The Corner

Audacious Health Care Goals

Last week’s White House summit on health reform showed how much we need to bring reality and perspective to the debate.

President Obama’s opening address and most of the comments in the breakout sessions demonstrated abundant hope about solving the cost/quality/access axis and general agreement that the realities that have intruded in the past to block major reform can be moved aside this time.

The Washington Post’s Ceci Connolly wrote today that “ex-foes of health-care reform emerge as supporters,” including insurance companies, business groups, and others who fought HillaryCare in the ‘90s. The article makes it appear as though all of the business, industry, and political leaders attending the summit have come to the table to deal and are ready to “make reform happen.”

A dose of reality was injected when Sen. Charles Grassley (R., Iowa) challenged the idea of a new government-run health plan for working Americans:

Grassley, the top Republican on the Senate Finance Committee, argued that the ‘public option’ would make government ‘an unfair competitor’ to private insurers.

‘The thinking on the public option has been that it gives consumers more choices and helps keep the private sector honest,’ Obama replied.

Sens. Grassley, Mitch McConnell, and other Senate Republican leaders sent a letter to Obama earlier that day saying:

Washington-run programs undermine market-based competition through their ability to impose price controls and shift costs to other purchasers. 

Forcing free market plans to compete with these government-run programs would create an unlevel playing field and inevitably doom true competition. Ultimately, we would be left with a single government-run program controlling all of the market. This would take health care decisions out of the hands of doctors and patients and place them in the hands of another Washington bureaucracy.

The vast majority of the groups represented at the summit strongly support a federal health insurance plan, and some are even advocates of a single-payer system. The list of summit participants included no fewer than nine unions: SEIU, UFCW, USW, Teamsters, UAW, CWA, Change to Win, AFSCME, and AFL-CIO.

The attendance list also included Physicians for a National Health Program (“Our Mission: Single-Payer National Health Insurance“) and other liberal advocacy groups such as the Center for American Progress, Campaign for America’s Future, AARP, Planned Parenthood, Families USA, and Health Care for America Now.

(I’m sure the Galen Institute’s invitation to the summit just got lost in the mail. Go figure.)

Politically, the president made a strategically important move in putting a $634-billion “down payment” on health reform in his 2010 budget, with only a broad outline of his goals and leaving it to Congress to actually write the legislation.

Congress is much more likely to pass a bill that it writes than one shipped to them from the White House in a 1,342-page package, as happened during the Clinton era. The general consensus is that congressional leaders and the White House want a bill passed before the August recess. And it is almost guaranteed that anything this Congress passes, Obama will sign.

But that means Congress will have to get into the details of a better way of paying for reform than raising taxes on charitable contributions and home mortgage interest deductions, eliminating private plan options in Medicare, and imposing higher taxes on pharmaceuticals in the name of “rebates.”

And they will have to grapple with the thorny issue of whether to impose mandates to require individuals to have coverage and employers to pay. When Obama said after the White House summit yesterday that he was willing to compromise, we wondered if that is what he has in mind since he expressed strong opposition to a universal mandate for coverage during the campaign.

Most analysts believe you cannot get to universal coverage without a universal mandate. The next steps are extremely difficult to navigate since the government must define acceptable coverage, making it much more likely that the mandate will be for an expensive, comprehensive plan. And payment and enforcement provisions will have to be specified, most likely financial penalties that will result in a new tax on Americans citizens and businesses.

Another contentious issue is whether or not Congress will press for the new government health plan built on the Medicare model. PricewaterhouseCoopers has said that more than 100 million people could lose their job-based coverage as employers find the new public plan less expensive and drop private coverage.

With federal price control and policing authority and all of the resources of government to draw on, as well as the ability to set the rules for all of the players, a public plan is likely to drive private plans out of business, leaving people with only the government option. This is not what they were promised during the campaign.

The question will be whether Congress pushes health reform through in another major bill that few members will have a chance to read, imposing huge new costs on the economy and giving government much more control over health decisions without even consulting the American people.

Now that would be audacious!

– Grace-Marie Turner is president and Amy Menefee is communications director of the Galen Institute, a non-profit research organization that focuses on free-market health reform.