WHEB Commentary

‘U-Turn if you want to’ – Mitt Romney’s about-turn on Obamacare


Mitt Romney famously pledged to repeal the entirety of Obama’s Affordable Care Act earlier this year when standing as a candidate for President of the United States. Yet on Sunday 9th September, in a television interview, he modified his position, saying: “Well, I’m not getting rid of health care reform.” He has subsequently pledged to keep various parts of the healthcare reform known as ‘Obamacare’. Specifically, he will ensure that those with pre-existing conditions can get health insurance, and he will ensure that individuals can have cover for their families up to whatever age they like.

These are two of the most popular aspects of Obama’s healthcare reform and so Romney’s tactic is clearly designed to win back the middle ground in America.

When Governor of Massachusetts, Romney enacted a healthcare plan that became the model for Obama’s reforms. This is a significant shift for Romney and is now being seen as a U-turn. The original plan to repeal the entire act served as a vivid illustration of how polarised American politics has become. Opposition to the healthcare law has been a central theme of his campaign and Romney has said that repeal of the law would be one of his first actions as President. Now he says he will keep the most popular parts of healthcare reform though free market purists would object to even these aspects of market manipulation.

The most contentious part of healthcare reform is the mandate requiring everyone to buy health insurance. This Romney has not said he will do, but critics point out that if insurance companies are mandated to insure those with pre-existing conditions then the cost of health insurance will rise for everyone else. Then, unless healthy people are mandated to buy insurance, they will be increasingly predisposed to opt out which as economist Paul Krugman points out, leaves behind: “a high-risk, high-cost pool.” Romney surely knows this is unworkable as described so far. We await further developments.

In the meantime, Romney’s U-turn significantly decreases the chances of Obama’s health care reform act being repealed with any swift action or even at all. Romney acknowledges that some parts of it are very popular and
he doesn’t want to oppose them. This is good news for health companies as it reduces the uncertainty about what happens to health care reform which some companies will be beneficiaries of. The WHEB Sustainability Fund has some 30% invested in the Health theme with many of these companies exposed to US health care policy. Healthcare has proved a resilient area for the IM WHEB Sustainability Fund to invest in at a time of economic uncertainty, and this move by Romney serves to reduce some of the political uncertainty surrounding the sector.

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