Commentary Magazine


Topic: health insurance

Why the Universal Health-Care Insurance Fetish?

Republicans have been tossing out alternatives to government-centric ObamaCare for some time. They have suggested, among other ideas, that we change the tax treatment of individually purchased insurance plans, reform the tort system, and allow interstate insurance sales. But now Jim Prevor raises an interesting and compelling question: if people want to go without insurance and instead self-insure, why is it the government’s job to stop them? Or put differently:

The fact that the national debate has focused on insurance for health care–as opposed to the accessibility of care–is a byproduct of the particular worldview that all “basic needs” should be provided by communal institutions, preferably the government but, alternatively, highly regulated companies that do the government’s bidding.

Prevor suggests that we ”give families money or vouchers that they could use to buy health insurance or any other thing they deemed helpful to their family’s future” and urges lawmakers to work on the supply side of care, not insurance, by among other things “wreak[ing] havoc on the American Medical Association’s efforts to restrain the supply of doctors.” Along the lines of Prevor’s argument, one of the more successful ventures in the Bush administration was emphasis on community health centers that expand care for needy Americans, quite apart from the insurance part of the equation. And expansion of medical accounts, which allows individuals to either buy insurance or pay for medical cost directly, would, following Prevor’s argument, maintain personal responsibility, individual choice, and make health-care purchases more accessible by allowing individuals to use pre-tax dollars to pay for their own care.

But what of the “cost shifting” problem caused by uninsured people? Well, now that the Democrats propose to dump millions of people into Medicare, which doesn’t fully compensate doctors and hospitals, it appears as though that argument is going by the wayside. Furthermore, as Mike Tanner of CATO has explained, cost shifting in the current system has been exaggerated and may account for a small portion of health-care costs. He notes that “it is a manageable problem. According to Jack Hadley and John Holahan of the left-leaning Urban Institute, uncompensated care for the uninsured amounts to less than 3% of total healthcare spending — a real cost, no doubt, but hardly a crisis.”

Tanner has also addressed the implied assumption of health-care reformers that universal health-care insurance will improve the nation’s collective health. He says that “in reviewing all the academic literature on the subject, Helen Levy of the University of Michigan’s Economic Research Initiative on the Uninsured, and David Meltzer of the University of Chicago, were unable to establish a ‘causal relationship’ between health insurance and better health. Believe it or not, there is ‘no evidence,’ Levy and Meltzer wrote, that expanding insurance coverage is a cost-effective way to promote health.” A New England Journal of Medicine article in 2006 likewise found that “health insurance status was largely unrelated to the quality of care.” It seems as though even if we force people to self-insure, they may not wind up much healthier.

In sum, Prevor raises a key point: the fixation on universal health-care insurance has distorted the health-care debate. It might, as he suggests, be a good time to take a step back and see whether the quest for universal insurance is really where we should be focusing our attention. Maybe it is time, as he puts it, to remember that “the moral imperative is not making everyone buy insurance. The moral imperative is freedom.”

Republicans have been tossing out alternatives to government-centric ObamaCare for some time. They have suggested, among other ideas, that we change the tax treatment of individually purchased insurance plans, reform the tort system, and allow interstate insurance sales. But now Jim Prevor raises an interesting and compelling question: if people want to go without insurance and instead self-insure, why is it the government’s job to stop them? Or put differently:

The fact that the national debate has focused on insurance for health care–as opposed to the accessibility of care–is a byproduct of the particular worldview that all “basic needs” should be provided by communal institutions, preferably the government but, alternatively, highly regulated companies that do the government’s bidding.

Prevor suggests that we ”give families money or vouchers that they could use to buy health insurance or any other thing they deemed helpful to their family’s future” and urges lawmakers to work on the supply side of care, not insurance, by among other things “wreak[ing] havoc on the American Medical Association’s efforts to restrain the supply of doctors.” Along the lines of Prevor’s argument, one of the more successful ventures in the Bush administration was emphasis on community health centers that expand care for needy Americans, quite apart from the insurance part of the equation. And expansion of medical accounts, which allows individuals to either buy insurance or pay for medical cost directly, would, following Prevor’s argument, maintain personal responsibility, individual choice, and make health-care purchases more accessible by allowing individuals to use pre-tax dollars to pay for their own care.

But what of the “cost shifting” problem caused by uninsured people? Well, now that the Democrats propose to dump millions of people into Medicare, which doesn’t fully compensate doctors and hospitals, it appears as though that argument is going by the wayside. Furthermore, as Mike Tanner of CATO has explained, cost shifting in the current system has been exaggerated and may account for a small portion of health-care costs. He notes that “it is a manageable problem. According to Jack Hadley and John Holahan of the left-leaning Urban Institute, uncompensated care for the uninsured amounts to less than 3% of total healthcare spending — a real cost, no doubt, but hardly a crisis.”

Tanner has also addressed the implied assumption of health-care reformers that universal health-care insurance will improve the nation’s collective health. He says that “in reviewing all the academic literature on the subject, Helen Levy of the University of Michigan’s Economic Research Initiative on the Uninsured, and David Meltzer of the University of Chicago, were unable to establish a ‘causal relationship’ between health insurance and better health. Believe it or not, there is ‘no evidence,’ Levy and Meltzer wrote, that expanding insurance coverage is a cost-effective way to promote health.” A New England Journal of Medicine article in 2006 likewise found that “health insurance status was largely unrelated to the quality of care.” It seems as though even if we force people to self-insure, they may not wind up much healthier.

In sum, Prevor raises a key point: the fixation on universal health-care insurance has distorted the health-care debate. It might, as he suggests, be a good time to take a step back and see whether the quest for universal insurance is really where we should be focusing our attention. Maybe it is time, as he puts it, to remember that “the moral imperative is not making everyone buy insurance. The moral imperative is freedom.”

Read Less

The Unraveling

As this report explains, the Obama coalition — made up of diverse groups with conflicting understandings of what he was all about — may be unraveling. There is the “specifically eroding support among young voters and independents — in part because of the president’s economic agenda.” Well, these groups and others have reason to be put off by Obamaism and the Democrats in Congress who have been enabling the lurch to the Left.

With unemployment sky-high among young workers and the prospect of a new mandate to buy health insurance they don’t want and can’t afford, younger voters (who aren’t inclined to turn out in off-year elections anyway) may stand on the sidelines in 2010. In August Michael Barone detailed the anti-youth aspects of Obama’s agenda, noting that even Obama’s cynical foreign policy and indifference to human-rights and democracy promotion don’t offer much for those who bought into the hope-n-change routine:

That leads me to wonder whether you were dismayed when Obama responded with stony indifference to the people in the streets of Iran protesting a fraudulent election and demanding freedom and democracy. Some called for the end of a regime that subordinates women and executes homosexuals, things I’m sure you don’t like at all. Although Obama eventually indicated some sympathy, he seemed to regard those demands as a nuisance getting in the way of negotiating with President Mahmoud Ahmadinejad and the mullahs.

Independents seem to be souring on Obamaism — huge spending, nasty partisanship, and massive debt. Then there are wealthy voters who are discovering just how expensive Obama’s economic agenda might be. In June the Wall Street Journal reported:

Recently elected Democrats from higher-income areas also have been cautious about legislation that would make it easier for labor unions to organize, and about legislation imposing tough new rules on banks. Republicans have savaged the new Democrats for supporting legislation to stem global warming by capping greenhouse-gas emissions, then forcing polluters to purchase and trade emissions.

The real kicker will be the Democrats’ insistence on a massive tax hike — allowing the Bush 2001 and 2003 tax cuts to expire. Combined with health-care taxes, marginal rates on the wealthy may return to pre-Reagan-tax-cut levels. That will be quite a wake-up call for the professional class that supported Obama in great numbers. Congressmen are not unaware of this:

“They’re just hanging themselves,” says Republican Rep. Sam Graves, who last year beat back a spirited challenge in his northwestern Missouri district, which includes suburban Kansas City, and said he is looking forward to a race on taxes in 2010.

The tax issue is presenting many new Democrats with a quandary as they struggle to get their political footing. “These members are going to have to make their own determinations on how to balance these interests,” said Maryland Rep. Chris Van Hollen, chairman of the Democratic Congressional Campaign Committee and himself a representative of the affluent suburbs of Washington.

And finally, the Left is now miffed at Obama for failing to live up to netroots’ fondest dreams. They haven’t gotten gay marriage, a pullout from Iraq and Afghanistan, or repeal of the Patriot Act. They are grumbling that insufficient progress has been made on their extreme environmental agenda.

In sum, Obama is losing factions of his political coalition in record speed as these groups learn what his agenda is all about. His Democratic allies are likely to bear the brunt of that in 2010 — at a time when the economy has not yet recovered and unemployment is still high. This is why 2010 may, in fact, be a “wave” election and a bracing wake-up call for the White House.

As this report explains, the Obama coalition — made up of diverse groups with conflicting understandings of what he was all about — may be unraveling. There is the “specifically eroding support among young voters and independents — in part because of the president’s economic agenda.” Well, these groups and others have reason to be put off by Obamaism and the Democrats in Congress who have been enabling the lurch to the Left.

With unemployment sky-high among young workers and the prospect of a new mandate to buy health insurance they don’t want and can’t afford, younger voters (who aren’t inclined to turn out in off-year elections anyway) may stand on the sidelines in 2010. In August Michael Barone detailed the anti-youth aspects of Obama’s agenda, noting that even Obama’s cynical foreign policy and indifference to human-rights and democracy promotion don’t offer much for those who bought into the hope-n-change routine:

That leads me to wonder whether you were dismayed when Obama responded with stony indifference to the people in the streets of Iran protesting a fraudulent election and demanding freedom and democracy. Some called for the end of a regime that subordinates women and executes homosexuals, things I’m sure you don’t like at all. Although Obama eventually indicated some sympathy, he seemed to regard those demands as a nuisance getting in the way of negotiating with President Mahmoud Ahmadinejad and the mullahs.

Independents seem to be souring on Obamaism — huge spending, nasty partisanship, and massive debt. Then there are wealthy voters who are discovering just how expensive Obama’s economic agenda might be. In June the Wall Street Journal reported:

Recently elected Democrats from higher-income areas also have been cautious about legislation that would make it easier for labor unions to organize, and about legislation imposing tough new rules on banks. Republicans have savaged the new Democrats for supporting legislation to stem global warming by capping greenhouse-gas emissions, then forcing polluters to purchase and trade emissions.

The real kicker will be the Democrats’ insistence on a massive tax hike — allowing the Bush 2001 and 2003 tax cuts to expire. Combined with health-care taxes, marginal rates on the wealthy may return to pre-Reagan-tax-cut levels. That will be quite a wake-up call for the professional class that supported Obama in great numbers. Congressmen are not unaware of this:

“They’re just hanging themselves,” says Republican Rep. Sam Graves, who last year beat back a spirited challenge in his northwestern Missouri district, which includes suburban Kansas City, and said he is looking forward to a race on taxes in 2010.

The tax issue is presenting many new Democrats with a quandary as they struggle to get their political footing. “These members are going to have to make their own determinations on how to balance these interests,” said Maryland Rep. Chris Van Hollen, chairman of the Democratic Congressional Campaign Committee and himself a representative of the affluent suburbs of Washington.

And finally, the Left is now miffed at Obama for failing to live up to netroots’ fondest dreams. They haven’t gotten gay marriage, a pullout from Iraq and Afghanistan, or repeal of the Patriot Act. They are grumbling that insufficient progress has been made on their extreme environmental agenda.

In sum, Obama is losing factions of his political coalition in record speed as these groups learn what his agenda is all about. His Democratic allies are likely to bear the brunt of that in 2010 — at a time when the economy has not yet recovered and unemployment is still high. This is why 2010 may, in fact, be a “wave” election and a bracing wake-up call for the White House.

Read Less

New York Times, Meet Milton Friedman

Since John has awarded the prize for the most ridiculous headline to the Times, let’s make it a twofer and give the Times the dumbest opening paragraph as well.

The Senate voted Thursday to require health insurance companies to provide free mammograms and other preventive services to women, and it turned back a Republican challenge to Medicare savings that constitute the single largest source of financing for the bill.

Just as there are no free lunches, there are no free mammograms either. The insurance companies will pass the cost along to the policy holders in the form of higher premiums. These politically imposed mandates are a major reason why health insurance is so much more costly in states like New York and New Jersey than it is in neighboring states like Connecticut and Pennsylvania. A family policy that costs $12,250 a year in New York costs only $7,750 a year next door in Connecticut because that state does not have guaranteed issuance (get sick today, buy the policy tomorrow, and still be covered) and many fewer coverage mandates. New York has no fewer than 51 of these, including chiropractic treatment, acupuncture, and — a very big-ticket item — in vitro fertilization. Even if you think chiropractors are quacks, hate needles, and are at a stage in life when you don’t want to make babies even the old-fashioned way, you still must pay for coverage because politicians in Albany have decided you should.

As I have often pointed out, politicians cannot make economic decisions; they can make only political ones. That’s why socialism has never worked — and it never will. For socialized medicine, that goes double.

Since John has awarded the prize for the most ridiculous headline to the Times, let’s make it a twofer and give the Times the dumbest opening paragraph as well.

The Senate voted Thursday to require health insurance companies to provide free mammograms and other preventive services to women, and it turned back a Republican challenge to Medicare savings that constitute the single largest source of financing for the bill.

Just as there are no free lunches, there are no free mammograms either. The insurance companies will pass the cost along to the policy holders in the form of higher premiums. These politically imposed mandates are a major reason why health insurance is so much more costly in states like New York and New Jersey than it is in neighboring states like Connecticut and Pennsylvania. A family policy that costs $12,250 a year in New York costs only $7,750 a year next door in Connecticut because that state does not have guaranteed issuance (get sick today, buy the policy tomorrow, and still be covered) and many fewer coverage mandates. New York has no fewer than 51 of these, including chiropractic treatment, acupuncture, and — a very big-ticket item — in vitro fertilization. Even if you think chiropractors are quacks, hate needles, and are at a stage in life when you don’t want to make babies even the old-fashioned way, you still must pay for coverage because politicians in Albany have decided you should.

As I have often pointed out, politicians cannot make economic decisions; they can make only political ones. That’s why socialism has never worked — and it never will. For socialized medicine, that goes double.

Read Less

What Happened to Bending the Cost Curve?

Megan McArdle has a typically thoughtful post on bending the cost curve, or not, through the Democrats’ health-care reforms. She explains:

What passes for delivery reform consists mostly of slashing reimbursement rates to providers, and then putting Medicare Advantage on the same plan. There are two problems with this.  The first is that there’s no reason to believe that providers will find ways to efficiently provide care at the new, lower rates, rather than just stop serving Medicare patients. That was the core point of the recent report from the Centers for Medicare and Medicaid Services — and though a lot of bloggers developed sudden suspicions about the integrity of government reports, in fact, this pretty much jibes with the warnings that Doug Elmendorf has been issuing, and also, reality. . . The second is that the treatment cuts — and any further cuts recommended by the cost effectiveness commission — can be undone by Congress.

Well what about the tax on so-called Cadillac plans? Maybe that’s going to discourage overspending, but as McArdle points out, it’s also quite possible that it “ends up just being a heavy tax on a random group of people who happen to have expensive health insurance, [and] then it won’t cut health care costs, and also, will probably end up being repealed.”

There’s really nothing in sight that will influence the cost of health care, because the Democrats refuse to address two issues: tort reform (with the ensuing problem of defensive medicine and unneeded procedures) and expanding markets (e.g., interstate sales, changing tax treatment of individually purchased plans).

What we are doing here is spending gobs of money, raising hundreds of billions in taxes, slashing Medicare payments, and empowering government bureaucrats to influence health-care treatment all in the name of expanding coverage. It isn’t remotely what Obama promised, and it’s not what voters seem to want. But we may get it anyway.

Megan McArdle has a typically thoughtful post on bending the cost curve, or not, through the Democrats’ health-care reforms. She explains:

What passes for delivery reform consists mostly of slashing reimbursement rates to providers, and then putting Medicare Advantage on the same plan. There are two problems with this.  The first is that there’s no reason to believe that providers will find ways to efficiently provide care at the new, lower rates, rather than just stop serving Medicare patients. That was the core point of the recent report from the Centers for Medicare and Medicaid Services — and though a lot of bloggers developed sudden suspicions about the integrity of government reports, in fact, this pretty much jibes with the warnings that Doug Elmendorf has been issuing, and also, reality. . . The second is that the treatment cuts — and any further cuts recommended by the cost effectiveness commission — can be undone by Congress.

Well what about the tax on so-called Cadillac plans? Maybe that’s going to discourage overspending, but as McArdle points out, it’s also quite possible that it “ends up just being a heavy tax on a random group of people who happen to have expensive health insurance, [and] then it won’t cut health care costs, and also, will probably end up being repealed.”

There’s really nothing in sight that will influence the cost of health care, because the Democrats refuse to address two issues: tort reform (with the ensuing problem of defensive medicine and unneeded procedures) and expanding markets (e.g., interstate sales, changing tax treatment of individually purchased plans).

What we are doing here is spending gobs of money, raising hundreds of billions in taxes, slashing Medicare payments, and empowering government bureaucrats to influence health-care treatment all in the name of expanding coverage. It isn’t remotely what Obama promised, and it’s not what voters seem to want. But we may get it anyway.

Read Less

Flotsam and Jetsam

Marco Rubio is closing in on Charlie Crist in the Republican Florida Senate primary.

Two Republican congressmen have a theory as to why the recovery is tepid: “The source appears to be a growing fear that the federal government is retreating from the free-market economic principles of the last half-century, and in particular the strong growth policies that began under Ronald Reagan.” One big factor, they say, is tax policy: ”Marginal income tax rates, capital gains rates, dividend rates and death-tax rates will increase — significantly. Hardest hit by these increases will be small businesses that file under the individual income tax code as sub-chapter S corporations, partnerships and proprietorships. Yet these are the very people whose investment and hiring decisions either drive or starve recoveries.”

Michael Goldfarb closes in on NIAC’s lobbying and efforts to silence journalists: “Keep in mind, this is an organization that claims on its tax forms that it DOES NOT engage in lobbying. Moreover, all of the group’s efforts seems focused on preventing additional sanctions, eliminating U.S. democracy funding initiatives, and destroying the Voice of America’s Radio Farda service. The regime couldn’t come up with a better set of priorities for NIAC, which may explain why so many people are wondering on behalf of whom NIAC is working.”

More bad polling for Obama in the latest Fox News/Opinion Dynamics poll: 46 percent approve and an equal percentage disapprove of his performance. Independents disapprove by a stunning 51 to 34 percent margin. By a 42 to 39 percent margin, respondents want to vote Republican in congressional races “to provide a check on Obama’s power.”

And from Quinnipiac: “Three-quarters of American voters — 74 percent — like President Barack Obama as a person, but only 47 percent like most of his policies, and voters disapprove 51-35 percent of the health care overhaul passed by the House of Representatives which he has endorsed, according to a Quinnipiac University national poll released today. Voters disapprove 53-41 percent of President Obama’s handling of health care. Obama’s endorsement of the House of Representatives–passed health care plan makes no difference to 44 percent of American voters, while 24 percent say it makes them view him more favorably; 30 percent less favorably.”

Meanwhile, the status quo has never looked so good: “As Congress debates a possible major expansion of health insurance in the United States, Gallup finds 38% of Americans rating healthcare coverage in this country as excellent or good, the highest (by eight percentage points) in the nine-year history of this question, and 12 points above last year’s level.”

Another weekend rush: “Senate Majority Leader Harry Reid said the first key test vote on his $848 billion health care bill will be taken Saturday, but he declined to say whether he has 60 senators lined up to vote yes. ‘We will find out when the votes are taken,’ he told reporters at a midday event. Reid also said he would not use a procedural maneuver known as reconciliation to pass the bill — a shift from previous statements when he would say all options are on the table.” And that’s 8 p.m. on Saturday for the vote. Get the sense they don’t want too much attention?

Meanwhile: “Democratic Sen. Ben Nelson (D-Neb.) said Thursday that he would prevent health reform from moving to final passage if restrictions on federal funding for abortion weren’t tightened during the amendment process. But, he added, ‘there are a lot of other things that could keep me from supporting it in the end as well.’”

Governors speak up: “Republican governors, meeting outside of Austin, sharply criticized the bill and a companion measure that has passed the House, claiming Thursday that they do nothing to contain rising medical costs and would shift significant costs to already fiscally strapped states.”

Wait, we were told to forget the tax problems because he was a genius: “Snowballing frustration about the economy burst into a political fracas Thursday, with several lawmakers calling on Treasury Secretary Timothy Geithner to resign over angst about unemployment and Wall Street bailouts. The criticism came largely from House Republicans, who have long been critics of the Treasury secretary. Mr. Geithner’s job status doesn’t appear to be in serious jeopardy and several Democrats at a congressional hearing leapt to his defense. But joining the anti-Geithner chorus in increasing numbers are more liberal Democrats who say the White House’s economic policies haven’t done enough to boost job growth.”

Marco Rubio is closing in on Charlie Crist in the Republican Florida Senate primary.

Two Republican congressmen have a theory as to why the recovery is tepid: “The source appears to be a growing fear that the federal government is retreating from the free-market economic principles of the last half-century, and in particular the strong growth policies that began under Ronald Reagan.” One big factor, they say, is tax policy: ”Marginal income tax rates, capital gains rates, dividend rates and death-tax rates will increase — significantly. Hardest hit by these increases will be small businesses that file under the individual income tax code as sub-chapter S corporations, partnerships and proprietorships. Yet these are the very people whose investment and hiring decisions either drive or starve recoveries.”

Michael Goldfarb closes in on NIAC’s lobbying and efforts to silence journalists: “Keep in mind, this is an organization that claims on its tax forms that it DOES NOT engage in lobbying. Moreover, all of the group’s efforts seems focused on preventing additional sanctions, eliminating U.S. democracy funding initiatives, and destroying the Voice of America’s Radio Farda service. The regime couldn’t come up with a better set of priorities for NIAC, which may explain why so many people are wondering on behalf of whom NIAC is working.”

More bad polling for Obama in the latest Fox News/Opinion Dynamics poll: 46 percent approve and an equal percentage disapprove of his performance. Independents disapprove by a stunning 51 to 34 percent margin. By a 42 to 39 percent margin, respondents want to vote Republican in congressional races “to provide a check on Obama’s power.”

And from Quinnipiac: “Three-quarters of American voters — 74 percent — like President Barack Obama as a person, but only 47 percent like most of his policies, and voters disapprove 51-35 percent of the health care overhaul passed by the House of Representatives which he has endorsed, according to a Quinnipiac University national poll released today. Voters disapprove 53-41 percent of President Obama’s handling of health care. Obama’s endorsement of the House of Representatives–passed health care plan makes no difference to 44 percent of American voters, while 24 percent say it makes them view him more favorably; 30 percent less favorably.”

Meanwhile, the status quo has never looked so good: “As Congress debates a possible major expansion of health insurance in the United States, Gallup finds 38% of Americans rating healthcare coverage in this country as excellent or good, the highest (by eight percentage points) in the nine-year history of this question, and 12 points above last year’s level.”

Another weekend rush: “Senate Majority Leader Harry Reid said the first key test vote on his $848 billion health care bill will be taken Saturday, but he declined to say whether he has 60 senators lined up to vote yes. ‘We will find out when the votes are taken,’ he told reporters at a midday event. Reid also said he would not use a procedural maneuver known as reconciliation to pass the bill — a shift from previous statements when he would say all options are on the table.” And that’s 8 p.m. on Saturday for the vote. Get the sense they don’t want too much attention?

Meanwhile: “Democratic Sen. Ben Nelson (D-Neb.) said Thursday that he would prevent health reform from moving to final passage if restrictions on federal funding for abortion weren’t tightened during the amendment process. But, he added, ‘there are a lot of other things that could keep me from supporting it in the end as well.’”

Governors speak up: “Republican governors, meeting outside of Austin, sharply criticized the bill and a companion measure that has passed the House, claiming Thursday that they do nothing to contain rising medical costs and would shift significant costs to already fiscally strapped states.”

Wait, we were told to forget the tax problems because he was a genius: “Snowballing frustration about the economy burst into a political fracas Thursday, with several lawmakers calling on Treasury Secretary Timothy Geithner to resign over angst about unemployment and Wall Street bailouts. The criticism came largely from House Republicans, who have long been critics of the Treasury secretary. Mr. Geithner’s job status doesn’t appear to be in serious jeopardy and several Democrats at a congressional hearing leapt to his defense. But joining the anti-Geithner chorus in increasing numbers are more liberal Democrats who say the White House’s economic policies haven’t done enough to boost job growth.”

Read Less

The Devil Is in the Details

The AP reports:

Americans are worried about hidden costs in the fine print of health care overhaul legislation, an Associated Press poll says. That’s creating new challenges for President Barack Obama as he tries to close the deal with a handful of Democratic doubters in the Senate.

For months the president held dog-and-pony shows at the White House, refused to talk about specifics, and declined (still has) to put forth his own health-care bill. We know why. When it gets down to the details, the public hates what he is selling:

For example, asked if everyone should be required to have at least some health insurance, 67 percent agreed and 27 percent said no. The responses flipped when people were asked about requiring everybody to carry insurance or face a federal penalty: 64 percent said they would be opposed, while 28 percent favored that. … “I think it’s crazy. I think it infringes on our rights as a citizen, forcing us to do these things,” said Eli Fuchs, 26, of Marietta, Ga.

Likewise, support for a ban on denial of insurance coverage for pre-existing conditions drops dramatically when people find out that their own insurance costs will go up, and support for mandates on employer coverage plunges when voters hear there are fines for employers who don’t comply.

No wonder the president wanted to avoid getting into the nitty-gritty specifics for so long. Who wants to be the bearer of bad news? But it’s not easy to pass legislation that is exceptionally controversial without getting into the weeds and confronting criticism head on. If Obama is such a great orator and so persuasive, why didn’t he tell the public about the “trade-offs” that are now proving to be a stumbling block?

Obama kept telling us during the campaign that politicians — those old-fashioned pols he was going to replace — didn’t treat voters like adults and deliver them tough medicine. But he’s done precious little of that since being elected. And by avoiding a full and thoughtful conversation on what he really wants — much higher taxes, a raft of new regulations with stiff penalties, and more government control of health care — he has left the heavy lifting to Harry Reid (never a good idea), and left the American people feeling like he’s tried to pull a fast one (also never a good idea).

The AP reports:

Americans are worried about hidden costs in the fine print of health care overhaul legislation, an Associated Press poll says. That’s creating new challenges for President Barack Obama as he tries to close the deal with a handful of Democratic doubters in the Senate.

For months the president held dog-and-pony shows at the White House, refused to talk about specifics, and declined (still has) to put forth his own health-care bill. We know why. When it gets down to the details, the public hates what he is selling:

For example, asked if everyone should be required to have at least some health insurance, 67 percent agreed and 27 percent said no. The responses flipped when people were asked about requiring everybody to carry insurance or face a federal penalty: 64 percent said they would be opposed, while 28 percent favored that. … “I think it’s crazy. I think it infringes on our rights as a citizen, forcing us to do these things,” said Eli Fuchs, 26, of Marietta, Ga.

Likewise, support for a ban on denial of insurance coverage for pre-existing conditions drops dramatically when people find out that their own insurance costs will go up, and support for mandates on employer coverage plunges when voters hear there are fines for employers who don’t comply.

No wonder the president wanted to avoid getting into the nitty-gritty specifics for so long. Who wants to be the bearer of bad news? But it’s not easy to pass legislation that is exceptionally controversial without getting into the weeds and confronting criticism head on. If Obama is such a great orator and so persuasive, why didn’t he tell the public about the “trade-offs” that are now proving to be a stumbling block?

Obama kept telling us during the campaign that politicians — those old-fashioned pols he was going to replace — didn’t treat voters like adults and deliver them tough medicine. But he’s done precious little of that since being elected. And by avoiding a full and thoughtful conversation on what he really wants — much higher taxes, a raft of new regulations with stiff penalties, and more government control of health care — he has left the heavy lifting to Harry Reid (never a good idea), and left the American people feeling like he’s tried to pull a fast one (also never a good idea).

Read Less

New York State as a Model? Only in Pelosiland

If you were developing a plan to make health insurance more affordable, would you use as a model the state whose laws have made health insurance the most expensive in the country? That’s what Nancy Pelosi and the Democratic majority in the House have done.

David Gratzer points out that PelosiCare will force insurance companies to cover orthotics. Unless you are a doctor or have foot problems, you probably don’t know even what orthotics are, but you’ll be covered for them if this bill becomes law. New York State also mandates the coverage of off-label drugs, chiropractors, in vitro fertilization, and a host of other services. Each additional mandate inescapably raises the premium.

Orthotics, of course, is hardly the only mandate in the 1,992-page PelosiCare bill.

Even worse, New York, with “guaranteed issue,” requires that health-insurance companies sell policies to anyone who asks for one and to cover pre-existing conditions. This is the equivalent of requiring fire-insurance companies to sell policies to people whose house burned down the day before — and then pay to rebuild the house. Naturally, premiums on the shmoes who carry health insurance when they are healthy must go up to cover the shnorrers who only begin paying premiums when they have claims.

PelosiCare will require guaranteed issue.

And New York severely limits the ability of insurance companies to charge the young, who have a very low risk of serious health issues, lower premiums than those charged to the not-so-young, who have a much higher risk. Since the young are wildly overcharged in order to subsidize seniors in New York, many decide not to buy health insurance, knowing that if they are very unlucky and get seriously sick, they can always buy the insurance then and be covered.

PelosiCare will do the same. To be sure, the bill calls for those who do not buy insurance to pay a fine of $2,000. As New Yorker Andrew R. Heinze writes, that’s about what he is currently paying just for the coverage of hospital care today, thanks to New York’s economic-reality-be-damned health-insurance laws. He plans to drop his insurance if PelosiCare becomes law and depend on good luck (and guaranteed issuance).

Residents of New York City pay about five times as much for health insurance as those who live in, say, Columbus, Ohio, because of these mandates, guaranteed issue, and restricted premium differentials. PelosiCare will make sure that those who live in Columbus will see their health-insurance bills soar. Or it will cause a collapse of the private health-insurance market, making a government takeover of health care inevitable.

It’s hard not to think that the latter is exactly what they have in mind.

If you were developing a plan to make health insurance more affordable, would you use as a model the state whose laws have made health insurance the most expensive in the country? That’s what Nancy Pelosi and the Democratic majority in the House have done.

David Gratzer points out that PelosiCare will force insurance companies to cover orthotics. Unless you are a doctor or have foot problems, you probably don’t know even what orthotics are, but you’ll be covered for them if this bill becomes law. New York State also mandates the coverage of off-label drugs, chiropractors, in vitro fertilization, and a host of other services. Each additional mandate inescapably raises the premium.

Orthotics, of course, is hardly the only mandate in the 1,992-page PelosiCare bill.

Even worse, New York, with “guaranteed issue,” requires that health-insurance companies sell policies to anyone who asks for one and to cover pre-existing conditions. This is the equivalent of requiring fire-insurance companies to sell policies to people whose house burned down the day before — and then pay to rebuild the house. Naturally, premiums on the shmoes who carry health insurance when they are healthy must go up to cover the shnorrers who only begin paying premiums when they have claims.

PelosiCare will require guaranteed issue.

And New York severely limits the ability of insurance companies to charge the young, who have a very low risk of serious health issues, lower premiums than those charged to the not-so-young, who have a much higher risk. Since the young are wildly overcharged in order to subsidize seniors in New York, many decide not to buy health insurance, knowing that if they are very unlucky and get seriously sick, they can always buy the insurance then and be covered.

PelosiCare will do the same. To be sure, the bill calls for those who do not buy insurance to pay a fine of $2,000. As New Yorker Andrew R. Heinze writes, that’s about what he is currently paying just for the coverage of hospital care today, thanks to New York’s economic-reality-be-damned health-insurance laws. He plans to drop his insurance if PelosiCare becomes law and depend on good luck (and guaranteed issuance).

Residents of New York City pay about five times as much for health insurance as those who live in, say, Columbus, Ohio, because of these mandates, guaranteed issue, and restricted premium differentials. PelosiCare will make sure that those who live in Columbus will see their health-insurance bills soar. Or it will cause a collapse of the private health-insurance market, making a government takeover of health care inevitable.

It’s hard not to think that the latter is exactly what they have in mind.

Read Less

McCain Health Care Conference Call

Doug Holtz-Eakin, senior policy advisor, and Carly Fiorina, RNC Victory 2008 Chair and former Hewlett-Packard CEO, held a conference call today as part of John McCain’s healthcare rollout.

There’s good in the McCain plan. Both advisors stressed that McCain’s plan puts “patients in charge,” and they both emphasized that under the McCain plan drug importation would be permitted. McCain has broken with many Republicans and drug industry interests in pushing to allow drug imports from places like Canada.

But there are real problems with the plan as well. Skeptical questioners on the call asked how McCain is going to compete with Democratic plans that guarantee health insurance universally. This is an intractable problem. McCain will need to convince people that the Democratic plan is either unrealistic (see the Massachusetts example), too expensive, or will impair the good things in the American health care system (e.g. doctor choice innovation). And we have yet to see McCain get fired up on a domestic issue to the extent he can sell something like this, which is not at first glance better than what the Democrats are offering.

There is also a fair amount of fudging going on. Where are all the cost savings going to come from? In large part, says the McCain team, from innovation. But, as they revealed in response to a question, these are things that private companies (e.g. insurers or employers) do. So where is government going to get money to cover or subsidize all those hard-to-insure people in the GAP plan? Not clear.

And isn’t GAP really another entitlement? The McCain campaign said in response to my follow-up question after the call that the GAP plan is “an effort to work with states to develop approaches to establishing a market to assure coverage for higher-risk folks who find it hard to get insurance.” That is thin gruel for those advocating universal coverage, and ominous for fiscal conservatives concerned this will be a drain on taxpayers. So the McCain team has its work cut out for it. But it is best to start practicing healthcare salesmanship now, on a day when the media is consumed with Obama-Wright coverage.

Doug Holtz-Eakin, senior policy advisor, and Carly Fiorina, RNC Victory 2008 Chair and former Hewlett-Packard CEO, held a conference call today as part of John McCain’s healthcare rollout.

There’s good in the McCain plan. Both advisors stressed that McCain’s plan puts “patients in charge,” and they both emphasized that under the McCain plan drug importation would be permitted. McCain has broken with many Republicans and drug industry interests in pushing to allow drug imports from places like Canada.

But there are real problems with the plan as well. Skeptical questioners on the call asked how McCain is going to compete with Democratic plans that guarantee health insurance universally. This is an intractable problem. McCain will need to convince people that the Democratic plan is either unrealistic (see the Massachusetts example), too expensive, or will impair the good things in the American health care system (e.g. doctor choice innovation). And we have yet to see McCain get fired up on a domestic issue to the extent he can sell something like this, which is not at first glance better than what the Democrats are offering.

There is also a fair amount of fudging going on. Where are all the cost savings going to come from? In large part, says the McCain team, from innovation. But, as they revealed in response to a question, these are things that private companies (e.g. insurers or employers) do. So where is government going to get money to cover or subsidize all those hard-to-insure people in the GAP plan? Not clear.

And isn’t GAP really another entitlement? The McCain campaign said in response to my follow-up question after the call that the GAP plan is “an effort to work with states to develop approaches to establishing a market to assure coverage for higher-risk folks who find it hard to get insurance.” That is thin gruel for those advocating universal coverage, and ominous for fiscal conservatives concerned this will be a drain on taxpayers. So the McCain team has its work cut out for it. But it is best to start practicing healthcare salesmanship now, on a day when the media is consumed with Obama-Wright coverage.

Read Less

McCain’s Pivot

Most candidates face a challenge going from a primary (where they have appealed to their base) to the general election (where they must offer more centrist message). John McCain is fortunate in that his primary message is his general election message. No significant policy readjustments appear needed to capture moderates and independents. Indeed, the pressure on McCain has been to go back and become more conservative to satisfy disgruntled elements on the Right–a plea he so far has ignored.

The challenge McCain does face is beefing up his domestic policy positions. Many voters suspect, I think, that McCain lacks interest in domestic matters. The flap with Mitt Romney over whether McCain admitted his lack of economic expertise only re-enforced this concern. On Tuesday, McCain began to address this problem with a detailed speech on the housing crisis. He generally got positive reviews from market-oriented commentators and avoided sacrificing conservative economic principles in the rush to soothe nervous voters/home owners.

This speech cannot be an isolated set piece. In his stump speech and town hall meetings McCain needs to talk fluently and frequently on the economy, free trade, and healthcare. (As to the latter, he actually has a very interesting proposal that addresses affordability and access to health insurance without a government mandate.)

His choice of a VP might also help. While McCain cannot appear to be subcontracting out his economic policy responsiblities, it would be wise to select someone with economic expertise, especially in the regulation of financial institutions or in budget and trade policy.

But make no mistake: McCain must convince voters he is knowledgable and engaged on domestic policy. Having substantially assisted in promoting and defending the surge, he may now be a victim of its success. Voters are turning their attention away from Iraq (which is receding from the front pages, except for the occasional acknowledgment of “grim milestones” like the 4000th casualty last week) and looking for answers on domestic issues.

Most candidates face a challenge going from a primary (where they have appealed to their base) to the general election (where they must offer more centrist message). John McCain is fortunate in that his primary message is his general election message. No significant policy readjustments appear needed to capture moderates and independents. Indeed, the pressure on McCain has been to go back and become more conservative to satisfy disgruntled elements on the Right–a plea he so far has ignored.

The challenge McCain does face is beefing up his domestic policy positions. Many voters suspect, I think, that McCain lacks interest in domestic matters. The flap with Mitt Romney over whether McCain admitted his lack of economic expertise only re-enforced this concern. On Tuesday, McCain began to address this problem with a detailed speech on the housing crisis. He generally got positive reviews from market-oriented commentators and avoided sacrificing conservative economic principles in the rush to soothe nervous voters/home owners.

This speech cannot be an isolated set piece. In his stump speech and town hall meetings McCain needs to talk fluently and frequently on the economy, free trade, and healthcare. (As to the latter, he actually has a very interesting proposal that addresses affordability and access to health insurance without a government mandate.)

His choice of a VP might also help. While McCain cannot appear to be subcontracting out his economic policy responsiblities, it would be wise to select someone with economic expertise, especially in the regulation of financial institutions or in budget and trade policy.

But make no mistake: McCain must convince voters he is knowledgable and engaged on domestic policy. Having substantially assisted in promoting and defending the surge, he may now be a victim of its success. Voters are turning their attention away from Iraq (which is receding from the front pages, except for the occasional acknowledgment of “grim milestones” like the 4000th casualty last week) and looking for answers on domestic issues.

Read Less

George McGovern, Free Marketeer?

Who would have thought that George McGovern would write an eminently sane column on the dangers of government paternalism? It has gems like this:

Buying health insurance on the Internet and across state lines, where less expensive plans may be available, is prohibited by many state insurance commissions. Despite being able to buy car or home insurance with a mouse click, some state governments require their approved plans for purchase or none at all. It’s as if states dictated that you had to buy a Mercedes or no car at all.

He even looks at the unintended consequences of bans on “payday lending,” long a bogey-man of liberals, and finds the cure is worse than the disease. He concludes:

Since leaving office I’ve written about public policy from a new perspective: outside looking in. I’ve come to realize that protecting freedom of choice in our everyday lives is essential to maintaining a healthy civil society. Why do we think we are helping adult consumers by taking away their options? We don’t take away cars because we don’t like some people speeding. We allow state lotteries despite knowing some people are betting their grocery money. Everyone is exposed to economic risks of some kind. But we don’t operate mindlessly in trying to smooth out every theoretical wrinkle in life. The nature of freedom of choice is that some people will misuse their responsibility and hurt themselves in the process. We should do our best to educate them, but without diminishing choice for everyone else.

No, honest: George McGovern wrote that. Perhaps he could talk to Hillary Clinton and Barack Obama about their notions for solving the home mortgage crisis. I am sure he would advise Clinton of the unintended consequences of freezing rates on sub-prime loans, or warn Obama about the costs to taxpayers and consumers at large of a bail-out fund for affected homeowners.

All this raises a question: has McGovern become wiser as the years have passed or has his party has become dimmer? Perhaps both . . .

Who would have thought that George McGovern would write an eminently sane column on the dangers of government paternalism? It has gems like this:

Buying health insurance on the Internet and across state lines, where less expensive plans may be available, is prohibited by many state insurance commissions. Despite being able to buy car or home insurance with a mouse click, some state governments require their approved plans for purchase or none at all. It’s as if states dictated that you had to buy a Mercedes or no car at all.

He even looks at the unintended consequences of bans on “payday lending,” long a bogey-man of liberals, and finds the cure is worse than the disease. He concludes:

Since leaving office I’ve written about public policy from a new perspective: outside looking in. I’ve come to realize that protecting freedom of choice in our everyday lives is essential to maintaining a healthy civil society. Why do we think we are helping adult consumers by taking away their options? We don’t take away cars because we don’t like some people speeding. We allow state lotteries despite knowing some people are betting their grocery money. Everyone is exposed to economic risks of some kind. But we don’t operate mindlessly in trying to smooth out every theoretical wrinkle in life. The nature of freedom of choice is that some people will misuse their responsibility and hurt themselves in the process. We should do our best to educate them, but without diminishing choice for everyone else.

No, honest: George McGovern wrote that. Perhaps he could talk to Hillary Clinton and Barack Obama about their notions for solving the home mortgage crisis. I am sure he would advise Clinton of the unintended consequences of freezing rates on sub-prime loans, or warn Obama about the costs to taxpayers and consumers at large of a bail-out fund for affected homeowners.

All this raises a question: has McGovern become wiser as the years have passed or has his party has become dimmer? Perhaps both . . .

Read Less

Obama On Health Care

Although Hillary Clinton’s mandated universal health care plan may be a winner in the primary, Barack Obama’s responses last night on health care showed why he will be a more formidable general election candidate. He made two points that will resonate with independents and even aggrieved Republicans who remember the Clinton secret health care task force shepherded by Ira Magaziner. First, Obama explained:

It was also that Senator Clinton and the administration went behind closed doors, excluded the participation even of Democratic members of Congress who had slightly different ideas than the ones that Senator Clinton had put forward. And, as a consequence, it was much more difficult to get Congress to cooperate. And I’ve said that I’m going to do things differently. I think we have to open up the process. Everybody has to have a seat at the table. And most importantly, the American people have to be involved and educated about how this change is going to be brought about.

Now that does sound like a different approach than Hillary Clinton’s I-know-best-and-you-can-take-it-or-leave-it approach. (David Brooks brings it all back to life here.) Obama also showed himself to be a less authoritarian liberal than Clinton. He explained the downsides of a plan with individual mandates:

Number one, understand that when Senator Clinton says a mandate, it’s not a mandate on government to provide health insurance, it’s a mandate on individuals to purchase it. And Senator Clinton is right; we have to find out what works. Now, Massachusetts has a mandate right now. They have exempted 20 percent of the uninsured because they have concluded that that 20 percent can’t afford it. In some cases, there are people who are paying fines and still can’t afford it, so now they’re worse off than they were. They don’t have health insurance and they’re paying a fine. In order for you to force people to get health insurance, you’ve got to have a very harsh penalty, and Senator Clinton has said that we won’t go after their wages. Now, this is a substantive difference.

So, at least on this issue, Obama does seem to have both a stylistic and substantive approach less off-putting, less authoritarian, and frankly less scary for voters than what many Democrats have presented. That amounts to a considerable challenge for John McCain.

Although Hillary Clinton’s mandated universal health care plan may be a winner in the primary, Barack Obama’s responses last night on health care showed why he will be a more formidable general election candidate. He made two points that will resonate with independents and even aggrieved Republicans who remember the Clinton secret health care task force shepherded by Ira Magaziner. First, Obama explained:

It was also that Senator Clinton and the administration went behind closed doors, excluded the participation even of Democratic members of Congress who had slightly different ideas than the ones that Senator Clinton had put forward. And, as a consequence, it was much more difficult to get Congress to cooperate. And I’ve said that I’m going to do things differently. I think we have to open up the process. Everybody has to have a seat at the table. And most importantly, the American people have to be involved and educated about how this change is going to be brought about.

Now that does sound like a different approach than Hillary Clinton’s I-know-best-and-you-can-take-it-or-leave-it approach. (David Brooks brings it all back to life here.) Obama also showed himself to be a less authoritarian liberal than Clinton. He explained the downsides of a plan with individual mandates:

Number one, understand that when Senator Clinton says a mandate, it’s not a mandate on government to provide health insurance, it’s a mandate on individuals to purchase it. And Senator Clinton is right; we have to find out what works. Now, Massachusetts has a mandate right now. They have exempted 20 percent of the uninsured because they have concluded that that 20 percent can’t afford it. In some cases, there are people who are paying fines and still can’t afford it, so now they’re worse off than they were. They don’t have health insurance and they’re paying a fine. In order for you to force people to get health insurance, you’ve got to have a very harsh penalty, and Senator Clinton has said that we won’t go after their wages. Now, this is a substantive difference.

So, at least on this issue, Obama does seem to have both a stylistic and substantive approach less off-putting, less authoritarian, and frankly less scary for voters than what many Democrats have presented. That amounts to a considerable challenge for John McCain.

Read Less

Palestinians in East Jerusalem Say: Please Don’t ‘Liberate’ Us

An extraordinary admission from Palestinians living in East Jerusalem in advance of the Annapolis summit, as recounted by Ilene R. Prusher in the Christian Science Monitor:

Those feeling skittish about the city’s potential partition aren’t just Israelis – who traditionally take the position that Jerusalem should be Israel’s united capital – but also Palestinian Jerusalemites, who fear that their standard of living will fall if they come under the control of the Palestinian Authority (PA).

“I don’t want to have any part in the PA. I want the health insurance, the schools, all the things we get by living here,” says Ranya Mohammed as she does her afternoon shopping in Shuafat.

“I’ll go and live in Israel before I’ll stay here and live under the PA, even if it means taking an Israeli passport,” says Mrs. Mohammed, whose husband earns a good living from doing business here. “I have seen their suffering in the PA. We have a lot of privileges I’m not ready to give up.”

Nabil Gheet, a neighborhood leader who runs a gift and kitchenware outfit in the adjacent town of Ras Khamis, also resists coming under the PA’s control.

“We have no faith in the Palestinian Authority. It has no credibility,” he says, as his afternoon customers trickle in and out. “I do not want to be ruled by Abbas’s gang,” he says, referring to Palestinian President Mahmoud Abbas.

An extraordinary admission from Palestinians living in East Jerusalem in advance of the Annapolis summit, as recounted by Ilene R. Prusher in the Christian Science Monitor:

Those feeling skittish about the city’s potential partition aren’t just Israelis – who traditionally take the position that Jerusalem should be Israel’s united capital – but also Palestinian Jerusalemites, who fear that their standard of living will fall if they come under the control of the Palestinian Authority (PA).

“I don’t want to have any part in the PA. I want the health insurance, the schools, all the things we get by living here,” says Ranya Mohammed as she does her afternoon shopping in Shuafat.

“I’ll go and live in Israel before I’ll stay here and live under the PA, even if it means taking an Israeli passport,” says Mrs. Mohammed, whose husband earns a good living from doing business here. “I have seen their suffering in the PA. We have a lot of privileges I’m not ready to give up.”

Nabil Gheet, a neighborhood leader who runs a gift and kitchenware outfit in the adjacent town of Ras Khamis, also resists coming under the PA’s control.

“We have no faith in the Palestinian Authority. It has no credibility,” he says, as his afternoon customers trickle in and out. “I do not want to be ruled by Abbas’s gang,” he says, referring to Palestinian President Mahmoud Abbas.

Read Less

HillaryCare 2.0

The most interesting thing about Hillary Clinton’s rollout of her health care plan yesterday was not the substance of the plan—which is not much different from what John Edwards and Barack Obama have offered—but the cautious and defensive tone she and her campaign have taken toward it. Clinton constantly repeated, during the rollout, that this idea was different from the “HillaryCare” proposal of 1993. “This is not government-run,” she told a cheering audience, “there will be no new bureaucracy.”

The chief reason for Hillary’s circumspection, of course, is her leading role in the Democrats’ last health care debacle. In one respect it actually seems like she is probably over-reading the importance of that line on her resume—how many voters really remember the ‘93 debacle or think of it as a great shadow over Hillary Clinton? This seems like a Washington cliché that has taken on a life of its own.

In another respect, her caution is absurd and misleading. The notion that an entirely new scheme of nationalized health insurance regulation will involve “no new bureaucracy” is risible. The idea that the new public insurance options to be part of the menu on Hillary’s plan won’t expand government-run coverage is ludicrous.

Read More

The most interesting thing about Hillary Clinton’s rollout of her health care plan yesterday was not the substance of the plan—which is not much different from what John Edwards and Barack Obama have offered—but the cautious and defensive tone she and her campaign have taken toward it. Clinton constantly repeated, during the rollout, that this idea was different from the “HillaryCare” proposal of 1993. “This is not government-run,” she told a cheering audience, “there will be no new bureaucracy.”

The chief reason for Hillary’s circumspection, of course, is her leading role in the Democrats’ last health care debacle. In one respect it actually seems like she is probably over-reading the importance of that line on her resume—how many voters really remember the ‘93 debacle or think of it as a great shadow over Hillary Clinton? This seems like a Washington cliché that has taken on a life of its own.

In another respect, her caution is absurd and misleading. The notion that an entirely new scheme of nationalized health insurance regulation will involve “no new bureaucracy” is risible. The idea that the new public insurance options to be part of the menu on Hillary’s plan won’t expand government-run coverage is ludicrous.

And more importantly, Clinton’s approach (and that of the Democrats generally) will create increasingly government-run care in more profound ways over time. Their response to the growth of health insurance premiums is to introduce new regulations and a new payer into the system. But introducing a new payer into the system does not reduce costs (on the contrary, as Medicare shows us, it tends to increase them), and Clinton has not offered any other serious way to reduce costs. She has offered, in the end, only a way to shift some costs to the government—and yet she still claims that would not shift control to the government.

He who pays the piper calls the tune. The emerging Republican approach to health care would have patients (rather than employers) pay—and would offer some aid to those who can’t. Hillary’s approach would have the government pay, and whether she wants to acknowledge it or not, would therefore have bureaucrats call the tune.

She is right to worry that government-managed health insurance will scare voters. But she is wrong to insist that her plan doesn’t qualify for the title.

Read Less

Counting the Uninsured

The annual Census Bureau report on income, poverty, and health insurance coverage was released yesterday, and set off the usual flurry of confusion and bad ideas on the last of those three subjects. The number of Americans without health insurance increased last year to roughly 47 million Americans, or 15.8 percent of the population. The raw number is less important than the percentage: in a growing population the raw number of both those without insurance and those with insurance is likely to grow (and indeed, the number of insured Americans increased by about 800,000 last year, while the number of uninsured increased by about 2 million.) But at 15.8 percent, the proportion of the uninsured matches its highest level ever (last reached in 1998).

In looking at this figure, though, a great deal of caution is warranted. As Eric Cohen and I pointed out in the February issue of COMMENTARY (and as the Census report itself notes) the number masks much nuance.

Read More

The annual Census Bureau report on income, poverty, and health insurance coverage was released yesterday, and set off the usual flurry of confusion and bad ideas on the last of those three subjects. The number of Americans without health insurance increased last year to roughly 47 million Americans, or 15.8 percent of the population. The raw number is less important than the percentage: in a growing population the raw number of both those without insurance and those with insurance is likely to grow (and indeed, the number of insured Americans increased by about 800,000 last year, while the number of uninsured increased by about 2 million.) But at 15.8 percent, the proportion of the uninsured matches its highest level ever (last reached in 1998).

In looking at this figure, though, a great deal of caution is warranted. As Eric Cohen and I pointed out in the February issue of COMMENTARY (and as the Census report itself notes) the number masks much nuance.

For instance, a family that loses its health coverage will, on average, become insured again in about five months. Only one-sixth of the uninsured lack coverage for two years or more. In addition, about a fifth of the uninsured are not American citizens, and so could not benefit from most proposed reforms. Roughly a third of the uninsured are eligible for public-assistance programs (especially Medicaid) but have not signed up, while another fifth (many of them young adults, under thirty-five) earn more than $50,000 a year, but choose not to buy coverage.

This is not to say that there aren’t a great many Americans going without health insurance, or that their plight doesn’t merit attention and action. It does, however, mean that unqualified use of the 47-million figure as a political rallying cry is not responsible.

Health insurance is, indeed, too expensive, for too many families. But the private health insurance system does work well for the great bulk of those who can afford it (a 2006 Kaiser Foundation poll found that 88 percent of those with health insurance rated their coverage good or excellent, and almost 60 percent were even satisfied with its cost). A sensible solution to the problems of the uninsured would help them afford access to private coverage, rather than replace the entire American health insurance system with a government funded single-payer approach. This approach—if we are to judge it by the experience of many nations that have tried it—is likely to reduce doctor and patient freedom, increase wait times, hurt quality, and (as we can already see from Medicaid and Medicare) threaten to bankrupt government budgets.

The Census figures show only that the uninsured are in need of help getting access to our (mostly) free-market health care system, not that America needs a huge new health insurance bureaucracy.

Read Less

A Crafty Health Care Move

Earlier this summer, when Senate Democrats (with significant support from some Republicans) offered a bill that would expand federal subsidies for children’s health insurance , conservatives accused them of trying to bring government-funded health care in through the back door. Now, as if to prove the point, House Democrats this week are preparing to introduce a much more ambitious plan to fortify and expand the government’s role in health care.

The New York Times reported that the plan, slated to be made public in the coming days, would not only vastly expand the scope of the State Children’s Health Insurance Program (SCHIP), it would also reduce the incentive for private health plans to participate in the Medicare program, and eliminate the requirement in current law to limit Medicare’s reliance on general revenue for its funding.

Two points about why this bill is a smart play by the Democrats. First of all, it’s intended to make the Senate plan (which would increase SCHIP funding by more than $35 billion) appear to be the most moderate of three alternatives, mediating between the White House’s proposal of a $5 billion increase and the House’s $50 billion.

Read More

Earlier this summer, when Senate Democrats (with significant support from some Republicans) offered a bill that would expand federal subsidies for children’s health insurance , conservatives accused them of trying to bring government-funded health care in through the back door. Now, as if to prove the point, House Democrats this week are preparing to introduce a much more ambitious plan to fortify and expand the government’s role in health care.

The New York Times reported that the plan, slated to be made public in the coming days, would not only vastly expand the scope of the State Children’s Health Insurance Program (SCHIP), it would also reduce the incentive for private health plans to participate in the Medicare program, and eliminate the requirement in current law to limit Medicare’s reliance on general revenue for its funding.

Two points about why this bill is a smart play by the Democrats. First of all, it’s intended to make the Senate plan (which would increase SCHIP funding by more than $35 billion) appear to be the most moderate of three alternatives, mediating between the White House’s proposal of a $5 billion increase and the House’s $50 billion.

Secondly, and more importantly in the long term, by tying together politically appealing cases for coverage—for the very old and very young—the Democrats are making a concerted effort to move toward government-funded health insurance. Historically, Medicare has been seen as a crucial foot in the door for advocates of government health insurance, and the SCHIP program, created in 1997, was very consciously conceived of as a step in this direction as well. By explicitly tying the two together in one bill, House Democrats can both gather a powerful coalition behind them (the AARP will mount a national campaign for the bill, for instance), and begin to press in on America’s private health care market from both sides.

Advocates of nationalized health care may, oddly enough, have learned a lesson from the pro-life movement: the way to achieve revolutionary goals in American politics is by taking one small step after another, each carefully designed to be emotionally appealing and hard to oppose.

Although President Bush has promised to veto both the House and Senate versions of the bill, the Democrats’ new strategy makes it more likely that the Senate bill might, in time, gain the votes to override such a veto. Fiscally, socially, politically, and practically, this would be a bad idea. But you have to admire the Democrats’ craftiness.

Read Less

Hillary’s Changing Plumage

Much has already been said about Hillary Clinton’s shifting positions on Iraq. Having once criticized President Bush for not sending enough troops, she now has announced her intent to vote to block war funding. But Hillary’s zigzagging is nothing new. It has been the stamp of her last fifteen years.

She began her political life in the radical student movement of the 1960′s, summarized by her commencement speech at Wellesley College in 1969, in which she declared that the “prevailing, acquisitive, and competitive corporate life . . . is not the way of life for us. We’re searching for a more immediate, ecstatic, and penetrating mode of living.” (Husband Bill seems to have taken this quest to heart.)

Her New Leftism was not soon outgrown. In 1987, her profile raised by Bill’s status as governor of Arkansas, she assumed the chairmanship of the New World Foundation, a funder of radical Left, pro-Communist, and PLO-linked causes. The foundation had a history of such activities before Hillary took it over, but as I showed in a 1993 article for COMMENTARY, the number of extremist and Communist front groups funded by the foundation multiplied under her leadership.

Read More

Much has already been said about Hillary Clinton’s shifting positions on Iraq. Having once criticized President Bush for not sending enough troops, she now has announced her intent to vote to block war funding. But Hillary’s zigzagging is nothing new. It has been the stamp of her last fifteen years.

She began her political life in the radical student movement of the 1960′s, summarized by her commencement speech at Wellesley College in 1969, in which she declared that the “prevailing, acquisitive, and competitive corporate life . . . is not the way of life for us. We’re searching for a more immediate, ecstatic, and penetrating mode of living.” (Husband Bill seems to have taken this quest to heart.)

Her New Leftism was not soon outgrown. In 1987, her profile raised by Bill’s status as governor of Arkansas, she assumed the chairmanship of the New World Foundation, a funder of radical Left, pro-Communist, and PLO-linked causes. The foundation had a history of such activities before Hillary took it over, but as I showed in a 1993 article for COMMENTARY, the number of extremist and Communist front groups funded by the foundation multiplied under her leadership.

In 1992, Bill ran for President as a “new Democrat,” code for not-a-liberal, and his emissaries successfully wooed my support. In discussions with leaders of the centrist Democratic Leadership Council, I was assured that Hillary, far from tugging Bill leftward, was using her weight to keep the campaign in the middle of the road.

Not long after she and Bill moved into the White House, Hillary turned back to the Left, leading the effort to install some form of national health insurance and inviting Michael Lerner, the unreconstructed 1960′s radical then parading as a “rabbi,” to the White House to give her guidance. Hillary embraced Lerner’s Oz-like “politics of meaning,” even using the phrase in her speeches.

When she set up shop in New York and ran for the Senate, Hillary swung back toward the center, becoming an especially vocal supporter of Israel and, later, a hawk on Iraq. Now she has shed her hawk’s plumage for the white of a dove. All of which leaves us to ponder this question as she runs for President: would it be worse to be governed by Hillary the opportunist or Hillary the true believer?

Read Less

French Health Care for All?

Over the past week, David Gratzer of the Manhattan Institute and Jonathan Cohn of the New Republic have been engaged in a fascinating debate over health care reform, hosted at TNR’s website. The two agree that American health care has serious problems, including a large uninsured population and very high costs. But they disagree about whether government-funded systems in other countries offer a model America should follow.

Their debate basically comes down to a disagreement about health-quality statistics. But both Cohn and Gratzer ignore almost entirely the attitude of the American public toward bureaucracy in health care. Recent experience suggests that Americans would be very unlikely to put up with even the modest constraints on doctors and patients in the French system that Cohn proposes as a model (let alone the overwhelmingly burdensome constraints employed in some other state-funded systems, like those in Canada and Britain).

Read More

Over the past week, David Gratzer of the Manhattan Institute and Jonathan Cohn of the New Republic have been engaged in a fascinating debate over health care reform, hosted at TNR’s website. The two agree that American health care has serious problems, including a large uninsured population and very high costs. But they disagree about whether government-funded systems in other countries offer a model America should follow.

Their debate basically comes down to a disagreement about health-quality statistics. But both Cohn and Gratzer ignore almost entirely the attitude of the American public toward bureaucracy in health care. Recent experience suggests that Americans would be very unlikely to put up with even the modest constraints on doctors and patients in the French system that Cohn proposes as a model (let alone the overwhelmingly burdensome constraints employed in some other state-funded systems, like those in Canada and Britain).

The American public’s rejection of the HMO model of health insurance offers some evidence on this point. Health maintenance organizations try to contain costs by using case managers to review physician referrals and care decisions, and so to avoid unnecessary procedures and expenses. They work: during the HMO craze in the mid-1990’s, private health-care spending per capita grew by just 2 percent annually, while today it grows by nearly 10 percent.

But as HMO’s became more popular, resentment grew too, among both doctors and patients, about the way health decisions were being made by bureaucrats rather than doctors. HMO’s quickly became some of the most hated institutions in America, participation declined sharply, and today many plans that still call themselves HMO’s don’t actually follow the case-manager model.

Everything Americans didn’t like about HMO’s would be worse under the kind of government-funded system many other Western democracies have. Americans have far less patience for intrusion into health-care choices than Europeans seem to (a point that elicited some broader reflection on government and culture by Jonah Goldberg last week).

In response to this concern, advocates of state-funded care might make the perfectly serious point that covering the uninsured is more important than playing to the selfish whims of the American middle class. That’s how wonks should think. But it’s not how any politician could allow himself to think, and so it’s not how any practical and plausible reform of the system could work.

The fact is, the American middle class would hate—and rebel against—the kind of reform Cohn has in mind, and that in turn would take the political wind out of the effort to help the uninsured. That means health-care reform needs to work by addressing some of the concerns of the (insured) middle class—concerns about stability and portability—while building ways of insuring the uninsured.

That latter effort, though, can’t proceed by creating new, more powerful middle-class anxieties about who makes medical decisions and the freedom of doctors. This also means it can’t proceed by replacing our private insurance system with a public one. It needs, rather, to use public resources to help those who can’t afford private insurance obtain private insurance.

French health care works for the French. But for cultural reasons as much as economic ones, it’s very hard to see how it could work here.

Read Less

Bush’s Health-care Vision

This year’s batch of controlled leaks building up to the State of the Union address has included a lot of talk about health-care proposals. It looks as if the President will offer two new health-care ideas in the speech: one involving a reform of the tax code and the other supporting state efforts to help the uninsured get private health insurance.

The President seems set to propose replacing the long-standing system of tax exemption on employer-purchased health insurance. This system makes it more expensive for Americans not covered through their job to get health insurance on their own and creates an incentive for employer-based plans to grow ever more costly (as Eric Cohen and I point out in the February issue of COMMENTARY). The President wants to put in its place a standard deduction for health insurance of $15,000 for families and $7,500 for individuals.

Anyone who has private health insurance, regardless of how it was purchased, would qualify under this plan. About 80 percent of workers who are now covered at work have plans that cost less than $15,000 and so would see their taxes go down or stay the same under this proposal, but the other 20 percent of those with employer-based coverage would end up paying more taxes. The money brought in by this measure would help cover the cost of allowing families who buy their coverage themselves to get in on the tax deduction. This would lower their health costs, and would be a major incentive for the uninsured who can afford it to purchase their own coverage.

The trouble is that those 20 percent are not just fat-cat CEO’s with extravagant health plans, but also some unionized workers, whose unions have negotiated particularly good coverage. The new Democratic majority in Congress is very unlikely to stand for a tax increase on its union constituency. And many Democrats also fear such proposals would reduce the pressure for a government-run system, their preferred health-care solution.

In the face of such opposition, the second proposal under discussion may be both more significant and more realistic. The President apparently intends to propose means of helping states turn the Medicaid funds they now use to pay hospitals for caring for the uninsured into direct assistance to uninsured individuals to buy their own private health insurance. Eric and I lay out the benefits of such an approach in our article, but we also point out that neither the Left nor the Right wants to discuss the real looming fiscal crisis in health care: the costs of care for older Americans. If what we see in the papers is right, that won’t change this year.

This year’s batch of controlled leaks building up to the State of the Union address has included a lot of talk about health-care proposals. It looks as if the President will offer two new health-care ideas in the speech: one involving a reform of the tax code and the other supporting state efforts to help the uninsured get private health insurance.

The President seems set to propose replacing the long-standing system of tax exemption on employer-purchased health insurance. This system makes it more expensive for Americans not covered through their job to get health insurance on their own and creates an incentive for employer-based plans to grow ever more costly (as Eric Cohen and I point out in the February issue of COMMENTARY). The President wants to put in its place a standard deduction for health insurance of $15,000 for families and $7,500 for individuals.

Anyone who has private health insurance, regardless of how it was purchased, would qualify under this plan. About 80 percent of workers who are now covered at work have plans that cost less than $15,000 and so would see their taxes go down or stay the same under this proposal, but the other 20 percent of those with employer-based coverage would end up paying more taxes. The money brought in by this measure would help cover the cost of allowing families who buy their coverage themselves to get in on the tax deduction. This would lower their health costs, and would be a major incentive for the uninsured who can afford it to purchase their own coverage.

The trouble is that those 20 percent are not just fat-cat CEO’s with extravagant health plans, but also some unionized workers, whose unions have negotiated particularly good coverage. The new Democratic majority in Congress is very unlikely to stand for a tax increase on its union constituency. And many Democrats also fear such proposals would reduce the pressure for a government-run system, their preferred health-care solution.

In the face of such opposition, the second proposal under discussion may be both more significant and more realistic. The President apparently intends to propose means of helping states turn the Medicaid funds they now use to pay hospitals for caring for the uninsured into direct assistance to uninsured individuals to buy their own private health insurance. Eric and I lay out the benefits of such an approach in our article, but we also point out that neither the Left nor the Right wants to discuss the real looming fiscal crisis in health care: the costs of care for older Americans. If what we see in the papers is right, that won’t change this year.

Read Less

From COMMENTARY: Health Care in Three Acts

As President Bush prepares to address the issue of health care in his State of the Union address, COMMENTARY is fortunate to have a trenchant analysis of the wider problem, “Health Care in Three Acts,” by Eric Cohen and Yuval Levin, coming out in the February issue. Here is an advance look.

Americans say they are very worried about health care: on generic lists of voter concerns, health issues regularly rank just behind terrorism and the Iraq war. And politicians are eager to do something about it. To empower consumers, the White House has advanced the idea of Health Savings Accounts; to help the uninsured, it has explored using Medicaid more creatively. Senator Edward Kennedy of Massachusetts, the Democrats’ leader on this issue, has backed “Medicare for all.” The American Medical Association has called for tax credits to put private coverage within reach of more Americans. A number of recent books have proposed solutions to our health-care problems ranging from socialized medicine on the Left to laissez-faire schemes of cost containment on the Right. In Washington and in the state capitals, pressure is building for serious reforms.

But what exactly are Americans worried about? Untangling that question is harder than it looks. In a 2006 poll, the Kaiser Family Foundation found that while a majority proclaimed themselves dissatisfied with both the quality and the cost of health care in general, fully 89 percent said they were satisfied with the quality of care they themselves receive. Eighty-eight percent of those with health insurance rated their coverage good or excellent—the highest approval rating since the survey began 15 years ago. A modest majority, 57 percent, were satisfied even with its cost.

Read More

As President Bush prepares to address the issue of health care in his State of the Union address, COMMENTARY is fortunate to have a trenchant analysis of the wider problem, “Health Care in Three Acts,” by Eric Cohen and Yuval Levin, coming out in the February issue. Here is an advance look.

Americans say they are very worried about health care: on generic lists of voter concerns, health issues regularly rank just behind terrorism and the Iraq war. And politicians are eager to do something about it. To empower consumers, the White House has advanced the idea of Health Savings Accounts; to help the uninsured, it has explored using Medicaid more creatively. Senator Edward Kennedy of Massachusetts, the Democrats’ leader on this issue, has backed “Medicare for all.” The American Medical Association has called for tax credits to put private coverage within reach of more Americans. A number of recent books have proposed solutions to our health-care problems ranging from socialized medicine on the Left to laissez-faire schemes of cost containment on the Right. In Washington and in the state capitals, pressure is building for serious reforms.

But what exactly are Americans worried about? Untangling that question is harder than it looks. In a 2006 poll, the Kaiser Family Foundation found that while a majority proclaimed themselves dissatisfied with both the quality and the cost of health care in general, fully 89 percent said they were satisfied with the quality of care they themselves receive. Eighty-eight percent of those with health insurance rated their coverage good or excellent—the highest approval rating since the survey began 15 years ago. A modest majority, 57 percent, were satisfied even with its cost.

Evidently, though, this widespread contentment with one’s own lot coexists with concern on two other fronts. Thus, in the very same Kaiser poll, nearly 90 percent considered the number of Americans without health insurance to be a serious or critical national problem. Similarly, a majority of those with insurance of their own fear that they will lose their coverage if they change jobs, or that, “in the next few years,” they will no longer be able to afford the coverage they have. At least as troubling is what the public does not seem terribly bothered about—namely, the dilemmas of end-of-life care in a rapidly aging society and the exploding costs of Medicare as the baby-boom generation hits age sixty-five.

All of this makes it difficult to speak of health care as a single coherent challenge, let alone to propose a single workable solution. In fact, America faces three fairly distinct predicaments, affecting three fairly distinct portions of the population—the poor, the middle class, and the elderly—and each of them calls for a distinct approach.

For the poor, the problem is affording coverage. Forty-six million Americans were uninsured in 2005, according to the Census Bureau. This is about 15.9 percent of the population, which has been the general range now for more than a decade, peaking at 16.3 percent in 1998.

But that stark figure fails to convey the shifting face and varied make-up of the uninsured. On average, a family that loses its coverage will become insured again in about five months, and only one-sixth of the uninsured lack coverage for two years or more. In addition, about a fifth of the uninsured are not American citizens, and therefore could not readily benefit from most proposed reforms. Roughly a third of the uninsured are eligible for public-assistance programs (especially Medicaid) but have not signed up, while another fifth (many of them young adults, under thirty-five) earn more than $50,000 a year but choose not to buy coverage.

It is also crucial to distinguish between a lack of insurance coverage and a lack of health care. American hospitals cannot refuse patients in need who are without insurance; roughly $100 billion is spent annually on care for such patients, above and beyond state and federal spending on Medicaid. The trouble is that most of this is emergency care, which includes both acute situations that might have been prevented and minor problems that could have been treated in a doctor’s office for considerably less money. The real problem of the uninsured poor, then, is not that they are going without care, but that their lack of regular and reliable coverage works greatly to the detriment of their family stability and physical well-being, and is also costly to government.

For the middle class, the problem is different: the uncertainty caused in part by the rigid link between insurance and employment and in part by the vicissitudes of health itself. America’s employment-based insurance system is unique in the world, a product of historical circumstances and incremental reforms that have made health care an element of compensation for work rather than either a simple marketplace commodity or a government entitlement. This system now covers roughly 180 million Americans. It works well for the vast majority of them, but the link it creates between one’s job and one’s health coverage, and the peculiar economic inefficiencies it yields, result in ever-mounting costs for employers and, in an age of high job mobility, leave many families anxious about future coverage even in good times.

The old, finally, face yet another set of problems: the steep cost of increasingly advanced care (which threatens to paralyze the government) and the painful decisions that come at the limits of medicine and the end of life. Every American over sixty-five is eligible for at least some coverage by the federal Medicare program, which pays much of the cost of most hospital stays, physician visits, laboratory services, diagnostic tests, outpatient services, and, as of 2006, prescription drugs. Established in 1965, Medicare is funded in part by a flat payroll tax of 2.9 percent on nearly every American worker and, beyond that, by general federal revenue. Most recipients pay only a monthly premium that now stands at $88.50, plus co-payments on many procedures and hospital stays.

But precisely because Medicare is largely funded by a payroll tax, it suffers acutely from the problems of an aging society. In 1950, just over 8 percent of Americans were over sixty-five. Today that figure stands at nearly 15 percent, and by 2030 it is expected to reach over 20 percent, or 71 million Americans. Moreover, the oldest of the old, those above the age of eighty-five, who require the most intense and costly care, are now the fastest growing segment of the population; their number is expected to quadruple in the next half-century.

For Medicare, therefore, just as for Social Security, the number of recipients is increasing while the number of younger workers to pay the bills is declining. But Medicare faces a greater danger still. Its costs are a function not only of the number of eligible recipients but of the price of the services they use. Over the past few years, health-care spending in America has increased by about 8 percent each year, most steeply for older Americans who have the most serious health problems. As these costs continue to rise much faster than the wages on which Medicare’s funding is based, the program’s fiscal decline will be drastic, with commensurately drastic consequences for the federal budget.

Three different “crises,” then, each of a different weight and character. The crisis of the uninsured, while surely a serious challenge, has often been overstated, especially on the Left, in an effort to promote more radical reforms than are necessary. The crisis of insured middle-class families has been misdiagnosed both by the Right, which sees it purely as a function of economic inefficiency, and by the Left, which sees it as an indictment of free-market medicine. And the crisis of Medicare has been vastly understated by everyone, in an effort to avoid taking the painful measures necessary to prevent catastrophe. In each case, a clearer understanding may help point the way to more reasonable reforms.

In the case of the uninsured, the best place to begin is with the solution most frequently proposed to their plight: a government-run system of health care for all Americans.

Under such a system—which exists in some form in most other industrialized democracies—the government pays everyone’s medical bills, and in many cases even owns and runs the health-care system itself. The appeal of this idea lies in its basic fairness and simplicity: everyone gets the same care, from the same source, in the same way, based purely on need. In one form or another—actual proposals have varied widely, with Hillary Clinton’s labyrinthine scheme of 1993 merely the best known of many—this “single-payer” model remains the preferred health-care solution of the American Left. But it is ill-suited to the actual problems of America’s uninsured, and adopting it would greatly exacerbate other problems as well.

Everywhere it has been tried, the single-payer model has yielded inefficient service and lower-quality care. In Britain today, more than 700,000 patients are waiting for hospital treatment. In Canada, it takes, on average, seventeen weeks to see a specialist after a referral. In Germany and France, roughly half of the men diagnosed with prostate cancer will die from the disease, while in the United States only one in five will. According to one study, 40 percent of British cancer patients in the mid-1990’s never got to see an oncologist at all.

Such dire statistics have in fact caused many Western democracies with single-payer systems to turn toward market mechanisms for relief. The Swedes have begun to privatize home care and laboratory services. Australia now offers generous tax incentives to citizens who eschew the public system for private care. To send a message to the government, the Canadian Medical Association recently elected as its president a physician who runs a private hospital in Vancouver, actually illegal in Canada. “This is a country in which dogs can get a hip replacement in under a week,” the new president told a newspaper interviewer, “while humans can wait two or three years.”

Defenders of the single-payer concept often point out that, despite patient complaints about the quality of care, overall measures of health in countries with such systems are roughly equivalent to those in America. That may be so, but the chief reason lies in social and cultural factors—crime rates, diet, and so forth—that make life in many other Western nations safer and healthier than life in America, and that would not be altered by a single-payer health system. Besides, citizens in those other nations benefit enormously from medical innovations produced and made possible by America’s dynamic private market; if that market were hobbled by a European-style bureaucracy, their quality of care would suffer along with ours.

And quality of care, it is important to remember, is one thing that most Americans are happy with. Any reform that promises to replace immediate access to specialists with long waiting lines, or the freedom to choose one’s own doctor with restrictive government mandates, is certain to evoke deep hostility, and thereby to cut into public support for efforts to help the uninsured.

On this score, proponents of socialized medicine would do well to consult the cautionary example of the health-maintenance organization (HMO). HMO’s are insurers who contract directly with providers, often for a flat fee, reviewing physician referrals and medical decisions in order to prevent unnecessary procedures or expenses. By the mid-1990’s, this capacity for cost-containment had made HMO’s very attractive to policy-makers and families alike. And they delivered on their cost-cutting promise. In those years, as David Gratzer notes in his recent book The Cure (Encounter, 325 pp., $25.95), private health-care spending per capita grew by just 2 percent annually (today the figure is nearly 10 percent, though the reasons for this, as we shall see below, go beyond just the decline of HMO’s).*

But the public soon chafed under the authoritarian character of a system in which case managers were entrusted with decisions that often seemed arbitrary, while doctors resented having their medical judgment questioned by bureaucrats. Participation soon declined, and HMO’s themselves began to take on the characteristics of traditional insurance plans. By the middle of this decade, they had joined the bipartisan list of stock American villains: in the 2004 presidential campaign, President Bush accused Senator John Kerry of getting “millions from executives at HMO’s,” while Kerry pledged to “free our government from the dominance of the lobbyists, the drug industry, big oil, and HMO’s—so that we can give America back its future and its soul.”

In a single-payer government system, everything Americans dislike about HMO’s would be worse: rationing, top-down control, perverse incentives, and, for patients, very little say. As has happened in Europe, a single-payer approach would also turn health-care costs entirely into government costs, grossly distorting public spending and threatening to crowd out other important government functions. The result would be a political, fiscal, and social disaster.

There is a better way to assist the uninsured: not universal government health care but universal private insurance coverage. Such an effort could begin by identifying the populations in need. Those who are uninsured by their own choice could be offered incentives to purchase at least some minimal coverage, or be penalized for failing to do so. Those who cannot afford insurance could be given subsidies to purchase private coverage based on their level of income, and then pooled into a common group to give them some purchasing power and options. Their coverage would still not equal that available to people in the most generous employer-based plans, but it would offer reliable access to care without destroying the quality and flexibility of the American system.

Although such a plan might not be cheap, it would not be nearly so expensive or complex as a single-payer system. The money for it could be taken, in part, from Medicaid funds now used to pay doctors and hospitals for care already provided to the uninsured, with such “uncompensated-care” programs gradually transformed into a voucher system for purchasing private coverage. But though it might rely on some federal dollars, the reform itself would best be undertaken and managed at the state level. After all, health insurance is regulated by the states, Medicaid is largely managed by the states, and different states face different challenges and possess different resources.

In Massachusetts and Florida, ideas like these are already being tested, although it is too early to judge the results. The federal government can help other states try this more practical approach by clearing away regulatory obstacles and by providing incentives for experiments in creative reforms.

This brings us to the health-care anxieties of middle-class Americans. Although these concerns are in most respects much less pressing than those of the poor, they are real enough. Middle-class families are, besides, the heart and soul of America’s culture and economy, as well as the essential political force for any sober assessment and improvement of America’s health-care system.

Generally speaking, the worries expressed by these Americans stem from the peculiarities of our employer-based insurance market. It is, indeed, a very odd thing that more than 180 million Americans should be covered by insurance purchased for them by their employers. The companies we work for do not buy our food and clothing, or our car and home insurance. They pay us for our labor, and we use that money to buy what we want.

No less odd is the character of what we call health insurance. Insurance usually means coverage for extreme emergencies or losses. We expect auto insurance to kick in when our car is badly damaged in an accident, not when we need a routine oil change; homeowner’s insurance covers us after a fire, flood, or break-in, not when we need to repair the deck or unclog the gutters. But when it comes to health, we expect some element of virtually every expense to be covered, including routine doctor checkups and regular care.

America’s insurance system is largely a historical accident. During World War II, the federal government imposed wage controls on American employers. No longer able to raise salaries to compete for employees, companies turned instead to offering the lure of fringe benefits, and the era of employer-based health care was born. Thanks to a 1943 IRS ruling allowing an exemption for money spent by employers on health insurance, an enormous tax incentive was created as well. Rather than giving a portion of every dollar to the government, employees could get a full dollar’s worth of insurance through their company.

Of course, wage controls are long gone, but the system they inadvertently created, including the tax exemption, remains in place. Although this system has served most Americans very well, it has two significant drawbacks. First, by forging a tight link between one’s job and one’s health insurance, it makes losing a job, or changing jobs, a scary proposition, especially for parents. Second, it lacks any serious check on costs. Because insurance often pays the bulk of every single bill (instead of kicking in only for emergencies or extreme expenses), most American families do not know, or attend to, the actual cost of their health care.

Any car owner can tell you the price of a gallon of gas or an oil change. But what is the price of knee surgery? Or even a regular doctor’s visit? Does one hospital or doctor charge more than another? Most patients pay only a deductible that, while often not cheap, bears almost no relation to the price of the service they receive. As a result, they do not behave like consumers, shopping for the best price and thereby forcing providers to compete for their dollar.

Inured to such issues, families worry most about the lack of portability of their insurance, leaving it to economists to worry about the distorting effects of price inefficiencies. To gain the support of middle-class parents, any reform to the system would therefore need to address the former issue first.

Policy-makers on the Left have tended to understand this, but have over-read the anxiety of families, seeing it as a broad indictment of America’s free-market health care. They have thus offered the same bad solution to the problems of the insured as they do to the problems of the uninsured: a government-run system that will replace our present one. As for conservative policy-makers, they sometimes tend to overlook the concerns of middle-class families altogether, focusing on inefficiency before portability.

The conservative health-care solution of the moment is the health savings account, or HSA. It has two components: a savings account to which individuals and employers can make tax-free contributions to be drawn on exclusively for routine health-care costs, and a high-deductible insurance plan to help pay for catastrophic expenses.

Since individuals can take their HSA’s with them when they change jobs (provided the new employer allows it), this option can indeed help promote insurance portability. But, generally speaking, that is neither its foremost aim nor its effect. Instead, it is seen by its proponents as helping to level the playing field by giving to individuals the same tax breaks that employers get in purchasing coverage, and as helping to train people to think like consumers, since in spending their own money they will have an incentive to spend as little of it as possible. In short, proponents of the HSA want to use market mechanisms to achieve lower costs and improved quality.

This is certainly a worthy goal—but does it meet the concerns of most Americans? David Gratzer, an advocate of the HSA, tells the story of a woman who used such an account in exactly the desired way. Needing foot surgery, and impelled to spend her own money wisely, she

took charge of the situation and thought about what she really needed. When a simple day-surgery was suggested, she looked around and decided on a local surgery center. She asked about clinic fees and offered to pay upfront—thereby getting a 50-percent discount. When she found out that an anesthetist would come in specifically to do the foot block, she asked her surgeon just to do it. She also negotiated the surgeon’s compensation down from $1,260 to $630. Finally, she got a prescription from her doctor for both antibiotics and painkillers, but only filled the former. “In the past, my attitude would have been, ‘just have all the prescriptions filled because insurance was paying for it, whether or not I need them.’”

Although Gratzer offers this as an ideal example, it will surely strike many people as a nightmare. Haggling with doctors, ignoring prescriptions, bypassing a specialist to save money—is this the solution to middle-class health-care worries? Who among us feels confident taking so much responsibility for judgments over his own health, let alone over the care of his children or his elderly parents?

If the HSA is to have wide appeal, it must be sold first and foremost as a means not of efficiency but of portability—and as part of a broader effort to expand the portability of health insurance generally. Nor should such an effort be aimed, at least at first, at undoing our employer-based system. Perhaps, given a blank slate, no sensible person would ever have designed the current system. But we do not have a blank slate. We have a system providing care that the vast majority of insured Americans are quite happy with—and that has also helped America resist the pressure for government-run health care of the kind for which every other developed nation is now paying a heavy price.

We have, in other words, a system that works but is in need of repairs, most notably in the realm of improved portability. Making this happen will require better cooperation between state and federal policy-makers. An exclusively national solution would require federalizing the regulation of health insurance, which is both undesirable and politically unachievable. Instead, states should be encouraged to develop insurance marketplaces like the one now taking shape in Massachusetts. Mediating between providers and purchasers, these would allow employers, voluntary groups, and individuals to select from a common set of private options. Whether working full-time, part-time, or not at all, individuals and families could choose from the same menu of plans and thus maintain constant coverage even as their job situations or life circumstances change. For those who cannot afford insurance and do not receive it from an employer, Medicaid dollars could be used to subsidize the purchase of a private plan.

The federal government, meanwhile, could ensure that Medicaid dollars allotted to states can be used to support such a structure of subsidies. It could also pursue other, smaller measures, like extending or eliminating the time limit on the COBRA program, which allows individuals leaving a job to keep their employment-based plan by paying the full premium. As states begin implementing marketplace reforms, the federal government could also find ways to encourage regional and eventually national marketplaces, which would enable the purchase of insurance across state lines.

In any such scheme, Health Savings Accounts would surely have a place. So would other measures of cost containment like greater price transparency. But the key to any large reform must be its promise to address the real worries of insured American families by preserving what is good about the current system while facing up to its limits and confronting its looming difficulties.

Unfortunately, when it comes to paying for the health care of older Americans, there are few attractive options. Costs have risen steeply in recent years, while the economic footing of the Medicare program has been steadily eroding. Nor are demographic realities likely to change for at least a generation; to the contrary, they may only worsen. So the solution must involve some form of cost containment.

This will not be easy. As Arnold Kling points out in Crisis of Abundance (Cato Institute, 120 pp., $16.95), costs are rising not because of increasing prices for existing medical services but because of a profound transformation in the way medicine is practiced in America. Between 1975 and 2002, the U.S. population increased by 35 percent, but the number of physicians in the country grew by over 100 percent. The bulk of these were specialists, whose services cost a great deal more than those of general practitioners. New technologies of diagnosis (like MRI exams) have also become routine, and not just for the old, and the number and variety of treatments, including surgeries, have likewise increased. We spend more because more can be done for us.

All of this spells heavier demands on the Medicare budget, to the point where the program’s fiscal prospects have become very bleak. Already accounting for roughly 15 percent of federal spending, Medicare will be at 25 percent by 2030 and growing. In David Gratzer’s words, “Medicare threatens to be the program that ate the budget.”

Worse yet, one of the most expensive and complicated burdens of an aging society is not even covered by Medicare. This is long-term care, involving daily medical and personal assistance to people incapable of looking after themselves. The Congressional Budget Office estimates that Americans spent roughly $137 billion on long-term care in 2000, and that by 2020 the figure will reach $207 billion. Longer lives, and the high incidence of dementia among the oldest of the old, are bound to impose an extraordinary new financial strain on middle-income families, whose consequent demand for government help will only worsen our already looming fiscal crisis.

Medicaid, which covers health care for the poor, does pay for some long-term care in most states. To qualify for this, and to avoid burdening their children, a growing number of the elderly have opted to spend down their assets when the need arises. But this ends up burdening their children anyway, if less directly. States already spend more on Medicaid than on primary and secondary education combined; if Medicaid comes to shoulder the bulk of long-term costs in the coming decades, it will bankrupt state coffers and place enormous strains on the federal budget.

Of course, the challenges of an aging society reach well beyond economics. As more and more Americans face an extended decline in their final years, elderly patients and their families will confront painful choices about how much care is worthwhile, who should assume the burdens of care-giving, and when to forgo additional life-sustaining treatment. Compared to this profound human challenge, fiscal dilemmas can seem relatively paltry. But they too necessitate hard and unavoidable choices.

One way or another, the Medicare program will have to be adjusted to a society with radically different demographics from the one it was designed to serve. If “seventy is the new fifty,” as a popular bumper sticker tells us, then the age of Medicare eligibility must begin to move up as well. That will inevitably impose a hardship on those who are already not vigorous in their sixties, as well as on those whose jobs are too physically demanding for even a healthy sixty-five-year-old. So hand in hand with raising the age of eligibility will need to go programs encouraging (or requiring) health-care savings earlier in life. At the same time, Medicare benefits will gradually have to become means-tested, so that help goes where it is most needed and benefits are most generous to those with the lowest incomes and fewest assets.

More fundamentally, the structure of the Medicare program will have to change. Its benefits now increase in an open-ended way that both reflects and drives the upward movement of health costs; if Medicare is to remain sustainable, constraints will gradually have to be put in place, so that benefits grow by a set percentage each year. The program will also need its own distinct and reasonably reliable funding source, which will require an adjustment in the design of the payroll tax.

Any such reforms will be politically explosive, to put it mildly. No politician in his right mind would run on a platform of limiting Medicare eligibility and capping its benefits. And yet, a decade from now, caring for aging parents will have become a burning issue for a great swath of America’s families as parents find themselves squeezed between the needs of their own parents and the needs of their children. Every politician will be expected to offer a solution, and will be subject to dangerous temptations: promising limitless care at the very moment when fiscal responsibility requires setting limits, or promising to “solve” our fiscal problems by abandoning the elderly. The least that responsible policy-makers can do now is to familiarize Americans with the realities of our aging society, so that when the time comes for difficult choices, we will not be blind-sided.

Understanding America’s three distinct health-care challenges, and the deficiencies of conventional responses to them, is the first step toward reform. Any approach we take will assuredly cost the taxpayers money. Already, nearly a third of the federal budget is spent on health-care, and that portion is certain to grow. The choice, however, is between paying the necessary price to ameliorate our genuine problems or paying far more to satisfy ideological whims or avoid politically painful decisions.

Neither socialized medicine nor a pure market approach is suited to America’s three health-care challenges, while the bipartisan conspiracy to ignore the looming crisis of Medicare in particular will return to haunt our children. Coming to grips with the true nature of our challenges suggests, instead, a set of pragmatic answers designed to address the real problems of the uninsured, of middle-class families, and of the elderly while protecting America’s private health-insurance system and looking out for the long-term fiscal health of the nation.

Even as we pursue practical options for reform, however, it behooves us to remember that health itself will always remain out of our ultimate control. Medicine works at the boundaries of life, and its limits remind us of our own. While our health-care system can be improved, our unease about health can never truly be quieted. And while reform will require hard decisions, solutions that would balance the books by treating the disabled and debilitated as unworthy of care are no solutions at all. In no small measure, America’s future vitality and character will depend upon our ability to rise to this challenge with the right mix of creativity and sobriety.

Read Less

Broadening the Definition

According to a story in the January 16th New York Times, “Democratic congressional leaders say they are committed to governing from the center.” This newfound centrism focuses on social issues. Democrats are alarmed by 2004 exit surveys that showed that religious voters favored Bush by an overwhelming margin. Part of the response has been the creation of a “faith working group,” led by Representative James Clyburn, the new House majority whip. This group, according to the story, aims to “broaden . . . the definition of values-related issues . . . to include economic issues like raising the minimum wage, assisting low-income children with health insurance, and shoring up Social Security.” “That’s Old Testament Bible, taking care of widows and orphans,” says Clyburn.

This is the social-issues version of Michael Dukakis’s memorable ride atop a tank during his 1988 presidential campaign. He was trying to show voters that he was strong on defense, but the photo op backfired because many voters understood that if the Democrats, inveterate critics of defense spending, had had their way, there would have been no tank.

Back then, aside from riding on tanks, the Democrats tried to persuade voters that they were not weak on national security by seeking to “broaden the definition” of national security to include these very same social insurance policies that today they are claiming are “values” issues.

Whatever the merits of the minimum wage, Medicare, and social security, they are of little avail against foreign enemies or terrorists. And whatever they may do for your body, they do little for your soul. They make poor substitutes for ethics, self-discipline, and other traditional virtues that churchgoing voters presumably prize.

The Democrats’ problem for the past thirty-odd years has been that they are much more liberal than the electorate. Senator Lieberman was their one leader who was conspicuously devout. He also happened to be deeply serious about national security, so they hastened to chuck him out. In thinking they can solve their problem through semantic games, the Democrats are showing their contempt for the voters. Notwithstanding the anomalous results in 2006, the voters will continue to return the compliment.

According to a story in the January 16th New York Times, “Democratic congressional leaders say they are committed to governing from the center.” This newfound centrism focuses on social issues. Democrats are alarmed by 2004 exit surveys that showed that religious voters favored Bush by an overwhelming margin. Part of the response has been the creation of a “faith working group,” led by Representative James Clyburn, the new House majority whip. This group, according to the story, aims to “broaden . . . the definition of values-related issues . . . to include economic issues like raising the minimum wage, assisting low-income children with health insurance, and shoring up Social Security.” “That’s Old Testament Bible, taking care of widows and orphans,” says Clyburn.

This is the social-issues version of Michael Dukakis’s memorable ride atop a tank during his 1988 presidential campaign. He was trying to show voters that he was strong on defense, but the photo op backfired because many voters understood that if the Democrats, inveterate critics of defense spending, had had their way, there would have been no tank.

Back then, aside from riding on tanks, the Democrats tried to persuade voters that they were not weak on national security by seeking to “broaden the definition” of national security to include these very same social insurance policies that today they are claiming are “values” issues.

Whatever the merits of the minimum wage, Medicare, and social security, they are of little avail against foreign enemies or terrorists. And whatever they may do for your body, they do little for your soul. They make poor substitutes for ethics, self-discipline, and other traditional virtues that churchgoing voters presumably prize.

The Democrats’ problem for the past thirty-odd years has been that they are much more liberal than the electorate. Senator Lieberman was their one leader who was conspicuously devout. He also happened to be deeply serious about national security, so they hastened to chuck him out. In thinking they can solve their problem through semantic games, the Democrats are showing their contempt for the voters. Notwithstanding the anomalous results in 2006, the voters will continue to return the compliment.

Read Less