Politics & Policy

A GOP Prescription

Health care need not be a Democratic issue.

Americans rank health care as one of their top domestic concerns; Democrats are heavily favored on the issue; and Barack Obama campaigns on his health-care plan. What’s a Republican to do?

The GOP can start by attacking Democratic overreach. Americans dislike big-government programs. They dislike wage and price controls. They hate being told what to do. Yet, in many ways, those are the core principles of practically every major Democratic health-care proposal today. Republicans should remind voters of the heavy-handed features of Democratic plans — the very features they rebelled against in 1994.

The temptation is to stop there, and content themselves with derailing wrongheaded policies. But this time, the GOP can’t stop there — it’s not 1994 anymore. Republicans need to understand that it’s simply not enough to oppose the changes Sen. Obama and others are supporting. Americans need a solution this time, not just a counter-argument.

Fortunately, Sen. John McCain has bold ideas to remake American health care. The presumptive GOP nominee promises to focus on cost, not coverage. And he starts with a recognition of reality: our present system, rising out of World War II-era wage and price controls, allows employers, but not families, to pay health-care premiums in pre-tax dollars. This costs the treasury more than $200 billion a year, vastly more than, say, agricultural subsidies. In this employer-centered system, individuals pay directly just 13 cents of every health dollar. This payment structure contributes to rising health costs, sapping American economic competitiveness and endangering middle-class prosperity.

McCain proposes scrapping 60 years of bad tax policy and getting employers out of the health-insurance game. Instead, every family would receive a tax credit to purchase their own insurance, either directly, or through their union, trade association, or church. This would not only make health insurance portable, but would also encourage people to pick more basic coverage and to shop around for routine care.

Under McCain’s plan, Americans will have the opportunity to get health insurance that follows them from job to job, an idea particularly attractive to what Ross Douthat and Reihan Salam call Sam’s Club Republicans — conservative-leaning Americans of modest means. McCain’s plan would be even stronger if he addressed four additional proposals:

Foster competition

American health care is the most regulated sector in the economy. The result? A health-insurance policy for a 30-year-old man costs four times more in New York than in neighboring Connecticut because of the multitude of regulations in the Empire State. Americans can shop out-of-state for a mortgage; they should be able to do so for health insurance.

The regulatory insanity affects all aspects of health care. Consider: Americans have a choice of reflexologists who will stick a candle in their ear to cure their heart disease, but state and federal governments restrict the choice of hospitals if Americans want to get surgery by a board-certified heart surgeon. A McCain administration would commit itself to foster competition at every level.

Increase transparency

Competition is of limited use if people have no access to data on pricing or quality. It’s great to have a choice of hospitals, but how to tell which excel and which don’t? American health care today is a “black box” — a closed system where little information flows out. McCain would not only release all federal government data, but also compel anyone receiving federal grants or compensation to do the same — which basically means everyone.

Reform Medicaid as they did welfare

Like Aid to Families with Dependent Children, the federal government’s old welfare program, Medicaid is expensive and deeply flawed. One of the fastest-growing government programs, Medicaid leaves inner-city children with coverage on paper but unable to access specialists, while wealthy seniors use the program to subsidize their long-term care. Between 1980 and 1995, the program’s costs quintupled, yet health outcomes remain far worse than in private plans. Even the New York Times declares the program rife with “waste, fraud, and abuse.” Part of the problem stems from the fact that the program is shared between the federal and state governments — and is thus owned by neither. A McCain administration will seek to fund Medicaid with block grants to the states, and then let them innovate.

Address drug prices by pruning the FDA

In large part because of the regulatory hurdles set by the FDA, it costs nearly a billion dollars for a prescription drug to reach the market — effectively a massive tax on pharmaceuticals. With new technology and focus, it should be possible to modernize the FDA, and overhaul its structure and mandate. McCain pledges to foster an innovative market for drugs, yet more reasonable pricing for Americans.

Pull this all together, and it makes for a compelling package — one that will empower families, build a better safety net, and potentially tame ever-rising health costs. American families would own their own health insurance and finally see into the black-box of the health-care system.

And there is potential political appeal, as well. The right to buy out-of-state insurance, for example, might prove a powerful pocketbook issue in blue states with the costliest insurance mandates — many of which Barack Obama failed to carry in the Democratic primary. McCain could make a compelling appeal to these voters’ fiscal sense, perhaps enough to make the races in those states a contest. In New Jersey, for example — where citizens pay twice as much for health insurance as they could in Connecticut — McCain could say again and again, vote for me and you’ll save thousands on your health insurance.

As solid as these ideas are, McCain’s needs to show more enthusiasm for discussing them. Since his October speech outlining his support for tax credits, he has barely mentioned health care on the campaign trail. He needs to take a page from candidate George W. Bush’s 2000 campaign. There, the future president discussed education practically every day, challenging Democratic dominance of the issue with his own proposals. By campaign’s end, he had helped close the education polling gap.

Perhaps the senator doesn’t feel comfortable discussing the nuances of the health-care issue. Yet he has built a career on denouncing government waste and Washington mismanagement, and health care is rife with both. Senator McCain has made no secret of his fondness for President Theodore Roosevelt and the trustbusters of the early 20th century. He could fashion himself as their modern heir, beating down the barriers to individual choice and competition in health care. While Obama promotes health-care “reform” that is simply more of the same government mandates and market interference, McCain has an opportunity to offer Americans real health-care change. Speak up, Senator.

– Dr. David Gratzer, a physician, is a senior fellow at the Manhattan Institute. His latest book, now in paperback, is The Cure: How Capitalism Can Save American Health Care.


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