In 1993, the Clinton Administration tried to reform health care with a “White House knows best approach.” That effort crashed and burned, deservedly so.
President Obama is trying the opposite tack: He is telling Congress, “Here are my general objectives – affordable health-care for everyone, ‘deficit neutrality,’ and no reduction in current benefits – and, please, Congress, you figure out how to pay for everything."
Once again, the President is all “fox” and no “lion.” He is saying, "Let Congress do the heavy lifting and I will market the outcome if I can say it meets my criteria."
An Ugly Duckling Emerges. After reading the transcript of the President's July 22 news conference, it is clear he sees health care reform legislation as his ticket to re-election in 2012, just as George W. Bush used Medicare drug entitlement legislation to ensure re-election in 2004. In other words, President Obama will sign any comprehensive reform bill so long as it purports to be "deficit neutral," increases coverage to nearly all Americans, and doesn't eliminate any benefits for current Medicare and Medicaid beneficiaries.
The official commentary on HR 3200, the legislation jointly reported out of three House Committees, claims that half of its costs would be paid for by "significant efficiencies and savings" in Medicare and Medicaid and the rest would be recovered through an income tax surcharge on "the wealthiest." The White House goes even further - with the President insisting that two-thirds of the cost of increased coverage can be recovered through cost savings in existing programs, and coyly indicating he will go along with most any tax increase Congress can agree on.
The Congressional Budget Office begs to differ: its admittedly incomplete analysis of the House legislation suggests an increased deficit of $239 billion over the ten-year period 2010-2019.
Both the President and Congress seem to find beating up insurance and drug companies, doctors, and hospitals as the way to go to get their savings. The House legislation is full of mandates telling everyone how to run their business. It also establishes a "public health insurance" option (cost unspecified) intended to compete with private and nonprofit organizations and force them to be more efficient. (If you like the way the government runs the finances of Medicare and the Pension Benefit Guaranty Insurance Corporation, you will love this new player.)
As it stands, HR 3200 is an ugly duckling, and likely to do little to improve the dysfunctional nature of our current health care system; in all likelihood it will make it - and the budget deficit - worse.
What Would A Lion Do? If the President wanted to enact genuine reform, he could take a number of steps that would accomplish some of his objectives. It would mean taking on tough issues directly, rather than accepting dysfunctional Congressional legislation. Some illustrative, common sense (but politically difficult) measures, which require no budget outlays, could include:
Make employer-paid health insurance premiums taxable. Such a step is just as important for its impact on changing employee preferences for gold-plated insurance programs - which help drive up the cost of health care - as it is for the additional revenue it would generate. Leading Democrats such as former Senator Daschle and John Podesta, a former Obama staffer, have promoted a variation on this. Permit a free market in living donor kidney sales for transplants. According to a series of articles in the peer-reviewed American Journal of Transplantation, every additional kidney transplant can save taxpayers $94,000 compared to having patients on Medicare-financed dialysis, as well as improving the quality of life and longevity of such patients. Back of the envelope calculations by Virginia Postrel suggest that giving each living donor about half of these savings would still result in a $4 billion reduction in Medicare spending. Permit nurse practitioners at a Walmart kiosk (for example) and or pharmacists to perform routine medical office tasks (many state laws place substantial barriers to such activity). Play no favorites among medical specialties in subsidizing doctors' education or Medicare treatment reimbursements; as it is now, primary care and internal medicine practitioners (usually the only ones who can see the patient as an entire human being) are at the bottom of the totem pole, despite substantial evidence that they are best placed to manage patient care. The rapid growth of "concierge medicine" for wealthier individuals is the most visible sign of this fact. These are just a small sample of the many ideas which market-oriented economists and health care policy experts have studied. Look at the Cato Institute's web site for additional suggestions. Financially, nearly all of these ideas are cost-free - but they require genuine leadership and spending scarce political capital. Health care reform is an issue that desperately requires both. Machiavelli wrote that leaders need, depending on the times, to be both a fox and a lion. Now its time for President Obama to act more like a lion.
