The Magazine

Real Health Reform

Republicans have a chance to advance some market-oriented reform ideas.

Aug 17, 2009, Vol. 14, No. 45 • By YUVAL LEVIN
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This has been a most unhappy summer for liberal health care reformers. As recently as May, Senate Finance Committee chairman Max Baucus could exclaim to the Washington Post, "The train is leaving the station. There's a sense of inevitability here." Yet as members of Congress begin their August recess, that train seems to have run off its rails, and the health care overhaul envisioned by President Obama and congressional Democrats is in real jeopardy.

Public concerns about the cost of the Democrats' proposal, its effects on the quality and availability of care, the disruption of coverage for the happily insured, and the prospects of ballooning bureaucracy each contributed to this turnabout. But it was the combination of them all--arising from the immense ambition of the plan as a whole--that has truly threatened to undo the effort.

In this sense, today's Democrats have repeated a crucial error of the Clinton health care initiative of 1993-94: They have tried to take on the entire massive and complex American health care system at once, rather than pursuing discrete solutions to particular problems in manageable steps. This is not an incidental feature of the liberal approach to health care reform. It is a function of the left's deeply held view that reform must involve wholesale reinvention from scratch, so that every last detail can be subjected to rational control and centralized expertise.

Inevitably, the result is a project too large, too complicated, too expensive, and too disruptive to succeed. And the public knows it. Polls show voters think Obama is taking on too much, and because this massive effort comes in the midst of the worst economic downturn in a generation, voters have the added sense that the Democrats' focus on health care distracts from attending to economic growth and recovery. The public has turned against Obamacare in strikingly large numbers--far worse than those Hillarycare faced at this stage in the Clinton effort.

For Republicans, this presents an opportunity to avert a sharp leftward turn in health care policy, and perhaps even to advance some market-oriented reform ideas. To do so, they must highlight not only the many flaws of Obamacare, but the overall flaw: the error of taking on too much at once.

As they talk to constituents this month and prepare for the resumption of the legislative struggle in the fall, Republicans should stress the excessive ambition of the Democrats' effort--aimed as much at transforming the relationship between the American people and their government as at solving actual problems of health care financing--and should highlight their own more practical, affordable proposals, which need not be undertaken as a single massive transformation in a single bill too long for anyone to read.

For most Americans, the shortfalls of our health care system express themselves in high costs (leading to the high number of uninsured), the instability of health coverage tied to employment, and the long-term fiscal nightmare of our Medicare and Medicaid entitlements.

To begin to address costs, conservatives should stress some ways of combating the inefficiencies of the current system. Ending the tax penalty for purchasing health coverage outside the employer system would help build a genuine individual market in health insurance and encourage the informed consumer choices and provider competition essential to reining in costs. The Democrats are increasingly open to taxing employer health benefits to pay for their massive new entitlement. Republican reformers should instead propose to extend the benefit to everyone in the form of a refundable tax credit for individuals to enable the creation of a true private health insurance market.

To further encourage competition, Republicans should call for reforms of insurance regulation to allow for the sale of coverage across state lines, and to allow small businesses to join together in negotiating coverage for their workers. And they should make a forthright case for medical liability reform, to lower costs and free doctors from the burdens of defensive medicine. The Democrats, out of deference to trial lawyers, have entirely avoided such reforms.