The substance behind the gaffe

Mitt Romney’s campaign critics — Democrats and Republicans, alike — have had quite a bit of fun today with his “I like being able to fire people” quote. By any fair analysis, the comment has obviously been taken completely out of context, and isn’t a reflection of what Romney was actually saying, though by his standards, out-of-context attacks are fair game.

In any case, while the seven-word phrase may linger for a while, there’s a more relevant question for those who care about the underlying policy argument: gaffe or no gaffe, was Romney right on the substance?

The former governor was talking about health care coverage: “I want individuals to have their own insurance. That means the insurance company will have an incentive to keep you 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.”

More specifically, the reference had to do with moving older Americans away from the traditional Medicare model and into a “premium support” system in which consumers could “fire” insurers who came up short. As consumers shop around, competition, the argument goes, will improve the delivery of health care services.

As Jonathan Cohn explained, Romney probably deserves some slack over the “I like being able to fire people” line, but his take on health care policy deserves more scrutiny.

[U]nfettered choice is not a good thing in health care policy. One reason is that getting good, reliable information about insurance plans is difficult — as anybody who has ever tried to buy coverage on his or her own can attest. Another is that, even in a world with perfect information, the insurance market is prone to a particular kind of failure. Insurers don’t want to pick up bad risks and will do whatever they can to avoid them. Absent regulation, that makes it virtually impossible for people with serious medical conditions to get coverage. As Ezra Klein put it a while back, when Republicans were talking up this idea, “It’s a great proposal if you don’t ever plan to be sick, and if you don’t mind finding out that your insurer doesn’t cover your illness. And it’s the Republican plan for health-care reform.” […]

That doesn’t mean competition can’t have an important place in health care. But government needs to structure and regulate the insurance market aggressively.

The “firing people” line will get all the attention, and I can understand why — the comment lines up remarkably well with Romney’s record of getting rich at the expense of laid off Americans. But as a substantive matter, the fact that the comment came as part of a misguided policy argument is far more important.

Update: Matt Yglesias is thinking along the same lines: Firing your insurance company is not the basis of a workable health insurance system.”