Can Bush Win on Health Care? He's Made a Good Start

The Wall Street Journal

Finally, a real debate over health care! In two speeches this week, George W. Bush gave a fresh glimpse of a free-market vision of health-care reform that would put money and control back in the hands of individuals. It’s a stark contrast to the policies of the last eight years — many of which Vice President Al Gore says he would extend — that advance government control over the health sector. Can Gov. Bush now build on such positive first steps and convince Americans his vision is best?

It won’t be easy. According to a recent Wall Street Journal poll, 41% of those surveyed believe Democrats do a better job at health care than Republicans; only 19% prefer the GOP. It’s no wonder, since Democrats peddle warm-and-fuzzy-sounding remedies like a patients’ bill of rights and a Medicare prescription-drug benefit. That’s why Mr. Bush’s new, proactive strategy is so important.

Unlike the 1993 Clinton health plan, which would have led to a $100-billion-a-year tax increase, the Bush plan provides real tax relief — tax credits of up to $2,000 a year for uninsured, low-income families to purchase private insurance. The credits — which should eventually cover millions more people — would put patients back in charge of health-care dollars and decision making, and help re-energize the flagging private health insurance market.

The Bush plan also unleashes Medical Savings Accounts from their regulatory shackles. According to the Treasury Department, one-third of all new MSA policyholders are people who were previously uninsured. Imagine how many more uninsured Americans will be helped if the red tape were removed. Mr. Bush would also allow workers with flexible savings accounts to roll over their health-care dollars at the end of the year, and he would allow states more flexibility in shaping programs for children’s health insurance. These are all steps in the right direction.

Mr. Gore also offers a refundable tax credit for the uninsured, worth up to 25% of the cost of private health insurance. But the rest of his proposals move in the wrong direction. He would expand Medicare, Medicaid and the health insurance program for children, an effort to lure more and more Americans into government-run health systems devoid of choice, competition and flexibility.

Consider Mr. Gore’s plan for a universal Medicare prescription-drug benefit. This would require the government to oversee up to 700 million to 900 million new claims every year. Suffocating bureaucracy, driven by more than 110,000 pages of mind-numbing regulations, is already one of Medicare’s biggest problems. Why make the problem worse?

Mr. Gore’s plan also exacerbates Medicare’s other major problem — its looming insolvency. The administration can’t possibly keep the cost of the drug benefit to $160 billion over 10 years, as the White House estimates. Costs will inevitably rise, leading to price controls and shortages and drying up the research base for the pharmaceutical industry, which is on the threshold of extraordinary innovations.

At the same time, the administration’s patients’ bill of rights would make health insurance more expensive — premiums would increase by 4.1%, according to the Congressional Budget Office. According to the Lewin Group, every 1% increase in health-care costs causes 300,000 people to lose their coverage. The Clinton-Gore plan would be expected to swell the ranks of the uninsured by at least 1.2 million people.

The figure is probably higher, because the patients’ bill of rights would also unleash a blizzard of lawsuits. A survey of 400 human-resource directors for the American Association of Health Plans found that if employers are exposed to more lawsuits, 38% “would be likely to stop providing coverage for some or all of their employees” and 57% “would be likely to stop doing so for some or all retirees.” That could cause up to 15.4 million Americans to lose health insurance.

It is critical, therefore, that Mr. Bush continue to champion his free-market vision of health care — and build upon his strategy in three ways:

  • First, make a strong push for Medicare reform that gives seniors the freedom to choose from a variety of private health plans. Today, federal employees — from congressmen to janitors — can choose from hundreds of private insurance plans. Options are tailored to people’s specific needs. Competition among plans keeps costs down. The same principles should be applied to Medicare. Let seniors choose among competing plans, including those offering low-cost catastrophic insurance, Medicare Medical Savings Accounts and generous prescription drug coverage.
  • Second, immediately create prescription-drug coverage targeted at those who need it most; full Medicare reform will take more time. These payments could enable lower-income Medicare recipients to pay drug bills directly, purchase coverage or choose a Medical Savings Account. But provide this benefit only to the needy. Two-thirds of seniors already have supplementary coverage, and it’s important that government not crowd out private coverage.
  • Third, create a brand name for the Republican health reform strategy. During the primaries, I served as a health policy advisor to Steve Forbes, who proposed many of the health-care reforms Mr. Bush is now adopting. He called his plan “A Health Care Declaration of Independence” — a catchy name that Mr. Bush should adopt. Remember: Most Americans haven’t the foggiest idea what the “patients’ bill of rights” includes. What they do know is that Democrats have a plan they’ve heard of, and Republicans don’t. Branding works in business; make it work in policy, too.

After eight years of liberals debating themselves over how best to nationalize American health care, Americans desperately need to see a compelling free-market vision. Mr. Bush is now beginning to offer just that.

Grace-Marie Arnett is president of the Galen Institute, a public policy research organization based in Alexandria, Virginia. She is the editor of Empowering Health Care Consumers through Tax Reform, published in 1999 by the University of Michigan Press.

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