the Affordable Care Act, which would do the same thing nationally that his law did for the people of Massachusetts.
The opinions expressed in this commentary are solely those of Aaron Carroll.