Mitt & Ted, a healthcare story

Part 4: Three-Legged Stool

NARRATION: Amy Lischko remembers vividly the first time she was summoned to the Governor's office. Amy was a career bureaucrat, so this office was like the inner sanctum of her world, with big windows overlooking the Boston Common, and chippendale furniture around a long wooden conference table, all polished to a shine. Amy had made it inside.  She was there to present for Mitt Romney and his core team. And the meeting did not go well.

Amy Lischko: He was very polite. But two of his underlings that were working with him at the time, Tim Murphy and Brian Wheelan were not as nice, particularly Brian Wheelan.

NARRATION: We met Tim and Brian in the last episode. They were the young dynamic duo the governor would stick on tough problems. And for what it's worth, I checked Amy's account with Brian.

Brian Wheelan: That is a hundred percent accurate.

NARRATION: He said it sounds very much like his younger self.

MUSIC: Enter

NARRATION: Now just to fully set up this first encounter: Amy had gone to a public university and spent the past ten years working as a career civil servant -- in healthcare. So she knew her stuff. She was in her mid 40s, which meant in this administration she was often the oldest person in the room. She jokingly refers to herself as the 'grandmother' of the health team.

Brian Wheelan on the other hand was barely 30, the baby of the group. He was a Dartmouth College and Harvard Business School grad who had also worked at Romney's old company, Bain Capital. So pretty much a caricature of the young know-it-all consultant unleashed on state government.

Amy Lischko: Whipper snapper thinks he knows more than he does could create a slide deck in like, five minutes. It was just very snap judgment, I don't like this guy.

MUSIC: Out

NARRATION: The Governor had called this meeting to learn more about the state's uninsured population: the roughly 500,000 people who still after all the reforms the state had tried, did not have health insurance. At first, the questions were all stuff Amy had prepared for -- like basic demographics.

Amy Lischko: You know, there were more men than women that were uninsured. Younger people were more likely to be uninsured. Part-time jobs were more likely to be uninsured, sort of things that you would understand.

NARRATION: But then Brian started pressing for more details. Like: do these people have access to insurance and turn it down? Could they afford insurance on their own? If not, how close are they to affording insurance?  Do they qualify for Medicaid?  If so, why aren't they signed up? Brian piled these questions on -- one after another -- all the questions a smart but somewhat obnoxious consultant would ask.

Brian Wheelan: And that was the role that Tim and I played a lot in the governor's office. And I think honestly, a lot of the agency heads, we used to drive them nuts.

NARRATION: He certainly drove Amy nuts.

Brian Wheelan: Right? Because we were the kind of the governor's henchman.

Amy Lischko: And I felt like he was so much younger than me and he should have a little bit of respect for age and my work over ten years. But he just probably thought I was a stupid state worker.

NARRATION: In the moment, Amy was flustered and embarrassed. It was her first big meeting with the Governor and she looked like a fool. So she gathered her notes and quickly left the conference room.

MUSIC: Enter Theme

NARRATION: But the worst part was, as much as she didn't like Brian Wheelan and his Ivy League know it all attitude, Amy Lischko also had to admit, he was asking good questions.

Eventually, the two of them would join forces to form a small health reform team inside the Governor's office -- a mix of insiders and outsiders. They called themselves "The Mod Squad", after the ‘60s cop drama. And it all started after that meeting.

Because instead of sulking at her desk, Amy went back to the data, determined to find answers. Determined that she would not be embarrassed again. Amy would find out why there were half a million people walking around the state every day with no health insurance. She would peer into their lives through every data point available.

Amy Lischko: It was more of a mix than what we thought.

NARRATION: The results were not what any of them expected.

Brian Wheelan: How is that possible?

NARRATION: And therefore the solution, the way to get those people insurance, was also not what anyone expected.

MUSIC: Post Theme

NARRATION: From GBH News this is The Big Dig Season 4: Mitt & Ted. I'm Ian Coss.

You can think of Obamacare, and before it Romneycare as a set of interlocking parts. You probably know some of their names already: The Healthcare Marketplace, Pre-Existing Conditions, the Individual Mandate. But I want to share the strange story of where each of these pieces came from. It involves some unlikely characters and even unlikelier coincidences, plus the most consequential PowerPoint presentation of Mitt Romney's life.

This is Part 4: Three Legged Stool

MUSIC: Out

Archival: Here's a phrase we're all going to have to get used to. This is called an individual mandate approach. Everybody in the nation…

NARRATION: If you remember any of the debate around Obamacare, then you remember the phrase "individual mandate".

Archival: An individual mandate is the centerpiece of the president's healthcare law

NARRATION: Back in 2009 it was the talk of the town -- the shiny new idea that promised to finally get the country to universal coverage.

Archival: Individual mandate

Individual mandate.

NARRATION: An idea so simple, so elegant, anyone could understand it.

Archival: Individual mandate

Individual mandate.

NARRATION: But also the focus of the harshest criticism.

Archival: The individual mandate that requires all Americans buy insurance came under fire.

MUSIC: Out

NARRATION: What you didn't hear so much about in that long hot summer of 2009, was where the idea actually came from. Who had supported it, and why.

Archival: Joining me now to discuss the current situation and where we're headed are two key players in the battle.

NARRATION: That story requires one more trip back to the 1990s, and the Clinton healthcare battle...

Archival: John Chafee, Republican Senator from Rhode Island.

NARRATION: This time, to meet Senator John Chafee.

Archival: What do you make of the delay, Senator Chafee?

Uh, the delay doesn't bother me at all, Roger. I think it's, um, from my point of view, we want the administration to come forward with…

NARRATION: Chafee was a well-mannered, soft-spoken, moderate Republican from New England, with bushy eyebrows and a boyish smile. In other words, unthreatening. Someone who could be a deal-maker.

Archival: One side isn't gonna control all this. This truly has to be a bipartisan approach.

NARRATION: But Chafee knew that in order to be at the table with Clinton, Republicans needed ideas and policies of their own. They couldn't just be against the Democrats plan. And the fact was, at that time healthcare was not a big Republican issue. A lot of Chafee's colleagues just did not do healthcare, period.

Christy Ferguson: And he thought this was crazy.

NARRATION: Christy Ferguson was Chafee's deputy chief of staff at the time.

Christy Ferguson: So we started a process of educating Republicans about healthcare.

MUSIC: Enter

NARRATION: Typically you might imagine an effort like this resulting in a bunch of subject experts and staff lecturing the senators on the difference between HMOs and PPOs. But Chafee and Ferguson wanted to get the other senators engaged – hands on.

Christy Ferguson: And we kinda turned it a little bit into a competition.

NARRATION: So instead they assigned every senator a specific topic, like community health centers for example, and then each week at 8am a different senator would get up to present to the group, on their own -- with no staff.

Christy Ferguson: 8:00 in the morning, if you can believe it, United States senators.

NARRATION: This was before our lives ran on computers, so the Senators made physical posterboards for their talking points. And senators being competitive people -- if one senator brought in 8 posterboards, you could bet the next week there would be 10.

Christy Ferguson: So it just, it just kind of, snowballed.

NARRATION: And the elder John Chafee could watch proudly from the back of the room as some of the most powerful people on the planet dutifully came in with their homework complete.

Christy Ferguson: Jack Danforth, Bob Dole.

NARRATION: Their notes and posterboards ready.

Christy Ferguson: Orrin Hatch. Chuck Grassley, Alan Simpson.

Ian Coss: Getting up like school children.

Christy Ferguson: Yes. It was,

Ian Coss: To say, "This is what I learned about the healthcare system."

Christy Ferguson: Exactly.

MUSIC: Out

Christy Ferguson: And as a result of that they thought, ‘Oh, we prepared for this!’ like really good students. ‘We’re ready, we’re ready to talk.’

NARRATION: They had prepared to bring a Republican perspective to the big healthcare reform.

Christy Ferguson: And unfortunately…

Archival: One of his first acts was to establish a task force on healthcare reform.

NARRATION: Unfortunately, as we covered in Episode 2, the Clintons decided to write their own bill.

Archival: The task force's mission is simple

NARRATION: ...without much input even from congressional Democrats, let alone Republicans.

Christy Ferguson: They pursued a more partisan approach.

Archival: Senator Chafee, how does the Republican plan that you're working on, how does it differ from what we all know about the Clinton plan?

Christy Ferguson: So the issue was, okay, how do we deal with this? How do we counteract this?

Archival: Well, of course we don't know the details of Mrs. Clinton's plan, but…

NARRATION: That meant in 1993, even as the Clintons were developing their secret, thousand-plus page behemoth of a bill, and Republicans were digging in to fight it, John Chafee would need to assert himself and offer a middle path. He needed to assemble his own coalition, and write his own bill. He knew it would be difficult, and he knew it would make some of his fellow Republicans furious. But his mind was set. The way Ferguson explained it to me: Chafee was part of the World War II generation. In fact, he dropped out of college to enlist after Pearl Harbor, and fought in some of the most brutal battles of that war, including the assault on Okinawa. He was someone who took public service very seriously.

Christy Ferguson: So that concept of self-sacrifice and I have to take that hill. I might die taking it, but I'm gonna be the first one up because I'm the leader.

MUSIC: Enter

NARRATION: As Chafee plotted out his health campaign, he knew he was not interested in a big Medicaid expansion, or reengineering how insurance companies worked. He was looking for a moderate approach -- something more market-based, more streamlined, more elegant.

Christy Ferguson: There needed to be a counterweight concept, right?

NARRATION: And amazingly, that concept walked into Ferguson's office one quiet day during the summer recess of 1993. It was carried by a man named Stuart Butler, who came from a little think tank called the Heritage Foundation.

MUSIC: Out

Stuart Butler: I'm Stuart Butler. Uh, for 35 years I was at The Heritage Foundation

NARRATION: At this point, I want to encourage you to set aside whatever image or concept you have of the Heritage Foundation. Because chances are it is very different from the place that Stuart Butler first knew.

Stuart Butler: When I first went there, it was a collection of small buildings, one of which, uh, had previously been a, uh, theater for porn shows, not recently, but that's what it was, and it was actually set up that way. The boss of Heritage his office was in what was the projection room.

Ian Coss: And do you think that reflects the culture of the place? It was a little scrappier, a little…

Stuart Butler: I think it did. I think it did.

NARRATION: Heritage then was not dogmatic, or heavily partisan. Heritage was a practical place, for moving small-c conservative ideas forward. And in the 1980s and 90s, one of those ideas was about healthcare.

MUSIC: Enter

NARRATION: Stuart Butler as you can maybe tell, comes from Britain, where you have government run healthcare. As a conservative, he didn't love it. But as an economist, he could also see there were some things about the American system that made no sense at all.

Stuart Butler: I thought, "Well, this is crazy."

NARRATION: For example: last episode I told you about our network of safety-net hospitals that provide care to everyone, whether the person had insurance or not. As Stuart Butler saw it, the mere existence of those hospitals changed peoples' behavior, in a bad way.

Stuart Butler: You're gonna get a whole bunch of people, particularly young people, saying, "Why do I need insurance if I know that if something terrible happens, I'm gonna get put back together at the local hospital? Why not sort of “go bare" as we say in insurance terms.

NARRATION: Another economist I talked to referred to these same people as the Evel Knievels of healthcare. They can afford insurance, they have access to insurance, but they choose not to get it. And the problem is that when those Evel Knievels do wind up in the ER, they get free care, and the cost is just absorbed by the system -- by the rest of us.

It was a classic free rider problem.

Stuart Butler: So it's a perverse incentive.

NARRATION: And Stuart Butler thought: let's flip the incentives; let’s require everyone to get some kind of basic catastrophic insurance: an individual mandate if you will. Stuart does not claim that he invented this idea. But in 1989, just a few years before the Clinton health battle began, Stuart put these ideas down in a short white paper, published by Heritage.

Stuart Butler: That, to me, was a conservative vision of what the social and political obligation should be.

MUSIC: Out

NARRATION: As part of my research, I visited the current Heritage building, which is definitely not a repurposed porn theatre. It's an eight story stone edifice complete with Heritage-branded coffee cups and much to my pleasure, a state of the art in-house recording studio.

Speaker 1: We’re rolling.

Ian Coss: Great. Just to start, could you introduce yourself – your name and what you do here.

Ed Haislmaier: Sure. Ed Haislmaier. I'm senior fellow in health policy here at the Heritage Foundation.

NARRATION: That is where I sat down with Ed Haislmaier, who actually worked with Stuart Butler back in the 80s.

Ian Coss: And so I was wondering if we can, uh, [crosstalk] And I know this is- Yeah, I know it's a little- This, this story is controversial ... it's

Ed Haislmaier: It’s a little controversial.

Ian Coss: So what, what I'm hoping is we can do like an intellectual genealogy- Yeah, the intellectual- … [crosstalk] of the individual mandate- Right, the intellectual- ... from your perspective.

Ed Haislmaier: Yeah. The intellectual genealogy is this.

NARRATION: Here's how Haislmaier remembers it:

Ed Haislmaier: So, my colleague Stuart Butler had done sort of a think piece on this and suggested that there was a social compact. It was really in the sort of theoretical-

Ian Coss:Mm-hmm ...

Ed Haislmaier: …is to say, ‘Okay, you're in hard times, we'll help you out, but you have an obligation to help yourself too.’

NARRATION: So as Haislmaier recalls, this mandate idea was just something Stuart Butler was noodling around on, back in the ‘80s.

Ed Haislmaier: That's really the only time that came up in the context of Heritage. It wasn't–I mean, first of all, it was never in anything we did.

NARRATION: The problem with this account is that Butler's article from 1989, explicitly refers to his health plan as quote "The Heritage Plan." And it wasn't just a casual one-off think piece either. It was delivered as part of a Heritage lecture series and then incorporated into a book published, again by Heritage and co-edited by Ed Haislmaier.

Ian Coss: Did the individual mandate play into that book?

Ed Haislmaier: No.

NARRATION: I can assure you that the individual mandate did feature prominently in that book -- and the discussion around it.

Ed Haislmaier: Gosh, you're really taxing my memory. I'd have to go back and look at that.

NARRATION: And I know I'm coming down pretty hard on Ed here, because the refusal to even acknowledge the Heritage connection is a little absurd. But I actually don't think it's all a cynical ploy on his part, or that it's just revisionist history in the aftermath of Obamacare. I believe Ed Haislmaier when he says he personally never embraced the individual mandate. In fact the point I want to make here is that the individual mandate has always been contested. It's sort of the red headed step child of American health policy.

For progressives, the individual mandate was way too limited as a reform. It let the corporations off too easy, it let the government off too easy, it put all the pressure on the individual, and sent all the benefits to the insurance companies. For libertarians, on the other hand, the individual mandate was way too intrusive as a reform. It took away your ability to choose for yourself.

Even for Stuart Butler, the mandate was a little uncomfortable, and he never saw it as the most important part of his plan.

Stuart Butler: But I thought, you know, when you look at the options politically, that was the least worst option.

NARRATION: So for a few years there the idea of an individual mandate remained confined to the realm of white papers and think tanks and edited volumes. Until one day, it escaped out of the lab, and into history.

Christy Ferguson: I will never forget the day that this synthesized into a bill.

MUSIC: Enter

NARRATION: We're back now with Christy Ferguson, aide to John Chafee -- the congenial old Rhode Islander with bushy eyebrows, who was determined to take the hill of healthcare reform. It's summer recess 1993, a quiet day at the capitol, and Ferguson gets a visitor.

Christy Ferguson: Stuart Butler, who was at The Heritage Foundation.

NARRATION: At this time Butler in the ‘90s had basically been going door to door in Congress looking for anyone who might want to work with his step child of a health plan.

Christy Ferguson: He came in to talk to me, and it was just the two of us, and we had a nice quiet conversation, and there wasn't like a lot of other stuff happening. And he raised the concept of the individual mandate, and it just clicked

NARRATION: Now for Butler, remember, the mandate was a necessary evil, he accepted it. For Ferguson, it was something more. This was that counterweight concept -- that elegant, free market alternative she had been searching for.

Christy Ferguson: And I think he was a little concerned that the light bulb went off because I think from his perspective, he's like, "Well, have you thought about all of these other possible conflicting things?" And I was like, "Yeah, but I think this is the hook."

MUSIC: Out

Archival: Mr. President

Senator from Rhode Island

Archival: Mr. President, I’m very pleased today to join with 19 of my colleagues in introducing the Health Equity and Access Reform, today, Act of 1993…

NARRATION: In November of 1993, shortly after the Clintons unveiled their healthcare proposal, John Chafee introduced his more conservative alternative to the US Senate. It had 18 co-sponsors, all Republicans, including many of Chafee's pupils who had eagerly presented with their posterboards.

Archival: Danforth, Brown, Stevens…

NARRATION: And it included the following language: "Subtitle F: Universal Coverage - Requires each citizen or lawful permanent resident to be covered under a qualified health plan..."

Archival: And I thank the Chair and I thank the others for letting me proceed.

Senator from Missouri.

NARRATION: It was an actual alternative -- a challenge to the heavy-handed, byzantine Clinton bill. But it turns out the individual mandate -- which for Christy had been the hook, the lightbulb, the magical piece clicking into place -- it was not that for everyone.

Ian Coss: Do you remember phone calls from Newt Gingrich and his staff?

Christy Ferguson: Yeah, I remember phone calls from a lot of those people, yes.

MUSIC: Enter

NARRATION: Over that following year, as the Democrats struggled to put together their own bill, the pressure on moderate Republicans like Chafee mounted. The strategy, remember, was to let the Dems flounder. Let this be their Stalingrad, their Gettysburg. And from that perspective, this compromise bill was practically an act of party treason.

Christy Ferguson: Like, there were a group of people who thought you were the most evil person on the face of the earth, that you could possibly even be talking about this. This is all— what you're seeing now, that's not new. That's not new.

NARRATION: John Chafee was one of the very last people to give up on healthcare reform that year -- him, Ted Kennedy and a few others. But in the fall of 1994, nearly a year after introducing their bill, Ferguson remembers Chafee telling her: it's time.

Christy Ferguson: You know, go home to your family tonight. Like, it's not that close. Go home to your family, have dinner. Don't give up everything."

MUSIC: Shift

NARRATION: Fast forward exactly ten years.

Archival: I'm proud to report that the state of the Commonwealth is strong and growing stronger. Massachusetts is back.

NARRATION: Mitt Romney is governor. Massachusetts has received that terrifying letter from DC threatening to yank a billion dollars in federal healthcare funding. A quiet crisis is unfolding, out of the public eye.

And so over the course of 2004, even as Ted Kennedy and Mitt Romney were negotiating with the Bush Administration to try and save the federal money, the Governor's team was also assembling a plan for what they would do with that money, how they would use it to get people private insurance. This is the team that called themselves the Mod Squad. It was Tim Murphy and Brian Wheelan, the governor's henchmen, plus another young staffer, and of course, Amy Lischko -- the self-described grandmother of the group.

MUSIC: Out

NARRATION: The Mod Squad began by studying the problem of the uninsured. And the first revelation was that the Squad all actually liked each other.

Amy Lischko: I mean, Brian I misjudged him. I did.

NARRATION: Brian it turned out was not an insufferable know-it-all.

Brian Wheelan: As you know, Amy, super smart.

NARRATION: And Amy was not some rigid bureaucrat just there to punch the clock.

Brian Wheelan: And when unleashed you could just see genius bloom.

NARRATION: In many ways they complemented each other, challenged each other. Amy understood the problems with Medicaid and insurance markets. Brian was seeing those problems with fresh eyes. And as they sliced the data over and over, the even bigger revelation for both of them was that the uninsured were actually closer to getting insured than anyone had realized. There was one whole bucket of people who already qualified for Medicaid and just needed some help or encouragement to sign up. So that was promising. Then there was another even larger bucket of people who could already afford to buy private insurance, but were choosing not to get it, the Evel Knievels. Together those two groups represented about two thirds of the state's uninsured. Two-thirds. All those people needed was a nudge.

And here we arrive at the first strange coincidence in the story…

Amy Lischko: I think it was a casual meeting with Christy. The governor wasn’t there.

NARRATION: Because by total chance, Christy Ferguson, the senate staffer from Rhode Island who helped introduce the individual mandate in Congress, landed a job inside the Romney administration. And so Amy Lischko happened to have this conversation...

Amy Lischko: And that's when she said, ‘well, I hope you're talking about an individual mandate.’

MUSIC: Enter

Amy Lischko: At the time, we hadn't really discussed that. And so she was the first person to mention whether there was an individual mandate included in the governor's plan.

NARRATION: In 2004 the individual mandate was a totally untested policy.

There were some moderate Republicans who had been pushing the idea for years -- ever since the Chafee bill in the ‘90s. And some conservatives had latched on too. Interestingly, Newt Gingrich, who had worked to kill the health reform process in ‘94, was a big fan himself at the time. So as you can imagine, in deep blue Massachusetts the individual mandate was essentially a fringe idea.

But for the practical-minded members of the Romney Mod Squad, the idea made perfect sense.

Brian Wheelan: Hey, look at auto insurance. Auto insurance is an individual mandate. It has become illegal to not have auto insurance.

NARRATION: Plus, it fit with what they were seeing in the data about the uninsured.

Amy Lischko: Without a mandate you can't just expect everybody to come in.

NARRATION: There were all these young healthy people, even some wealthy people who had apparently made the rational decision that it wasn't worth their money to have health insurance -- who were clearly not going to buy into the system unless you forced them.

Brian Wheelan: Look, everybody's gonna get sick. It is your responsibility to have some coverage so that you don't just walk into a hospital and expect the hospital to give you care for free.

NARRATION: And so together, the Mod Squad and Christy Ferguson brought the idea to the Governor to see what he would think.

MUSIC: Out

NARRATION: There's a story about Mitt Romney that I heard from a Globe reporter, and find myself thinking about it. One day around this time, in the 2000s, these two ran into each other in the airport, and one of them had a muffin. It was one of those strange moments where you see someone you know, but in an unexpected setting -- like when you encounter your boss outside of the office -- and suddenly they are just another person. It's almost uncomfortably intimate. And in that moment, the governor and the politics reporter, these two humans in an airport, had nothing better to talk about apparently than the muffin, and the appropriate way to eat a muffin. Is it top to bottom, bottom to top, side to side? You know, the important questions. And Mitt had a very Mitt Romney answer, which is that he only eats the muffin top. "Why?" the reporter asked. Because when the muffin bakes in the oven, all the butter and fat settle down into the bottom of the muffin. So the top must be the healthiest part.

Setting aside whether that's true, or even whether butter is bad for you, what you can take from that story is that Mitt Romney is a relentless optimizer. Nothing is too small to be optimized. The man has been known to remove the cheese from pizza and the skin from fried chicken. On family road trips, he would only stop to use the bathroom if the car also needed gas. Out on the campaign trail if there was no time to go to a gym, he would jog laps around the hotel.

Mitt Romney is a pragmatist's pragmatist. And the individual mandate was a perfect muffin top.

Christy Ferguson: I almost cried.

NARRATION: Christy Ferguson remembers when they first brought Romney the idea, he immediately grasped the logic of it.  He understood the problem of the free riders, the Evel Knievels, the perverse incentives.

Christy Ferguson: "Oh my God, you are the first person that got this in such a short period of time and understood what all the pushes and pulls of the system are."

NARRATION: But with Romney, there is always a shadow side to the pragmatist, which is the calculating politician. And so even as he got excited about the policy, he was also cautious.

Christy Ferguson: I think he asked me, like, ‘Why is the individual mandate such a political hot button?’

MUSIC: Enter

NARRATION: Of course it was Christy Ferguson's previous boss John Chafee, who had stuck his neck out once for this very same idea. And paid a price for it. Chafee didn't lose his seat, but as Ferguson recalls he did lose influence, and ultimately gave up his position running the Republicans’ health task force in the Senate. That was the danger of getting out ahead of your party on a big idea, of trying to take the hill.

Christy Ferguson: That's a very, very tough, very, very tough, thing to do in politics.

NARRATION: So was Mitt Romney ready to do the same?

MUSIC: Out

Ian Coss: What do people call you?

Keith Rudolph: People call me Rudy or Uncle Rudy.

NARRATION: Back in the 2000s, one of those half million Massachusetts residents who did not have health insurance, was named Keith Rudolph. Everyone calls him Rudy. And his story can help us understand why an individual mandate on its own was not gonna be enough. Because he wanted insurance.

Keith Rudolph: I mean, I'm raised in Alabama on a farm. You didn't sit down. I don't care if you worked at McDonald's, you were the best burger flipper there, you put the cheese perfectly in the center, you know what I mean? That's just the way we were raised. So I wanted a job.

NARRATION: Rudy had a tough spell back in the ‘90s after getting laid off from a bank job in Boston. So he started going to an employment agency, over and over again just to see if they had anything for him. Eventually the woman who ran the place noticed Rudy and said look: either you can sit at home and wait for us to call, or if you really need a job now, we could actually use some help ourselves -- here at the agency.

Keith Rudolph: So that's what I did. I showed up Monday morning, suit, tie, shoes shined, teeth brushed, the whole nine yards. You know what I mean? So…

Ian Coss: Did you get health insurance through that job?

Keith Rudolph: That was the company I was with when this whole thing started.

MUSIC: Enter

NARRATION: Rudy's job was to screen other job seekers for positions at law firms or warehouses...  It really was perfect work for someone who valued work.

But the pay was entry level, barely enough to live on -- let alone support a family.

Keith Rudolph: I think our rent was like $1400 to $1600. I needed a car because we had to get back and forth and stuff like that, and we're doing this off this little $30,000 paycheck.

NARRATION: And because this agency only employed about a dozen people, the healthcare options were not great. The monthly premium Rudy would have to pay to get on the plan was $400.

Keith Rudolph: $400 a month on top of everything else that I had on this plate that's on the edge of the table that's wobbling, you know? It was-- I couldn't do it.

NARRATION: Rudy looked into buying an individual policy outside his job; the cost of that was even worse.

Keith Rudolph: So there's no room to give.

NARRATION: At that point he was a healthy guy in his 30s, his kids were young. Insurance was something he could go without -- as long as he was careful.

MUSIC: Shift

Keith Rudolph: That became my mentality.

Ian Coss: Don't get hurt

Keith Rudolph: When the snow comes, I tiptoe to work. Don't get hurt. That's why it was such a shock when I wound up in the hospital.

MUSIC: Out

Keith Rudolph: I had a meeting with a law firm that afternoon, and I'm sitting there and all of a sudden the two fingers on my right hand, my palm down to my wrist went numb. And my director walks by. She's like, "Rudy, every time I walk by you keep balling up your fist. What, are you gonna punch somebody?" And I'm like, "No, I have no feeling in my hand."

She's like, “You need to go to the doctor." I'm like, "You know I can't afford no doctor." I'm like, "I'll be all right. I'll be all right. Probably just circulation. I've been sitting here on the computer all day.” I go on about my business, the next day I get back and I'm having the same problem.

The owner comes over and shuts my monitor off and says, "Go to the hospital."

MUSIC: Enter

NARRATION: For Rudy, "the hospital" meant Boston City Hospital. The safety-net hospital that always had to take you in, whether you had insurance or not, whether you could pay or not.

Keith Rudolph: It's chaos in four walls.

NARRATION: He got a ticket with a number and sat down in the waiting room, his hands and feet still tingling.

Keith Rudolph: You've got Bobby over here in the chair who thinks he's having a heart attack, so he's yelling at the top of his lungs, ‘What's taking so long!’ The baby's also been here for four hours, so he's hungry now. He's screaming at the top of his lungs. You got this guy over here, God bless him, but he hasn't bathed in about two or three weeks, but he wants to come and sit up under you. And you have no choice but to sit there until you can get what you need.

NARRATION: Once he was admitted, Rudy stayed in the hospital for eight days. The tingling and numbness were the symptoms of a stroke. At that time, he hadn't had a physical or seen a primary care doctor in more than a decade. So think about that in terms of the cost to society: eight days in the hospital that maybe could have been prevented, if he could have had regular access to a doctor.

MUSIC: Post

NARRATION: Rudy is no Evel Knievel. He was not showing up at the ER in his Corvette, laughing at the rest of us suckers who picked up his tab. He was someone who wanted desperately to get into the insurance system, and couldn't afford it -- at least, not the way the system was set up.

MUSIC: Out

NARRATION: So remember what I said at the top. Think of Romneycare -- and therefore Obamacare -- as a series of interlocking parts. If you look at the individual mandate in isolation, it does nothing to help Rudy. If anything, it would bankrupt him. But that changes if you look at the mandate in combination with a couple of other policies.

Jonathan Gruber: Which is essentially, what I call the three-legged stool.

NARRATION: Jonathan Gruber is a professor of economics at MIT, who also advised the Romney administration. But for now, he's giving us some healthcare economics basics.

Jonathan Gruber: The fundamental difference between insurance markets in America and the rest of the world, circa that time, was that insurers in America could legally discriminate against the sick.

What do I mean by that? If I walked in coughing, they could say, I'm not gonna give you health insurance, or, you know what, I'm gonna charge you six times as much. Or if you walk in and have had breast cancer like my wife had, they could say, we're gonna cover you, but not for anything ever arising for breast cancer ever again. That was called the pre-existing condition exclusion. So that's the way insurance worked.

NARRATION: A quick side note that I'm sure Jon Gruber would agree with: we both reference "sick people" and "healthy people" as broad categories. And I realize that is not a simple binary, that we are all both those things at some point in our lives. But in harsh economic terms, it's a meaningful distinction. I've never spent a night in the hospital in my life. My mom has MS and is in the hospital all the time. For an insurance company, I am healthy and she is sick. I am desirable as a customer, she is not.

Now for the roughly 60 percent of Americans who got a good insurance plan through their jobs, including my mom thankfully, this kind of discrimination was not an issue. They could get covered no matter what. And for the 20 percent of Americans on government insurance like Medicaid or Medicare, this was also not an issue.

Jonathan Gruber: But for the 20% of Americans who didn't have either employer insurance or public insurance, they were screwed.

NARRATION: That 20% of Americans included people like Rudy. People at small companies, people who were self-employed, people who worked multiple part-time jobs. They had to buy insurance on their own, and face the harsh discrimination of the market. So really the first leg of the reform stool was to end that kind of discrimination.

Jonathan Gruber: Sounds good. But now you're the insurer. You're in Massachusetts. So you're worried when Ian comes in, he's a healthy looking guy, maybe there's something he's not telling me. Maybe he's a skydiver. Maybe he likes riding in the middle of the road on his bike. You know, maybe he's having risky sex. We don't know.

NARRATION: The problem with that kind of reform, is if you just end insurance discrimination on its own, then insurance companies start getting suspicious that people are only buying insurance after they get sick, after they need expensive care. It’s yet another perverse incentive.

Jonathan Gruber: So what happened in every state that did this is insurers abandoned the market and the markets collapsed.

NARRATION: Hopefully you’re seeing a pattern. If you reform just one thing at a time, it inevitably creates problems somewhere else. It’s a one-legged stool. What the state needed was to start combining these legs.

Jonathan Gruber: Okay. The second leg is say, well look, we'll make sure everyone buys insurance.

NARRATION: So if leg number one is ending discrimination, then leg number two is the individual mandate. And just think for a second about how these two legs interact. If you end insurance discrimination and require everyone to buy insurance, then all the perverse incentives are suddenly gone. No one is waiting until they get sick to buy insurance, no one is counting on free care at the ER, everyone is forced into the same risk pool, where everyone can get a fair rate. The stool can stand, but just barely.

Jonathan Gruber: So the third leg of the stool was to make insurance affordable for low income families.

NARRATION: And this is where that billion dollars of federal money came in: the third leg.

MUSIC: Enter

NARRATION: By early 2005, the Mod Squad inside the Romney administration had coalesced around the idea of an individual mandate. The hope was that the mandate on its own would bring down insurance costs for everyone, by bringing more young, healthy people into the system. But that would not be enough to help people like Rudy, making $30,000 a year. He would need some kind of government help. But not a government health plan, not more Medicaid expansion -- that again was the Democrat approach.

Cindy Gillespie: And none of it was just sitting right.

NARRATION: This is Cindy Gillespie who we heard in the last episode. Remember, she had come to Massachusetts with Romney from the Olympics, and remained a trusted advisor as he weighed his options on healthcare.

Cindy Gillespie: You know, I mean the governor was not responding with that's it. That's it.

And then one day, Tim and Brian go up to DC for some meetings. They come back and they are, I mean, they are just jumping, they're so excited. I mean, they are so excited. They got this concept about an exchange.

MUSIC: Out

NARRATION: Here we find yet another strange coincidence: this meeting was at a little DC-based conservative think tank called The Heritage Foundation.

Ed Haislmaier: Essentially, they laid out their situation.

NARRATION: With a Heritage fellow named Ed Haislmaier, who we met before.

Ian Coss: And what'd you tell him?

Ed Haislmaier: And we said, "Well yeah, it sounds like a good idea. And by the way, we've been working on something you might be interested in." And that was the aha moment.

MUSIC: Transition

NARRATION: Think about what Airbnb does for home rentals, or eBay does for antiques, or CarMax does for cars. It's an open market, where you can see all the options and choose for yourself. That did not exist in the world of healthcare – there was no place where health plans could compete directly for your business, where that competition would keep them honest

Ed Haislmaier: I started calling it a health insurance exchange because I was trying to get across the idea that it was a clearing house for people to compare individual market plans and pick one.

NARRATION: And if this is all sounding familiar, that’s because what Haislmaier is describing is what we know today as the Health Insurance Marketplace, or the Obamacare Exchange. It's the thing you find if you go to healthcare.gov. It’s the final leg of the stool. And if the Heritage Foundation refuses any credit for the mandate, they are happy to own this one.

MUSIC: Out

NARRATION: Now at this time in 2005, the healthcare exchange was entirely conceptual. Then, enter Tim and Brian from the Romney Mod Squad.

Tim Murphy: Got it. I got it.

NARRATION: For Tim Murphy in particular, that first meeting was a real catalyst moment.

Tim Murphy: That's not exactly how we can do it in Massachusetts, but I got it.

NARRATION: He flew straight back to Boston, went to the state house, and began putting the ideas on paper.

Tim Murphy: And I remember the next morning I came in and I threw it on Wheelan's desk and he's like, ‘Oh, I guess someone was working all night.’

MUSIC: Enter

NARRATION: At this point we are well into the spring of 2005. For reference -- the tag team pitch session for the Wisconsin Badgers-loving Health Secretary, that was in January 2005. So the state is pretty sure they can keep this pot of federal money, as long as they are using it to get people private insurance.

And the Heritage exchange concept could do just that. The state could plow that billion dollars of federal money right into the exchange, where it became personal subsidies for people like Rudy -- the guy who hadn't seen a doctor since he was a teenager. He would be able to shop around for the plan that fit him best, and actually afford it. All the pieces working together.

Cindy Gillespie: And as soon as they lay it out, you know, you're just, you can't help yourself just start grinning going. That's cool.

NARRATION: Again, Cindy Gillespie.

Cindy Gillespie: Run up, show it to the governor, who's like, that could work. That could work. I mean, it's like the last piece had finally come together. The piece we could not figure out 'cause everybody was still stuck in the, does the government offer a plan and people buy into it? You know what I mean? It's just the same old, same old, and all of a sudden it's like, oh, wow, that could work.

MUSIC: Out

NARRATION: By the summer of 2005 the three-legged stool was assembled. The pragmatic, PowerPoint loving Governor had his policy. There was just one problem.

Archival: Tonight on Greater Boston Governor Mitt Romney looking to trade his corner office for a presidential run.

NARRATION: Mitt Romney also wanted to run for president, and 2005 was the year that became abundantly clear.

Archival: No amount of reassurance from Governor Mitt Romney or his aides can stop speculation that the Gov has his sights set on the White House rather than the state house.

NARRATION: First there were the out of state trips to key primary states -- a summer vacation in New Hampshire, a stopover in Iowa. There were appearances at national Republican events -- banquets, speeches. And then there were the pivots -- mostly on social issues.

Archival: Every child has the right to have a mother and a father.

Romney has started to take that tougher stance nationally on the gay marriage issue….

NARRATION: Gay marriage, stem cell research, abortion, adoption.

Archival: He now says he's always opposed civil unions.

NARRATION: In a way, Romney's hand was forced on these issues. In 2004, Massachusetts became the first state in the country to legalize same sex marriage. At the same time, the legislature was moving to expand access to abortion.   And just across the river, Harvard was launching an entire stem cell research institute.

Archival: No to cloning human embryos, creating new life, new embryos.

NARRATION: So this was all happening on Romney's watch, just as he was thinking about how to present himself in a Republican primary.

Archival: An ethical line we don't wanna cross.

NARRATION: In the past, Romney had always been cautious on social issues. He knew his national party was out of step with the state he served. So he would sometimes make his personal views known, but not try and push them. Now in 2005, it was like Romney was looking for a fight, even on issues where he knew he would lose.

Archival: On the road, Romney has called himself a red speck in a blue state.

Brian Wheelan: He was posturing. The abortion stuff was posturing.

NARRATION: Again, Brian Wheelan.

Brian Wheelan: You know, occasionally he'd get that national stage and you weren't getting the guy that you worked for.

Archival: Being a conservative Republican in Massachusetts is a, uh, a bit like being a cattle rancher at a vegetarian convention.

And sure enough…

NARRATION: Even for Brian, who worshipped Mitt Romney, who loved what the man stood for, all this posturing for national Republicans became incredibly frustrating. I mean the race was still three years away -- and here it was dominating the conversation.

Brian Wheelan: Unless you are gay or gonna be married, or having an abortion, like, you couldn't get the governor's attention for a period like in ‘04, ‘05, it was like, ‘Hey, come on. We got shit to do here.’

NARRATION: And that looming shadow of national politics would only grow larger as time went on. It hung over everything the administration did, including healthcare reform.

MUSIC: Enter

NARRATION: There is a simple narrative about Romneycare -- and the individual mandate in particular -- that says: Republicans were all for the idea right up until Obama embraced it, and then they were all against it. A complete and cynical 180. The reality is more complicated. As I've been trying to stress, the mandate always had a kind of murky political coding. It could be read in terms of personal responsibility and market efficiency, or it could be read as a government imposition, heavy handed regulation. Mitt Romney knew all this in 2005. His political advisers knew this in 2005. They were never naive about the fact that the individual mandate could come back to haunt them. And right up into June of that year, it remained an open question as to which side of Mitt Romney's personality would win out: the wonky pragmatist, or the calculating politician.

MUSIC: Out

NARRATION: In June of 2005, Mitt Romney gathered his inner circle around a long polished table on the third floor of the state house.  Tim and Brian were there. Cindy Gillespie was there. And a pair of the Governor's top political advisers as well. Mitt sat at the head of the table. 

Later that month, Romney was scheduled to give a speech before a gathering of the state's top healthcare insiders. It was his chance to introduce everything they'd been working on -- to lay out a vision for reform. And so the time had come to make a call on the individual mandate. Yes or no.

Tim Murphy: Here are the numbers, here's what it is. And we lay the facts, right? 'cause we were, we were those guys.

NARRATION: Tim and Brian started by recapping the basic options on the table.

Tim Murphy: And then it starts, right?

MUSIC: Post

Tim Murphy: Yeah, there are people who sometimes will be like, everybody talks and then I'll talk. I'm the last person who talks. He's not exactly like that.

NARRATION: Right away, Romney had questions about the mandate -- policy questions -- but the data on that point was pretty clear.

Cindy Gillespie: You know, the numbers didn't work without it.

NARRATION: Then from the political side of the table, there were questions about how Romney would position this idea nationally -- how would the mandate play on Fox News? How would it play in Iowa?  In South Carolina?

Cindy Gillespie: And Mitt understood that it wasn't necessarily a popular way to go but he also knew that without it, he really wasn't solving the problem.

MUSIC: Out

NARRATION: There's something this debate brings up for me that’s obvious, but I think worth saying, which is that healthcare is one of our most basic human needs. Right up there with food, water, shelter, sleep -- the things we truly need to survive. But unlike those other needs, healthcare by its very nature is something we cannot provide for ourselves. When we are sick, when we are elderly, when we are injured, or in labor, or in a mental health crisis -- that is when we need other people.

So if you step back from all the details about mandates and markets and premiums, health policy is fundamentally about what we owe and expect from each other as members of a society. What it means to be members of a society. Because we truly are all in this together: rich and poor, citizens and undocumented immigrants; me, my mom, Rudy, the mechanic, Tim, Brian, Cindy, Mitt. All of us. So what rights and obligations do we have to each other as parts of that whole?

No amount of data or polling can make that kind of decision. As Tim Murphy recalls, at some point in the conversation they just put all the numbers to the side. The individual mandate really came down to a question of principle.

Tim Murphy: And so it was kind of that kind of a back and forth, like, you know, so who's taking responsibility? Who's not taking responsibility? And all the implications of putting this in our bill.

Ian Coss: And that really was the last big policy decision in the run up to announcing the bill? It was right down to the wire?

Tim Murphy: It was right down to the wire on that one. Because it was, as I said, it was more philosophical than it was analytic.

MUSIC: Enter

NARRATION: The meeting came to a close. The fate of the mandate was now in the Governor's hands.

Cindy Gillespie: When we left the meeting, there was a version with it and a version without it. And I didn't know which version he was gonna use.

Tim Murphy: And ultimately look, it's one person who gets to make that decision.

Archival: People take their seats please now, we'll begin in a minute.

NARRATION: On June 21st, the Blue Cross Blue Shield Foundation held a forum event -- one of a series of forums -- designed to push the issue of healthcare forward. It was at the JFK Presidential Library, with the stage set up against a giant glass window, overlooking Boston Harbor.

Archival: This is an obedient group…

Cindy Gillespie: Huge room. And as Tim and Brian always say the healthcare intelligentsia of the state was all there. Everybody that was anybody in healthcare was there.

NARRATION: Hospital executives, insurers, doctors, academics, journalists -- all seated banquet style at big tables.

Archival: And I wanna welcome all of you to today's healthcare coverage summit.

Cindy Gillespie: And so I was actually standing there at the forum watching, thinking, are we doing a mandate or not? Are we doing a mandate or not?

NARRATION: Finally, Romney himself got up to speak. He had slides, of course, and the projector screen was hanging right over that giant plate glass window, so it was framed by water, islands, the city skyline in the distance. Cindy Gillespie had seen the slides in advance. So she knew the team had prepared one on the individual mandate, she just wasn't sure if that slide made it into the final deck.

Then Romney starts laying out the pieces: the exchange, the subsidies, the reforms...the mandate.

Cindy Gillespie: And then it pops up and I was like, Okay. And it didn't surprise me because Mitt solves problems. It is in his DNA, so a half solution doesn't work.

MUSIC: Enter

Archival: We will be reconvening at precisely 10:40, so don't be late.

NARRATION: With that presentation, Mitt Romney had tied his political fortunes to the individual mandate, and I think even with all warnings from his advisors, all the careful positioning and planning, there is no way he could have imagined just how fateful that choice would be.

MUSIC: Post

NARRATION: But that would all come later. First Romney had a bill to pass, and a deadline: July 1st, 2006. Exactly one year to pass these ideas into law, and get the new system up and running. Otherwise, all that federal money would once again be gone.

So no, Mitt Romney could not spend his final year in office waging culture war fights and visiting primary states. He would have to go back to the same legislators he was fighting on abortion and gay marriage and stem cells. He would have to deal with them, and his perfect tripod of a bill would have to change.

Archival: I simply propose changing the word Commonwealth care contribution and replacing them with the words jobs tax. Thank you, Mr. Speaker…

That's next time.

Archival: …members of this conversation. Attention to the gentleman…

CREDITS

The Big Dig is produced by Isabel Hibbard and myself, Ian Coss. It’s edited by Lacy Roberts. The editorial supervisor is Azita Ghahramani (Ga-rah-MAH-nee) with support from Ryan Alderman. And the Executive Producer is Devin Maverick Robins. 

A special thank you to Wharton School economist Mark Pauly; he was the one who described the voluntarily uninsured as the Evel Knievels of health insurance, but we weren’t able to include his interview.

Thank you as well to The Heritage Foundation for helping record our interview with Ed Haislmaier, and to the Blue Cross Blue Shield of Massachusetts Foundation for generously entrusting me with a whole stack of VHS tapes from their own archive.

The artwork is by Bill Miller. Our closing song is “Things Will Be Different,” by The Shods. The Big Dig is a production of GBH News and distributed by PRX.