Universal Care Works Great; Just Don’t Get Sick

Health care already has emerged as a top issue for the 2008 elections. Sensing mounting public support for reform, each of the leading Democratic candidates is calling for universal health coverage, as are a number of governors from both sides of the aisle, including Republican Gov. Arnold Schwarzenegger of California.   

“We need a truly universal solution,” former Sen. John Edwards insisted at a recent Democratic campaign event, “and we need it now.”  Republican Mitt Romney was the first to stake claim to this territory by enacting his plan in Massachusetts.

Sen. Barack Obama has promised universal coverage by 2012, and Sen. Hillary Clinton has made her goal clear for many years.  Now comes Gov. Schwarzenegger with a plan that would cost $12 billion the first year and mandate that every resident of California get insurance.

Virtually all political leaders see universal health insurance as a worthy and important goal. But it’s important to look past the rhetoric to see what the plans would really mean.

In 1994, then First Lady Hillary Clinton proposed a complex plan to redesign the U.S. health care system. Her 1342-page legislative plan called for new Health Insurance Purchasing Cooperatives, individual mandates, and a “pay or play” system that would force companies to shell out a portion of their payroll into a government fund if they didn’t provide health coverage.  This is much like the plan that Gov. Schwarzenegger is proposing now.

Most economists agree that such a plan would hurt low-wage workers the most, as the new taxes would force business owners to choose between cutting wages, laying off workers, or shutting their doors.

All of these plans call for a much bigger role for government, not only in enforcing individual and employer mandates, but also in getting the government involved in setting prices for everything from prescription drugs to insurance policies.

Former Sen. Edwards has called for a federal health insurance agency which could become the basis for a single-payer system that would eventually eliminate private health insurance. Although Senators Obama and Clinton have yet to reveal the details of their plans, they will surely call for a much bigger role for government.

But a quick glance at systems around the world shows that socialized medicine isn’t what it’s cracked up to be.

State-administered systems always fall victim to laws of supply and demand. In a healthy marketplace, consumers determine what they’re willing to pay. But in a price-controlled system, bureaucrats and politicians make those decisions instead.

Case in point:  Two new "wonder drugs" with the potential to prolong the lives of thousands of kidney cancer sufferers are being denied to British patients because they are too expensive.

The drugs have proven to shrink tumors dramatically, with some disappearing altogether. The drugs have been licensed for safety, but the British government agency that approves payment for new drugs so far has declined approval.

In the interest of national budgets, state-administered health systems have an incentive to put saving money before lives.

This creates a serious discrepancy between what’s needed and what’s provided – including the ratio of doctors to patients. Japan, for example, spends only about half as much of its gross domestic product on health care as the United States. But the resulting low salaries that doctors receive have caused a deadly shortage of cancer specialists in a country where the disease is the leading cause of death.

Government decisions can also have a dampening effect on progress and innovation.  In 1993, for example, the Clinton administration proposed a plan to control prices on so-called “breakthrough” drugs. These are the innovative drugs that offer important new treatments but which are so new, they don’t yet have any competitors.

Not surprisingly, the two years after her price control plan was announced saw substantial declines in the growth of drug research and development. It wasn’t until after the Clinton plan was defeated that investment in pharmaceutical research and development began to return to previous levels.

In other words, when the government gets its hands on drug pricing, drug creation takes a hit. Never mind those who desperately await the invention of the next miracle cure.

The best health care decisions are made by patients and their doctors — not by the government. That’s why the solution to America’s health care costs doesn’t lie with expanded public programs. Instead, it lies with creating a uniquely American system grounded in proper greater incentives, more affordable choices, and expanded access to care and coverage.

President Bush’s recent proposal to allow individuals to purchase health insurance with pre-tax dollars is a good start. Indeed, the idea of personal, portable health insurance has been widely praised across the political spectrum, a remarkable feat for a president with record-low approval ratings.

As health care reform takes center-stage in the 2008 campaign, congressional leaders should not reflexively dismiss the president’s plan. It would make insurance affordable for the millions of uninsured, while giving all Americans more freedom to select the insurance plan that best fits their personal needs.

In a nation that loves choices, a one-size-fits-all, top-down approach just won’t sell.

*************
Grace-Marie Turner is president of the Galen Institute, a non-profit research organization focusing on free-market solutions to health reform.  She can be reached at P.O. Box 320010, Alexandria, VA 22320, or at turner@galen.org.

SHARE THIS ARTICLE

About the author

Health care already has emerged as a top issue for the 2008 elections. Sensing mounting public support for reform, each of the leading Democratic candidates is calling for universal health coverage, as are a number of governors from both sides of the aisle, including Republican Gov. Arnold Schwarzenegger of California.   

“We need a truly universal solution,” former Sen. John Edwards insisted at a recent Democratic campaign event, “and we need it now.”  Republican Mitt Romney was the first to stake claim to this territory by enacting his plan in Massachusetts.

Sen. Barack Obama has promised universal coverage by 2012, and Sen. Hillary Clinton has made her goal clear for many years.  Now comes Gov. Schwarzenegger with a plan that would cost $12 billion the first year and mandate that every resident of California get insurance.

Virtually all political leaders see universal health insurance as a worthy and important goal. But it’s important to look past the rhetoric to see what the plans would really mean.

In 1994, then First Lady Hillary Clinton proposed a complex plan to redesign the U.S. health care system. Her 1342-page legislative plan called for new Health Insurance Purchasing Cooperatives, individual mandates, and a “pay or play” system that would force companies to shell out a portion of their payroll into a government fund if they didn’t provide health coverage.  This is much like the plan that Gov. Schwarzenegger is proposing now.

Most economists agree that such a plan would hurt low-wage workers the most, as the new taxes would force business owners to choose between cutting wages, laying off workers, or shutting their doors.

All of these plans call for a much bigger role for government, not only in enforcing individual and employer mandates, but also in getting the government involved in setting prices for everything from prescription drugs to insurance policies.

Former Sen. Edwards has called for a federal health insurance agency which could become the basis for a single-payer system that would eventually eliminate private health insurance. Although Senators Obama and Clinton have yet to reveal the details of their plans, they will surely call for a much bigger role for government.

But a quick glance at systems around the world shows that socialized medicine isn’t what it’s cracked up to be.

State-administered systems always fall victim to laws of supply and demand. In a healthy marketplace, consumers determine what they’re willing to pay. But in a price-controlled system, bureaucrats and politicians make those decisions instead.

Case in point:  Two new "wonder drugs" with the potential to prolong the lives of thousands of kidney cancer sufferers are being denied to British patients because they are too expensive.

The drugs have proven to shrink tumors dramatically, with some disappearing altogether. The drugs have been licensed for safety, but the British government agency that approves payment for new drugs so far has declined approval.

In the interest of national budgets, state-administered health systems have an incentive to put saving money before lives.

This creates a serious discrepancy between what’s needed and what’s provided – including the ratio of doctors to patients. Japan, for example, spends only about half as much of its gross domestic product on health care as the United States. But the resulting low salaries that doctors receive have caused a deadly shortage of cancer specialists in a country where the disease is the leading cause of death.

Government decisions can also have a dampening effect on progress and innovation.  In 1993, for example, the Clinton administration proposed a plan to control prices on so-called “breakthrough” drugs. These are the innovative drugs that offer important new treatments but which are so new, they don’t yet have any competitors.

Not surprisingly, the two years after her price control plan was announced saw substantial declines in the growth of drug research and development. It wasn’t until after the Clinton plan was defeated that investment in pharmaceutical research and development began to return to previous levels.

In other words, when the government gets its hands on drug pricing, drug creation takes a hit. Never mind those who desperately await the invention of the next miracle cure.

The best health care decisions are made by patients and their doctors — not by the government. That’s why the solution to America’s health care costs doesn’t lie with expanded public programs. Instead, it lies with creating a uniquely American system grounded in proper greater incentives, more affordable choices, and expanded access to care and coverage.

President Bush’s recent proposal to allow individuals to purchase health insurance with pre-tax dollars is a good start. Indeed, the idea of personal, portable health insurance has been widely praised across the political spectrum, a remarkable feat for a president with record-low approval ratings.

As health care reform takes center-stage in the 2008 campaign, congressional leaders should not reflexively dismiss the president’s plan. It would make insurance affordable for the millions of uninsured, while giving all Americans more freedom to select the insurance plan that best fits their personal needs.

In a nation that loves choices, a one-size-fits-all, top-down approach just won’t sell.

*************
Grace-Marie Turner is president of the Galen Institute, a non-profit research organization focusing on free-market solutions to health reform.  She can be reached at P.O. Box 320010, Alexandria, VA 22320, or at turner@galen.org.

SHARE THIS ARTICLE

About the author