Prepare for lots of bad health care proposals in 2008.
Jun 18, 2007, Vol. 12, No. 38 • By DAVID GRATZER
Michael Moore has just finished a documentary on the problems of American health care. But it turns out Michael Moore is the problem with the U.S. system. Well, not exactly Moore, but people like him, if you follow the logic of Senator Hillary Clinton. Americans are obese, costing the system billions of dollars, says Clinton. And that will change if she's elected president. Though, for the record, Clinton adds, Moore and other obese people should pay no more for their health insurance (that would be discrimination). Also, we need to better understand ways to make Moore thin. So Clinton pledges a new government organization called the Best Practices Institute. After Moore and people like him shed a few pounds, she estimates that we'll save about 6 percent of our annual health expenses.
That, in a nutshell, is Hillary Clinton's health care platform, unveiled two weeks ago in a carefully planned speech at George Washington University.
More than a decade ago, Hillary Clinton promised a sweeping plan to remake our nation's health care system; today, she offers a plan to shrink our waistlines. Talk of a new American system is out; talk of a new American is in. "About 30 percent of the rise in health care spending," she explained at George Washington University, "is linked to the doubling of obesity among adults over the past 20 years."
Besides thinner Americans, what does she suggest? Better "prevention." She also likes computers. Electronic medical records are the ticket, she says, saving billions a year. And she favors several mainstays of Democratic policy: reimporting prescription drugs from Canada, regulating the insurance industry to stop its profiteering, and expanding coverage by expanding government programs.
Start with her desire to reimport prescription drugs. While the topic makes for great rhetoric-Don't Americans deserve the inexpensive meds our neighbor gets?-the reality is this: Other countries impose price controls on medications, we don't. Reimportation would (re)import price controls, undermining the profitability and thus the innovation of the pharmaceutical industry. Politicians like Clinton like to suggest that we should buy American drugs at Canadian prices. Notice what they never mention: Canadian innovation (or the complete lack thereof).
Further regulation of the insurance industry also sounds tempting. Clinton says Americans should be guaranteed health insurance but not punished for poor health. At the state level, such laws have been disastrous, since the young and healthy stop buying coverage, leaving a pool of older, less healthy people. It's the major reason a 30-year-old man will pay $200 a month for health insurance in New York while his Connecticut cousin pays an eighth of that for the same policy offered by the same company. Even liberal Washington state shelved these laws years ago.
Expanding government programs seems to make sense with so many uninsured. But the reality is that most program expansion has led to private insurance being replaced by public coverage. The State Children Health Initiative Program, up for renewal this year, could be a case study: For every dollar spent on SCHIP, Jon Gruber of MIT estimates, 60 cents out of the Treasury simply replaces private insurance.
Prevention? No one could be opposed to better prevention, but it's not clear that government policy has much influence on the dinner choices of America.
Here, though, is the clue to what's happening to the health care debate in America: In her first major address on health policy, Clinton said little that could not be found in a press release from the Democratic House caucus.
And the differences with her main rival Barack Obama are almost nonexistent. In his speech earlier this month, Senator Obama made similar proposals: prevention, a new institute to study effective treatments, regulation of insurance, and more coverage through more government programs. He hasn't yet come up with a name for his institute, but he too likes computers.
At first glance, it would seem Democrats are trying to distance themselves from the issue. Where they once were bold, they now tread lightly.
Here's another explanation: Democrats feel they're winning. Health care is again a major issue. Most polls show it as one of Americans' two top domestic policy concerns (the other being the overall state of the economy). Americans now say they favor universal health care. And the mood in the boardrooms is hardly different: CEOs increasingly see rising health costs as undermining competitiveness. It's one reason coalitions of union leaders and CEOs are springing up and demanding a fix (read: government takeover).
America is implementing Hillary Care on the installment plan: We are slowly succumbing to government-financed health care. Clinton proposes little because, in some ways, she's already won the arguments of the 1990s. As Washington these days debates expanding SCHIP, the only question is by how much. Proposed legislation would widen the scope of the FDA more than at any time in the past 45 years. States from California to New York are pushing to expand Medicaid.
The Republican presidential candidates need to take note and take action. It's true that Americans favor Democrats on the issue. But when it comes to general policy ideas, Americans have never been more cynical about wage and price controls, distrustful of government programs, or accepting of market reforms. In principle, they oppose everything in Hillary Clinton's plan.
The GOP contenders should consider some of the health policy ideas floated by the Bush administration: correcting the historic bias of the tax code to favor employers and individuals, and empowering people with health savings accounts. But the candidates also need to learn from the administration's failure: Six years after moving into the White House, President George W. Bush has not moved the debate, in part because he never invested much political capital.
The party of welfare reform can now become the party of Medicaid reform. The GOP should champion breaking the wage and price controls of Medicare, fostering competition within health care through deregulation, and challenging rising costs by further empowering people with more market-friendly options like health savings accounts.
Senators Clinton and Obama want to talk platitudes about obesity. The Republican candidates need to offer Americans a better prescription.
David Gratzer, a physician, is a senior fellow at the Manhattan Institute. His latest book is The Cure: How Capitalism Can Save American Health Care.