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Talking to Iran; Bay State Health Insurance

The Journal Editorial Report

Paul Gigot: This week on "The Journal Editorial Report":

Condoleezza Rice: The Iranian regime can decide on one of two paths, one of two fundamentally different futures for its people and for its relationship to the international community.

Gigot: Negotiating with Iran. Is the Bush administration playing into the hands ever the mullahs? Plus, health insurance for all. Massachusetts governor Mitt Romney is here to defend a plan some are calling a big-government reform. But first, these headlines.

Gigot: Welcome to "The Journal Editorial Report." I'm Paul Gigot.

In a surprising policy reversal, Secretary of State Condoleezza Rice offered to negotiate directly with Iran this week, providing that country agrees to suspend all uranium enrichment and cooperate with U.N. arms inspectors. The move drew praise from many in the international community, but so far a cool reception from Tehran. Is the U.S. playing into the mullahs' hands? Joining the panel this week, Wall Street Journal columnist and deputy editor Dan Henninger, foreign-affairs columnist Bret Stephens and editorial board member Rob Pollock.

Bret, the administration is arguing that this new proposal will keep the allies together and will allow them to smoke out Iran's real intentions. Do you agree?

Stephens: Well, it'll keep the allies together for the next few weeks. But Iran's intentions were already smoked out just in the last few days. Dr. Rice made an offer; the Iranians said no. They intend to go forward with nuclear enrichment, and they intend to go forward for one very clear reason, which is this: Every time they misbehave, the West makes even greater concessions. They did so with the Europeans. They did so with the Russians. And now, they have the biggest prize, the Americans. They're just going to keep going along this path because, even if they lose, they still get the bomb.

Gigot: What do you think about that, Rob?

Pollock: Well, let me say, I think there's one virtue in this talks offer, which is that it does finally put an end to the pretense that the talks, led by the EU-3--that is, Britain, France and Germany--were getting anywhere in terms of a solution to the Iranian problem. So I've got no problem with that. And I think talking is OK. But what's the end game here? I mean, it appears to me--I mean, look, if the end game was to tell the Iranians, Disarm verifiably, like Gadhafi did, or there's going to be air strikes, I would be absolutely fine with talks. If what we're up to here is to tell them, Look, do what Mohamed ElBaradei tells you, and if you don't, you're going to face some kind of weak U.N. sanctions. But look, I don't think they're very afraid of that. They're probably saying, Yes, please throw us in the brier patch.

Gigot: Mohamed ElBaradei being the chief U.N. arms inspector.

Pollock: Yes.

Gigot: But let me read you a quote from David Brooks, our former colleague, now works at the New York Times. He said about this, "They have put Iran on the defensive and forced the different factions in the regime to argue about what sort of country they wish to become."

Stephens: This is particularly a bad point that Brooks makes. Because we did have an opportunity to really exploit existing divisions in the regime between Ahmadinejad and people like Rafsanjani, the former president; between Khamenei, the supreme leader, and Ahmadinejad. But what we've managed to do is we've empowered Ahmadinejad, or we've made him more powerful, because we've said, OK, we're willing to negotiate with your government. There were a number of things we could have done. We could have applied terrorism-financing laws. We could have threatened the supply of refined gasoline to Iran; Iran imports 40% of its refined gasoline. There were things we could have done to have brought pressure on that regime unilaterally, without going to the Europeans, that could have really exploited those divisions and made the Iranians think twice. We didn't do that.

Gigot: But the administration would have been isolated if it did that, Bret. I mean, my sources say the administration felt that they had to do this in order to get the Russians on board, and otherwise this whole united front we've been presenting would have collapsed.

Henninger: You know, there's something to that. But I think the Russians are the real wild card in this negotiation. Because Russia has its own interest. It has aspirations to returning to superpower-like status. One route into that is to reassert its regional authority in the Middle East. It would like to make an Iran a client state of the Russians. Russia sold 30 antimissile systems to the Iranians for a billion dollars. They have an enormous amount of nuclear technology that they want to sell to the Iranians. I wouldn't be surprised at all if there's a point in these negotiations where what the Russians put on the table is an explicit ban on the military option.

Gigot: But the administration is basically saying the Russians have now agreed, if Iran doesn't accept this deal, to some kind of sanctions. Are you saying that that's just a pipe dream?

Henninger: No, I think it could happen. But I think the Russians are going to play an ace in the hole when the negotiations are further along the line.

Pollock: Yeah, and, look, I'd like to challenge the fundamental assumption that the administration is still buying into here, which is negotiations are somehow the "responsible" course of action here. I mean, that may be true for a certain period of time. But given what we know, which is that this is the No. 1 state sponsor of terrorism in the world, determined to acquire a nuclear bomb, at some point we're going to have to come to a realization that negotiations are not responsible, but in fact a dereliction of the president's fundamental constitutional duty, which is to defend the American people.

Gigot: Already we're seeing that Tehran is saying, Look, sure we'll be happy to talk with you. But we want to do so without any preconditions at all. We're not going to suspend enrichment. We're not going to agree with that. Let's sit down and talk about it. Where do these negotiations go next, Bret?

Stephens: Remember, Iran lied to the IAEA about its nuclear programs for almost 18 years. They then basically bamboozled the Europeans for the next three years. And what I think is going to happen now is they're going to play the same game with the Americans for as long as they can. Look, for the Iranians, they're simply playing down the clock. They have one year, maybe two years to go before they have some kind of real nuclear capability. And that's--you know, we keep saying, Well, time is on our side. You know, if these negotiations fail, we'll be able to impose sanctions. We'll be able to do a variety of things. I don't think time is on our side at all.

Henninger: The one thing you mentioned--but time, that's the one thing.

Gigot: There's no timeline on this offer.

Henninger: There has to be a timeline, though. I mean, we put a deadline and we can reach the point where we put the sanctions issue on the table. Otherwise, we'll never reach that point without a deadline.

Gigot: Dan, we don't have a lot of time, but one of the dangers here is the mixed message it sends to the Iranian opposition. We've been saying--look, it's an unpopular regime. But we've been saying to the people who are opposed to it, Look, we're on your side; we want freedom. This sends a message that on the one hand, we're dealing with the regime and it gives it a little bit of legitimacy. At the same time, we want to say no, we don't like the regime. That's a tough message to sell.

Henninger: Yeah. The only real reason--I mean, like David Brooks said, sure, stir the pot internally among their politics, but I think it devalues the opposition inside Iran, and they're going to lose heart.

Gigot: OK. All right, thank you, Dan. Thank you all. When we come back, Massachusetts miracle or bad medicine? The Bay State passes a sweeping measure requiring health insurance for every citizen amid charges of expensive mandates and government intrusion. Gov. Mitt Romney answers his critics, next.

Gigot: Welcome back. In a groundbreaking move, Massachusetts adopted a law in April that requires all state residents to obtain medical insurance by July 1, 2007. Starting next year, those who don't have coverage will lose their state income tax deduction and face a monthly fee, while low-income residents will have access to state-subsidized insurance policies. Although the plan has been praised by many, it has some conservatives chafing at the prospect of new government mandates. Massachusetts governor Mitt Romney joins me now from Boston. Welcome, Governor.

Romney: Thanks, Paul. Good to be with you.

Gigot: One of the criticisms of your plan I have heard from several people is that you require people to offer health insurance but without first deregulating the insurance market. How do you respond to that?

Romney: Well, our system does allow for people to be able to buy private health-insurance policies. And what we've done is we've made our policies have a great deal more flexibility than ever before in our state, for much more substantial deductibles and copayments. We're going to have policies which, instead of costing $350 a month for individuals, will now be priced at about $200 a month. That kind of change allows people to be able to afford policies that couldn't afford them in the past. And right now, we've got hundreds of thousands of people in our state that are getting free health care, paid for by taxpayers, because they show up at hospitals without insurance, even though they could afford to buy a policy if it were reasonably priced.

Gigot: Well, that free-rider problem, as it's sometimes called, is a real problem. But some people say it's not as big a problem as the mandates that are passed by politicians in the state that require certain kinds of coverages and so on. Do you think that the mandate problem is the real problem in driving up the cost of health insurance in Massachusetts? And your bill really didn't do much to change that.

Romney: Well, actually my bill asked for all of the mandates to be stripped out of the policies, but the Legislature turned that down, as you might imagine. We've worked with the insurance companies here, all the private companies, and said, Look, how do you get our premiums down to a level where people can afford them, people who are not now insured? And they said, Look, the big drivers of cost of an insurance policy are, No. 1, the size of the deductible; No. 2, the copays; and No. 3, whether you can direct the beneficiary to go to a certain network, a directed network if you will, of suppliers.

And if you do those things, those are what's critical for getting the price down. Whether you have mandates on mental health coverage and so forth is less important to them. Although we do have some flexibility in the law that got passed by the Legislature, I'd like more. But what we have is what we need in order to have policies people can afford. And frankly, the cost of free riders--and that's hundreds of thousands of people who can afford to buy health insurance but choose not to buy it because they get health care free by the taxpayers' picking up their bill--that's something which is a huge burden on our system. It's driving up costs of health care across the country. And that's what we're taking aim at.

Gigot: The Council for Affordable Health Insurance, whichh follows these things around the country, says that a family of four with a standard Blue Cross policy in La Crosse, Wis., with a $250 deductible, would pay about 600 bucks a month for a policy. But in Boston, it's over $1,400 a month, and that's in part because of, I guess, the particular rules in Massachusetts. How do you get that price down?

Romney: Well, that's the great thing about our plan, which is that we've gone to the insurance companies and they said, If you can let us put in place higher deductibles, higher copays and directed networks, and if you insist that all of our citizens participate, instead of just having the adverse selection of the very sick buy the policy, instead everybody now plays. As a result of doing that, they get the prices of the premiums way down. And people are now able to afford products that they couldn't afford prior to this legislation being put in place.

Gigot: You going to do anything about what they call guaranteed issue or community rating--community rating, for example, which requires that you charge the same price for insurance regardless of the risk and the health of the individual?

Romney: Well, what we do in our plan is that we have tranches, if you will, of community ratings so that we look at groups of people of the same age group and so forth and price them all at the same level. But because we're going to have everybody insured, no one is being left out. Everyone in our state will have health insurance. We of course are going to require that insurance companies can't pick and choose. They're going to take the whole population. Otherwise, those that would be left behind would have to get picked up by government. And that's what we want to end.

What we're really doing here is saying, You know what? The free market does work. If we let people buy private health insurance plans, and insist that if they can afford to do so, they do it, we can get government out of the business of handing out free care. And that's what we're been doing in our state to the tune of more than a billion dollars a year. That's what this is about. Get the market to work well. Get everybody insured inside the system rather than people getting free health care paid for by everybody else.

Gigot: Let's talk about the employer component of this. There was a levee on employers who don't insure employees of $295 for each employee. You vetoed that. The Legislature overrode you. But that's going to go up in the future, that fee, is it not?

Romney: Well, I think it'll actually disappear. It is kind of, in my view, kind of a silly add-on that the Legislature tacked on at the very end. It's not necessary for the plan at all. It raises a very small amount of money. I think it was just a face-saving kind of change that they wanted to put in place. It applies to a very small percent--2%, 3%, 4% of our employers. And you can avoid the fee altogether by insuring one employee. So if you have 500 employees and you insure one, there's no fee at all. So it's kind of a silly proposal in my opinion, and that's why I vetoed it. It's unnecessary. It'll go away. This is fundamentally a plan which is based on individuals being helped to get their own private health-insurance policy.

Gigot: Governor, you've been mentioned as somebody who might want to go--might have some national ambitions. Is this something--is your plan something that you think that Washington should consider for the whole country?

Romney: Well, there are some aspects of what we are doing that could well be applicable to the rest of the country. One is, we found a way to allow people to buy their own insurance policy with pretax dollars. In the past, you could only get that outcome by having your employer buy your policy for you. So that's an innovation that I think is important nationwide. I think also--John Goodman, who's president of the National Center for Policy Analysis, he looks at the same issue and says, Look, we're already spending all the money in giving out free care. We've got to turn the money we're spending into getting people to buy their insurance policies. That principle, which we've applied here, may be applied in different ways by different states. But the overall principle really does have applicability generally.

And fundamentally, you know, we have a massive health-care crisis in this country, not just those that don't have insurance, but the extraordinary cost of health care. We're not going to solve either of those problems until we get everybody inside the system, having insurance, going to get their care in the appropriate setting. These are changes which we have to see, or we're going to continue to see skyrocketing costs in health care.

Gigot: All right, Gov. Mitt Romney, thanks.

Romney: Thank you, Paul.

Gigot: Coming up, is the Massachusetts plan a good model for other states, or is it merely a mandate for more government spending? Our panel weighs in when "The Journal Editorial Report" continues.

Gigot: We're back with more on Massachusetts' universal health-care plan. Rob, you heard the governor. Heritage Foundation, a conservative think tank, supports this plan. It does something about the uninsured. What do you think?

Pollock: Well, I think if it's going to do something it's going to do something at huge expense both to the taxpayers and the economy. Look, there's a reason why liberals like Ted Kennedy love this bill. The essence of it is really subsidy and compulsion. It has some market elements, but they're not the dominant elements of it. And frankly, I find it a little offensive when the governor comes on and talks about the so-called free-rider problem after it was politicians who made insurance in Connecticut so expensive that many people couldn't afford it. I mean, basically they create the problem. Then they say people are gaming the system by not buying insurance.

Look, if Romney really wanted to do something about the fundamental issue, which is affordability, all he had to do was look at the regulations in next-door Connecticut, where a person in their 30s can buy a policy for major medical for something like $40 a month.

Gigot: Right.

Pollock: I mean, very affordable. That's all they had to do was copy the Connecticut regulations.

Gigot: Well, it's tough to do that in a liberal state like Massachusetts.

Henninger: Well, the problem--yeah, that's exactly the point. Massachusetts has this incredibly liberal legislature. And he's just sort of imposed a market-like system on a highly regulated, highly expensive system.

Gigot: Right.

Henninger: One particular point: There is no deductible in the program. So they're going to be very expensive policies that will have to be subsidized by somebody. That creates an incentive to increase taxes to create the subsidy, which will flow back to the insurance companies and make them willing to offer these plans.

Gigot: EHealthInsurance.com, which is a Web-based insurance provider, doesn't even operate in the individual market in Massachusetts, does it?

Pollock: That's right. They operate in almost all states of the country, but not Massachusetts because of the heavy regulations. Look, what this plan says to me fundamentally is that we need a national market for health insurance. It's absolutely crazy in the Internet age to have, you know, 50 different sets of insurance regulations. What we ought to be going for is a model where, you know, we can go online to something like eHealthInsurance and pick policies from any vendor in any state of the country and--and--.

Gigot: So if you're in Massachusetts, a very expensive state with a lot of mandates, you can buy an insurance policy for somebody in Connecticut or Pennsylvania or someplace where it is more affordable, because they have fewer of these rules and regulations. That's what you're saying.

Pollock: Absolutely. And banking already works that way. So it's hardly unprecedented in the financial-services sector.

Gigot: Bret, the governor, nonetheless, is getting a lot of credit for this--for addressing an issue, health care, that a lot of the Republicans just run from, they don't want to have anything to do with; and for getting things done and working in a bipartisan fashion. Do you think this could be the kind of issue that helps him as he seeks the Republican nomination?

Stephens: Absolutely. I mean, you saw how he comes across. He's smart. He's well-informed. And he's providing solutions and working with his Democratic opposition. I think he deserves a certain amount of credit, more so than maybe we've been willing to give him. I think the other thing about the plan that's interesting is he does take the 20% or so of uninsured people who are eligible for Medicaid and gets them into Medicaid. And he manages effectively to identify really the 40% of people who exist somewhere between being eligible for Medicaid and being able to afford health insurance, who are really sort of the heart of this problem.

Now, whether the solution he offers is the right one, I'm not so sure. But he has been a proactive, effective politician in a Democratic state. And I think that's going to give him a national platform.

Gigot: And more than the Republican Congress, he actually can say I've accomplished something. All right, Bret, thanks. We have to take one more break. When we come back, our "Hits and Misses" of the week.

Gigot: Winners and losers, picks and pans, "Hits and Misses." It's our way of calling attention to the best and the worst of the week. Item one, 14 days and a quarter of a million dollars later, Jimmy Hoffa is still missing. Dan?

Henninger: Yes he is. Jimmy Hoffa has been missing since 1975, when the former head of the Teamsters Union disappeared, possibly rubbed out by the Mob. Ever since, one of the great mysteries of American life is, Where is Jimmy Hoffa buried? It was thought at one point that he was actually buried in the end zone at Giants Stadium in the Meadowlands. Well, about two weeks ago, the FBI got a tip that he might be buried on a farm in northern Michigan. So they sent 20 agents up there and trailers and backhoes, and they stripped the farm and knocked down the barn. And they found nothing. Well, people are making fun of the FBI. But you know what? I find it kind of endearing. I think it bespeaks a more innocent time when instead of chasing Islamic terrorists all over the country, the FBI was looking for where Jimmy Hoffa was buried. So, yes, it's a miss, but it's a kind of endearing miss.


Gigot: All right. Next, environmentalist kicked off the 2006 hurricane season this week by calling on the country's chief storm forecaster to resign. Bret?

Stephens: Yeah, well, Poor Max Mayfield. A group called the U.S. Emergency Climate Council is demanding the resignation of the National Hurricane Center because Mr. Mayfield refuses to accept the purported obvious link between global warming and hurricane intensity. And this was supposed to be a rally that would draw hundreds of people. In fact only 30 showed up, which tells you something. But what I really find sort of interesting about this moment is that the global-warming fanatics have been telling us for a long time that the scientific consensus is on their side. Well, I looked into the literature. I've gone through it. And there is no scientific consensus--we should say it clearly--linking global warming to hurricane intensity. Mr. Mayfield is right. The protesters are wrong. And it's once again an example of whose side sound science is on.

Gigot: All right, thanks, Bret. Finally, not normally sympathetic to big tort claims, Rob Pollock wants to make an exception for this one. Rob?

Pollock: Well, we have an awfully sympathetic plaintiff here in the person of Sgt. Peter Damon, who's a double-amputee veteran of the Iraq war who's suing Michael Moore and other producers of the movie "Fahrenheit 9/11" allegedly for falsely portraying him as some kind of disgruntled veteran who was left behind by the Bush administration. In fact, Sgt. Damon says, I don't feel left behind at all. I strongly support the president, strongly support the war.

In fact, he gave this amazing quote: "It was kind of like the enemy was using me for propaganda. I didn't lose my arms over there to come back and be used as ammunition against my commander in chief."

Gigot: All right, thanks, Rob. That's it for this week's edition of "The Journal Editorial Report." Thanks to Dan Henninger, Bret Stephens and Rob Pollock. I'm Paul Gigot. Thank you all for watching. And we hope to see you next week.

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