The Magazine

Two Aspirin and Call Us in 2008

The GOP health care consensus.

Oct 1, 2007, Vol. 13, No. 03 • By YUVAL LEVIN
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The 2008 presidential campaign has seen the Democrats more outspoken on health care than they have been since the early 1990s. The three frontrunners have produced health care proposals that would greatly increase the role of the government in funding and managing the nation's health insurance system, and all constantly speak about health care on the stump.

An aggressive approach would seem to make political sense. Americans are clearly concerned about the cost of health care--often listing it just behind the war in Iraq among their worries--as well as the instability of coverage and the plight of the uninsured. But when pollsters begin to dig into these worries, what they turn up is not quite what the Democrats are hoping.

To begin with, those Americans who are insured--which, of course, includes the vast majority of voters--are very happy with their coverage and care. Almost 90 percent of them rated their coverage good or excellent in last year's Kaiser Foundation poll on health care, the highest rating in the two decades Kaiser has been polling. In the same poll, 93 percent were happy with their quality of care, 86 percent with their ability to get a doctor's appointment when they want to, and 77 percent with their ability to get non-emergency care without having to wait. A surprisingly high 64 percent even said they were satisfied with their health care costs. These are not voters clamoring for radical change in their health care.

Americans are also not eager to see a more intrusive federal role in health insurance. In early September, Senate Republicans were briefed on the results of recent polling of women and swing voters in key 2008 states which showed that "government-run health care" was a very powerful turn-off for these crucial constituencies. More recent surveys turn up the same result: Voters are anxious about health care, but the prospect of a new bureaucracy to manage their care worries them, too.

What troubles them about the current system is the inherent instability of employment-based health insurance, which links changes in jobs to changes in health coverage. Rising costs, moreover, mean that those just barely holding on to coverage must constantly worry about losing it. Add in the fact that tens of millions of Americans are without insurance, and you have a real desire for action.

But the Democrats' approach to health care, which would essentially dismantle our existing insurance system and replace it with a new one with the government at its center, is a grossly excessive response to these concerns. The candidates' plans would seriously undermine what the vast majority of Americans appreciate about their health care and would introduce new sources of concern. The Democrats made this mistake in 1993, and Republicans were able to crush HillaryCare by just pointing to its profound flaws. In 2007 voters have more serious concerns about health care (and recognize the genuine problems of the uninsured); Republicans will need something to counter with.

Rather surprisingly, though, the Republicans may be prepared. In recent months, without fanfare, a Republican health care consensus has emerged. It is backed by the administration, which introduced a series of proposals in a low-key presidential speech in June. It has the support of Republican leaders in Congress, who have taken to speaking more about health care this summer. And in one form or another it has made it into the stump speech of the leading presidential contenders. The approach consists of three parts: reform of the way health insurance is taxed, more control for consumers in how health care dollars are spent, and more flexibility for states to use Medicaid funds to help the uninsured. Each of these pieces is larger than it seems.

Tax law is the principal shaper of America's health care-insurance system, because money spent by employers on health insurance (unlike money spent on salary or other benefits) is not taxed, which creates an enormous incentive to pay for health coverage through our employers. Republicans from George W. Bush to Rudy Giuliani to Mitt Romney have proposed creating a standard health care deduction (or tax credit), which would make it equally sensible for individuals to buy their own insurance as it is to get it through work. An individual insurance policy would stay with you if you changed jobs, and such a market would make it cheaper for small-business workers and the self-employed (a significant portion of the uninsured) to afford coverage.

Individually purchased health care coverage would also create more cost-conscious consumers. Galloping growth in health care costs is a major source of the public's anxiety about coverage. The Bush administration has begun to use the lever of Medicare payments to force physicians and hospitals to make prices publicly known, and Republicans in Congress and on the campaign trail have pushed for greater openness about costs too. Together with the long-standing campaign for Health Savings Accounts, this begins to point the way toward a more consumer-driven health care market. Health care is not quite like any other commodity (nor should it be), but it can be subjected to some market pressures to control costs and empower patients.

Finally, Republicans have also proposed allowing states more latitude in using Medicaid dollars that now pay for "uncompensated care" (which mostly covers care for the uninsured who do not directly qualify for Medicare) to provide subsidies for the uninsured to help them buy their own private coverage. As governor of Massachusetts, Mitt Romney used such an approach. But rather than a national version of his state's plan, in August Romney proposed giving each state the ability to design its own approach to the problem. (In the same speech, he also lined up behind a tax reform proposal and consumer-driven health care.) The Massachusetts model, he suggested, could help other states. But for the federal government, his preferred solution is much like Bush's and, by all indications so far, like those of all the prominent Republican presidential candidates. It is the new GOP health care consensus.

This mix of proposals is not without its own problems. Medicaid flexibility, for instance, has tended to encourage state irresponsibility with federal dollars in the past. And consumer-driven health care, if carried too far too fast, can increase the an-xiety of families by forcing them to make unfamiliar choices. But on the whole, Republicans have put forward serious yet modest proposals that address voters' concerns about the stability and portability of their insurance coverage and help the uninsured while keeping in place a private insurance system that works quite well for the great majority of Americans.

The overreaching of the Democrats may hand Republicans an unexpected opportunity on health care reform. Both parties are seeking to address the concerns of the middle class and uninsured, but the Republican approach builds on what most middle-class voters like about the current system (its relative freedom, lack of waiting, and decent quality), while the Democratic approach builds on what they don't like (bureaucracy and loss of control over health decisions).

Some Democrats are clearly aware of their vulnerability. In rolling out her health care proposal last week, Hillary Clinton was notably defensive. "This is not government-run," she said in her two speeches announcing the plan. "There will be no new bureaucracy." But her plan calls for a new federal individual health insurance mandate (which will require an entirely new national regulatory structure for coverage) and includes a new public government-run insurance program on its menu of coverage options. It points precisely to bureaucracy and government-run health insurance. The lady doth protest too much.

A savvy Republican candidate would talk about two sets of health care problems: The first are the problems of the system we have, and the second are the prospects of centralized, bureaucratic, government-managed health care, which the Democrats support--slowly dismantling our health care system and replacing it with a huge bureaucracy from the people who brought you the post office and the DMV.

The new Republican approach to health care would address both problems through targeted reforms that control costs, give more people access to private insurance, improve the stability and portability of coverage, and increasingly put insurance decisions in the hands of individuals and families, where they belong. This is the platform the Republicans have long needed.

Yuval Levin is a fellow at the Ethics and Public Policy Center and senior editor at the New Atlantis magazine.