Politics & Policy

A Prescription For Health

Two new books remind us that free-market reforms should be a priority for President Bush.

After sealing his win, President George W. Bush outlined an ambitious domestic agenda for the second term: Social Security reform, tax simplification, higher academic standards for public education, and a ban on same-sex marriage. Absent from the list was any mention of health care. Perhaps it was a small oversight in the post-election haze. But this much is clear: If President Bush is looking for an issue desperately in need of attention, health care is it. And he can start by taking a close look at two books that have just been published.

A decade ago this fall, HillaryCare collapsed. Much has changed politically over the last ten years. Republicans gained control of the House and the Senate; George W. Bush was elected president; 9/11 happened; Bill Clinton retired and wrote his memoir. And yet, at least one constant remains: America’s worry about health care. In a Market Strategies poll, 86 percent of people expressed deep concerns about rising costs.

If the problems are familiar, so are the solutions. While the grand designs of the Clinton White House went unrealized, the idea of some type of national effort appears more and more popular. Just this summer, the National Coalition on Health Care, a bipartisan organization chaired by former presidents Bush and Ford, announced support for a universal coverage scheme that would centralize key health decisions to a government committee. Prop 72., the disastrously expensive California health-care referendum that managed to score criticism even from the San Francisco Chronicle, failed by just 2 percent.

Americans appear to be coming full circle, returning to their starting point of a decade ago.

Perhaps that’s what makes Sally Pipes’s new book, Miracle Cure: How to Solve America’s Health Care Crisis and Why Canada Isn’t the Answer, so interesting. Pipes, a Canadian who runs a feisty California think tank, offers a unique perspective. Born and raised in Canada, she is intimately familiar with health care north of the 49th parallel, but for the last dozen or so years she has lived and worked in the United States. As a result she offers a clear-eyed view of both systems.

Also out this fall is the latest effort of John Goodman. The president of the National Center for Policy Analysis, Dr. Goodman helped shift the present health debate with Patient Power, laying the intellectual foundation for health savings accounts. Teaming up with two coauthors, he again offers critical insights on health care and health reform in his latest book, Lives at Risk: Single-Payer National Health Insurance around the World.

Whereas health-policy books are usually far and few in between (and hopelessly liberal), right now the free-market cup runneth over: Both of these books are outstanding.


For the last decade, two ideas have dominated the health debate in the United States: government expansion and managed care. After the collapse of HillaryCare in Washington, many statehouses pushed ahead with similar reforms. Consider that in Vermont, a family earning more than $50,000 is still entitled to some Medicaid benefits.

Surveying the situation–from HillaryCare-lite south of the border to Canadian health care–Pipes finds little compelling. She argues that a robust role for government in the payment of health care quickly leads to a robust role in its management and rationing. Canadians are familiar with this: More than a million can’t find a family doctor, according to a recent government-sponsored study. Pipes offers many a moving anecdote, but the most damning condemnation of Canadian health care–the “miracle cure” touted by academic liberals–comes from a Canadian surgeon who observes, “Everybody waits.”

Goodman provides page after page of data. From the percentage of people waiting more than four months for surgery in five countries (5 percent in the U.S., 36 percent in Britain) to an international comparison of mortality rates for prostate cancer (the U.S. has the highest incidence of the disease, yet the lowest percentage of deaths), he offers countless examples of government-run health care falling well short of the American standard. As a Canadian physician who has written a book on public health care and edited another, I was awed by the depth of Goodman’s research.

Though its reputation has been shattered, managed care actually did contain costs, a point made by both authors–and yet health outcomes weren’t affected by their cost-containing techniques. But in an age of consumerism, allowing HMO bureaucrats to dictate your care is unpalatable. Whereas the idea of some type of managed competition was once advocated by everyone from former Vice President Walter Mondale to House Speaker Newt Gingrich, HMOs are discredited.

But if not Canadian-style medicare or American-style managed care, then what? American experts are scrambling to find a meaningful answer, not unlike economists in Eastern Europe after the collapse of the Berlin Wall: Everyone knows what doesn’t work, but no one quite knows what to put in its place.


Both Pipes and Goodman find an alternative in the concept of greater individual choice and control. Rather than leave important decisions up to others, we should “put consumers in the drivers’ seat.” The authors note that the most basic problem with American health care is that patients don’t pay directly for the services they receive; consumers pay just 14 cents on every health dollar spent. The economics are clear. Consumers pay little directly–and demand expensive and inefficient service. With a third party paying the bills, key decisions are left to payers, not patients. It’s a prescription for universal dissatisfaction.

Health savings accounts are an important first step toward addressing this economic problem. Created by last year’s Medicare Modernization Act, health savings accounts (or HSAs) put consumers in charge. HSAs marry real insurance (that is, coverage for high and unpredictable costs) with contributions to a savings account that can be used to pay for smaller health expenses and rolled over from year to year.

Pipes and Goodman both see great hope in the idea of consumer-directed health care. And so do Republicans. At the end of a campaign rally in Iowa, the president promised: “We’ll expand health savings accounts so more small businesses can cover their workers, and more families are able to get health care accounts they can manage and call their own.” After a decade of bipartisan efforts to expand government, the president now champions a different approach.

But much work remains. HSAs are just the first step. Pipes is particularly strong in outlining what do to next: strengthening insurance options by allowing companies to team up and purchase insurance together (association health plans) and to purchase out-of-state insurance. She argues for further deregulation, thus allowing innovation to help reshape American health care. Goodman pushes further–advocating, for instance, that we scrap present subsidies for the uninsured and simply give them vouchers.

Republicans haven’t had much luck with health care; other issues offer easier political targets. But an “ownership society” must surely involve ownership of one’s health care. Health reform must therefore be a second-term priority.

David Gratzer, a physician, is a senior fellow at the Manhattan Institute.


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