I initially hoped to have this article out Monday or Tuesday of
this week, but the more I contemplated criticizing Rudy Giuliani’s
health care plan, the more I realized how much I had to, well,
contemplate. Doing so means that I will be disagreeing with some
free-market health care policy heavyweights, like Sally Pipes, David
Gratzer and Mark McClellan. That, along with some gentle
smacking from a few of my American Spectator colleagues at
AmSpecBlog, has
made me tentative and wonder if I’m wrong.
Thus, I’ve had to step back and give it a lot more thought.
Nevertheless, the more I look at Giuliani’s plan, the more it seems
to me that it is, to use a football analogy, a field goal at best.
Not altogether bad, but quite a ways from a desired touchdown. So
why are many of my fellow free-marketeers so positive about
Giuliani’s plan?
Let me suggest that the excitement you’re seeing is the type
that football fans express about a field goal when their team has
had trouble scoring during the entire game. For those of us on the
free-market health care side, we have experienced frustration over
a long scoring drought. More frustrating is that politicians who
should be on our side often score points for the other team.
While free-market ideas have come to dominate Republican
thinking in many policy areas, health care is one area in which the
GOP is still little more than Democrat-lite. Consider just the last
two decades: In 1986, a Republican-controlled Senate approved and a
Republican President signed into law COBRA and EMTALA, two major
expansions of government regulation of the health care industry. In
the mid-1990s, a Republican-controlled Congress approved another
big expansion of government regulation called HIPAA and a new
government health insurance program, the State Children’s Health
Insurance Program (SCHIP). In 2003, the GOP Congress and Republican
President Bush created a huge new entitlement with the Medicare
Prescription Drug Program. Now some Republicans in the Senate,
specifically Orrin Hatch and Chuck Grassley, are leading the charge
for a big expansion of SCHIP. Finally, the Republican Senator from
New Mexico, Pete Domenici, is pushing a nationwide “mental health
parity” benefit mandate for all insurance policies. If it passes,
President Bush has said he will sign it.
Given the GOP’s dreary record on health care, how can our side
help but be elated when a Republican candidate for President
announces, “The future of America’s healthcare
system lies in free-market solutions, not socialist models”?
Giuliani, it seems, is where a GOP politician should be on health
care.
AND, INDEED, PARTS OF HIS PLAN are quite good. For one, he wants to
scale back the regulatory process at the Food and Drug
Administration so it is less costly to bring new drugs to market.
The best part of his plan is the tax exclusion that will allow
those without employer-based coverage to have a deduction up to
$15,000 for the purchase of health insurance. This will do much to
equalize tax treatment of health insurance and limit the incentive
to buy expensive policies that result in overuse of health
care.
Unfortunately, Giuliani’s plan also goes in the wrong direction
by expanding government’s role in health care. For example, it
gives block grants to the states to “improve health care quality
and make health insurance more affordable.” Given the mess states
have made in causing health insurance to be unaffordable, it’s
curious why the Mayor wants to fund them with the expectation that
they can now make it more affordable, and why he thinks that they
won’t make a similar mess of health care quality. His plan also
encourages government to partner with the private sector to improve
health care information technology (IT). Yet one of the biggest
initiatives in health care IT, establishing electronic medical
records (EMRs), has proven tricky and a recent study concluded that use of EMRs “were not
associated with better quality ambulatory care.” If the private
sector is finding health care IT a hard slog, why does Giuliani
favor an approach that assumes a partnership between government and
the private sector can do better?
One clue is found in the interview I had with Giuliani policy
adviser Scott Atlas. On a number of Giuliani’s health care
proposals, Atlas emphasized that Giuliani was less concerned about
the methods, that it was “the results that the Mayor wants to hold
accountable.” It seems that Giuliani is bringing the
results-oriented approach to health care that he brought to
reducing crime when he was Mayor. Indeed, that approach worked
wonders for New York’s crime rate. Yet law enforcement is a
legitimate government function and those in charge need to be
concerned about results, especially that crime rates are going in
the right direction, down. Health care is not (or should not be) a
proper function of government; most of it should be left to the
markets. Markets will yield good results, but many of those results
will be impossible to predict. Thus, the Mayor’s approach of
molding government policy to achieve predetermined results will not
work in health care. To put it in concrete terms, no one can know
for certain if EMRs will prove feasible. Thus, a government policy
that seeks to establish EMRs makes little sense and is likely to do
more harm than good.
THAT MINDSET ALSO INFORMS Giuliani’s proposal for letting people
buy health insurance out of state. There is a big catch in this
part of the plan: you can only buy it out of state if the insurance
companies in your state do not offer “affordable” coverage. The
Giuliani team has not yet worked out what constitutes “affordable,”
but it’s pretty clear that this is part of the results-oriented
approach. Presumably, one could come up with a definition of
affordable then measure the extent to which states are working to
provide affordable insurance.
The experience of the No Child Left Behind Act should warn us
that state governments are quite adept at fudging numbers and you
can bet that they will bring that “skill” to the challenge of
making health insurance look affordable. But the bigger problem is
that Giuliani’s approach takes the decision of what constitutes
affordable away from the individual (where it belongs) and gives it
to the government. One of the biggest problems with our health care
system is that there are way too many politicians, bureaucrats,
academics, and other “experts” who formulate policy based on the
idea that individuals are not competent to make proper health care
decisions and, thus, government must intervene. Letting government
decide what constitutes affordable insurance gives a big boost to
that type of thinking. And if government has decided that the
insurance you have access to is affordable, how long before those
who formulate policy think that you should be forced to buy it? I’m
sure Giuliani and his advisers did not intend to create a policy
with an individual mandate, but that is where, in the long run, it
may end up.
In summary, Giuliani’s plan does expand liberty in some areas,
but expands the role of government in others. The bad news is that
Giuliani’s plan is only a field goal. The good news is that there
is still plenty of opportunity for another GOP candidate to release
a health care plan that scores a touchdown.
David Hogberg is a Washington writer and host of the
website Health Hog.
