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Fallacies and Charades
April 17, 2013 | 14 comments
The Right Prescription
Heritage and the Individual Mandate
A political and policy memoir of battles lost — and won.
I have kept the true story of the Heritage Foundation and the individual health insurance mandate under wraps for almost 20 years now, because up until now it has been too costly to tell it. But now it is too costly not to tell it.
This is not an attack on Heritage, which has long since mended its ways. But the story is now centrally relevant to the Republican presidential primaries.
In 1993, I was a refugee from the failed George H.W. Bush Administration, where I had served as Associate Deputy Attorney General of the United States, after my service in the White House Office of Policy Development, where I had worked for President Reagan. I was the Heritage Foundation John M. Olin Distinguished Fellow in Political Economy.
There I discovered the wonders of the Heritage health plan, devised to stop the Hillary health plan. Except that it followed the outlines of the Hillary plan far too closely. Worse, where it differed, it was destined to fail politically.
For example, the Hillary plan was based on an employer mandate, requiring employers to buy the health insurance plan for their workers the government specified they must buy. The Heritage plan was based on an individual mandate, requiring each worker to buy the health insurance plan the government specified they must buy. So the issue was framed as who should have to buy the health insurance, the employer as the Hillary plan required, or the worker, as the Heritage plan required. Not a winning issue for the Heritage plan.
Another key difference was that the health insurance plan Hillary would require the employer to buy would be a broad generous plan covering everything. But the health insurance plan Heritage would require the worker to buy would be a cheap bare bones basic plan. So the issue was framed as which do you want: broad, generous health coverage paid for by the employer, or cheap, bare bones coverage paid for by the worker? It seemed more like the Heritage plan was designed to fail politically.
Socialized Medicine
But that would be the best possible outcome. For if it
passed, the individual mandate would inevitably lead to full blown
socialized medicine. As I tried to explain to then Heritage
Director of Domestic Policy Stuart Butler, once the government
enacts an individual mandate for health insurance, then it must
specify exactly what health insurance, with what benefits and
coverage, would satisfy the mandate. Once the government enters
that political minefield, then politics would inevitably force it
to specify a broad, extremely expensive plan that covers everyone
and everything.
What and who could you leave out? Not mental health benefits, drug and alcohol rehab, any uninsured no matter how sick and costly once he or she first showed up, not any possible service or treatment, each with its own little politically intractable platoon of the afflicted expecting to benefit, and service providers expecting to be paid to serve them.
The result would consequently inevitably be a mandate requiring purchase of the most expensive health insurance possible, as we will now see from Obamacare. That would inevitably lead to outcries from those mandated to purchase the monster for government help with the expense. We see that in Obamacare, too, with an enormously expensive new entitlement program providing subsidies for families earning close to $100,000 a year, and soon more than that under an automatic index.
The explosive cost to the government of that assistance would require the government to get involved in directly controlling health care, in order to try to control costs. That would result ultimately in government imposed health care rationing, with bureaucrats ultimately deciding who gets what health care and when. Hence we see in Obamacare the Independent Payment Advisory Board, the entering wedge of the death panel, eventually effectively supervising not just Medicare, but the entire health care system. And we see already under Obamacare government bureaucracies getting with the program, raising questions for the first time about tests for breast and prostate cancer, seeming to say that at a certain age if you have those life threatening illnesses, the government doesn’t want to know about it, or you to know about it either. And for the first time the FDA is considering whether to approve therapies for life threatening illnesses considering what they cost.
I had been close friends up until then with Stuart Butler, even double dating a couple of times with our girlfriends and then wives. Before he became Director of Domestic Policy, Heritage had offered the job to then another friend of mine, Tony Pellechio. But I wanted Stuart to get it, because I thought Stuart was more hard core. So I talked Tony out of taking the job when he came to me to ask what I thought he should do. Sure enough, Stuart was next in line. Stuart does not know about this history almost 30 years ago to this day.
Stuart had no response to my objections to the individual mandate. But he was passionately devoted to the brilliance of the Heritage health plan. I told him it was so close to the Hillary plan, and so poorly framed as an alternative, that I predicted that President Clinton would come to point to it as the GOP alternative plan, and seek to get the Hillary plan passed as a compromise just ironing out the differences (employer pays or worker pays, generous health insurance or cheap health insurance).
Sure enough, a year later, as the Hillary plan was about to go down to defeat, President Clinton arose to point to the Heritage plan as the true GOP alternative, and offer to pass health reform by just ironing out the differences. Fortunately by then, I had already killed the Heritage health plan.
The Conservative Revolt
I fled Heritage near the end of 1993 to join John Goodman at
the National Center for Policy Analysis (NCPA). Together, Goodman
and I became the leaders ringing the alarm bells for the
conservative movement about the Heritage plan, and the dangers of
the individual mandate, as described above. My assignment at NCPA
was to kill the Heritage health plan.
Heritage had convinced then stalwart conservative Senator Don Nickles from Oklahoma to introduce the Heritage plan. I went through that long bill line by line and wrote up a summary section by section of everything that was wrong about the bill from the conservative perspective. I then got 37 major conservative leaders to sign on to the petition. It was the only document in history to be signed by both Phyllis Schlafly and Ed Crane. It was signed by Grover Norquist and Paul Weyrich. It was a who’s who of the leadership of the conservative movement at the time.
About the Author
Peter Ferrara is Director of Entitlement and Budget Policy at the Heartland Institute, General Counsel of the American Civil Rights Union, Senior Fellow at the National Center for Policy Analysis, and Senior Policy Advisor on Entitlements and Budget Policy at the National Tax Limitation Foundation. He served in the White House Office of Policy Development under President Reagan, and as Associate Deputy Attorney General of the United States under President George H.W. Bush.
Letter to the Editor View all comments (21) | Leave a comment
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Bill Hussein O'Stalin| 12.21.11 @ 7:06AM
Thanks for the inside story.
However, it doesn't explain Heritage hanging onto an obvious government takeover concept in the opposition to the facts.
L. Ross| 12.21.11 @ 7:51AM
I wish I had a good suggestion on how to control health care costs. Something (I'm not sure what) needs to change, however. If you look at life expectancy in the U.S. vs. the developed world (and even the partially developed world), we are within a few months of countries spending a tiny fraction of what we do. Health care costs are rising at an absolutley unsustainable rate. These are hard facts. I know that at some point, health care costs will rise to the point that they literally cannot go higher, but is that the only hope for containment? (health care can never exceed GDP for example) I've heard many calls for a return to "fee for service", direct payment to doctors for work performed. Patients will shop around for the best deal. This seems to work in plastic surgery. Maybe we need to pursue the plastic surgery model for everyone.
Any smart people with smart ideas?
George S| 12.21.11 @ 8:06AM
Smart people with smart ideas are what got us into this mess...
JayDick| 12.21.11 @ 9:13AM
The market must be completely open so different things can be tried to see what works. The government's only roles should be to prevent fraud, enforce contracts, and take care of poor people.
DaveD| 12.21.11 @ 1:04PM
Government is so entangled in the medical profession that correcting the problem may very well be impossible. Americans demand a great deal of health care - going to the Doctor for a head cold, for instance - but beyond that, government involvement actually increases our individual health care costs. Let me give you a personal example.
By the current definition, I am classified as suffering from diabetes. By the definition in effect in 2005 I would not be classified as a diabetic. The blood numbers today are better than they were in 2005 yet today I am a diabetic, while in 2005 I was not. How come for why, is the question I ask.
I suspect the following. In order for diabetes research to get ever more and expanding grants form the government, the American Diabetic Association (ADA) must show a "growing" problem that "needs" to be addressed. Thus, they continue to expand the definition of what constitutes a diabetic to increase the size of the population at risk in order to garner more dollars for their organization.
DaveD| 12.21.11 @ 1:15PM
[Hit the wrong button - continuing previous comment]
Consequently, I am now stuck with Doctor visits on 3-4 month interval, which if I do not do I lose insurance. I am being over treated for something that may not even be a problem for major concern. Except that the definition changed.
We see this kind of thinking invading all sorts of scientific areas. For instance, nobody gets a second grant to study climate if the results of the first one do not point to Anthropogenic Global Warming as a severe problem. Why would anyone think that medical science is immune from this kind of pressure?
So the definition of diabetes is a fluid thing, changing as needed in order to keep the issue at crisis point. Or so it would appear. Now I am certain the ADA will deny this, but I am convinced that financing through government grants is an ongoing factor in what constitutes the definition of being sick.
richard ryan| 12.21.11 @ 1:12PM
1. Meaninful tort reform with caps on non-economic damages. This means lawyers can't sue for millions in emotional damage etc. Almost all doctors admit to ordering all sorts of tests that patients do not need. In the ER, where most patients are Medicaid, everyone with a headache gets a CT scan of the head. Everyone with a tummy ache gets a CT scan of the belly. Almost everyone gets blood tests and chemistry tests. It's no cost to the doctor, but it helps cover them in the event of a lawsuit.
2. Expand health savings accounts. Let patients have a skin in the game. Let them shop around for best prices, and refuse a test if it is not necessary.
3. Eliminate most government mandates. Yes, we already have them at the state level. The government tells insurance companies what they must cover. New York has dozens. I shouldn't have to pay for drug rehab coverage if I don't want it. Government says I must.
4. Allow interstate competition between insurers. Competition equals more choice and lower cost.
5. Block grant Medicaid and Medicare to the states. Stop the federal match for medicaid funding. Let conservative states demonstrate how to save money. Others will follow. Pay doctors more to see Medicaid and Medicare patients. It will save money by keeping these people out of the emergency room for headaches.
6. Give those on government insurance some rewards for healthy behavior. Smoking and obesity are very prevalent in the Medicaid population.
Timothy L. Pennell| 12.21.11 @ 8:45AM
So, what you're telling us, is what we already know. For far too long, the Republican Establishment, has been little more than Democrat - Lite. Duuhhh.
That's what we've been saying. These aren't your "Friends" on the other side of the aisle. They're your ENEMY. They are the ENEMY of every American, who loves this Country, and it's Founding Principles. The Enemy of every American who BELIEVES in the Greatness of our Founding Fathers, and the WISDOM they possessed, when setting forth our Founding Documents. Who BELIEVE in a Strong Military. Who BELIEVE in the 1st, the 2nd, and the 10th Amendments. Who BELIEVE in Personal Responsibility, fealty to GOD, Hard Work, and the Golden Rule.
Obama's Democrats? They wanna give you everything for nothing. It's painless and you don't have to do anything. All you need do, is sign away your Soul.
"Just sign here. Good. That takes care of you. Sign here. That covers your Children's Souls. And, one more time, right here. There ya go. That takes care of your Children's Children."
"See? Painless. Just like I told you. Now, if you'll just take these Food Stamps, just enough money to get you through the Month, and No Reason to TRY bettering your life, because you'll really have NO HOPE in doing that, anyway, and you're off. Goodbye. Good Luck. And, don't call US. We'll call YOU."
"Tell your Friends."
VonMisesJr| 12.21.11 @ 9:21AM
Dear Peter,
I met you at a TEA Party monthly meeting. I have also met Robert Moffit, PhD. who leads up the Heritage Health Care project on two occasions, once with Betsy McCaughey. I had conversations with Dr. Moffit both times he presented to the AFP/TEA Party, and I am sure his ideas are congruent with yours today. Betsy McCaughey is an avid opponent of ObamaCare and can cite specifics in the Bill from memory.
I tell you this not for any other reason than to thank you for spending the time and effort to meet with concerned citizens, and to inform readers of the comments of your column that AFP and local TEA Party events can provide great opportunities to learn and have your voices heard.
Have a Merry Christmas and thank you for being a fine American.VMJr.
Peppermint Tea| 12.21.11 @ 9:59AM
The entire problem is the misconception that we need a healthcare plan.
When can we get it through our heads that THIS IS CENTRAL GOVERNMENT PLANNING! The same crap that ruined east Germany, eastern Europe, and now the Euro zone. The same crap that makes North Korea a dark night sky. The same crap that held China down for 1000 years.
For some reason the Heritage Foundation wanted Hillarycare Lite, in other words CENTRAL PLANNING lite. For some ungodly reason Gov. Romney wanted MASScare Lite.
The answer is FREEDOM! LESS regulation not more.
Thanks for telling the story, Peter.
Colin | 12.21.11 @ 10:33AM
Obamacare: The Future
- Soylent Green
- Logan's Run
Suggestion:
- Don't get old.
RJ| 12.21.11 @ 11:17AM
Thanks Peter for your work in challenging more government control over personal health care.
I remember Heritage's plan and its role in RomneyCare. It caused me to reconsider my support of The Heritage Foundation. Frankly, I lost confidence in it and viewed it more of a statist organization. I suppose its error was that it felt compelled to propose a government solution in order to "do something" regarding a current problem.
Greg Scandlen| 12.21.11 @ 1:01PM
Hey, Peter. I beat you to the punch on this. When I was running CAHI in 1992 I critiqued Heritage's proposal for Maryland which included an individual mandate, a commission to dictate allowable benefits, subsidies paid for with higher taxes on employers, and so on. I wrote to Stuart asking for a meeting to discuss it and never heard back from him.
I'm afraid Stuart was more interested in building his creds with the DC health policy elite than in advancing free market solutions. It worked for him. For decades he was the token "conservative" invited to speak at all the health policy conferences.
bob alou| 12.21.11 @ 1:33PM
It was essentially that same Heritage Foundation which talked the elder George Bush into the idea that banning semi-automatic rifles that had a "sinister" appearance, would be a good idea. It (among other things) cost Bush the election.
Should Have Impeached| 12.21.11 @ 3:54PM
Peter:
Like RJ above, I thank you for your work in this, and I'm glad to have learned a bit about it. It's people like you who are in a position to stop a train wreck when we voters don't even know what's coming. I shudder to think what would happen if people like you weren't there. (Not trying to suck-up, just trying to say thanks.)
POST American| 12.21.11 @ 10:14PM
----------------'90's Show' DIS-traction----------------
-------------------------ALERT!---------------------------
MEANWHILE,
EVEN AS North Korea arcs into to headlines
with the --reported-- death of 'Dear Leader'
and
while the US Congress is caught passing
NDAA legislation authorizing the 'disappearance'
of American citizens ---and as news spreads
FEMA camps are being put on activation
'stand by' nationwide----
ONCE AGAIN, for the reality challenged:
"Understand, 'Free Trade', Globalism,
USURY, TREASON and EUGENICS are
ALWAYS intertwined. ------ALWAYS."
That's right kiddies ------ALWAYS.
---------------HUAC/ Nuremberg 2012----------------
-----------------MERRY CHRISTMAS!----------------
Johnimo| 12.22.11 @ 1:18AM
The healthcare mess will require a radical, multifaceted reconstruction to be set on a free market course. (1) We can make most drugs "over the counter" rather than prescription only, (2) we must recognize doctors' and nurses' degrees from foreign universities, (3) healthcare IRAs can provide mobility and give an incentive for healthy behavior, (4) end the ban on drug reimportation, (5) end the ban on interstate insurance plans, (6) remove most citing requirements and certificates of need for healthcare facilities, (7) allow non-traditional insurance pools across State lines, and get the Federal Government totally out of healthcare. Where in the constitution is federal healthcare provided for? What we need .... in other words .... a total revolution in healthcare. We must learn that "healthcare" is not health, but rather a huge vested interest in the status quo.
WM| 12.22.11 @ 7:04PM
Thank you for your activism, Mr. Ferrera. Your story is proof that over time, principle works and so-called pragmatism does not.
However, while the Heritage Foundation may have moved right a little, it is still a statist organization. They openly advocate the notion that it's okay if a state does it, just as long as the federal government does not. "It" here means virtually anything, not just the individual mandate.
Things have reached the point where individual conservatives need to make a deliberate, conscious choice about whether they are going to insist on a free market and follow free market ideas to their logical conclusion, or whether they are going to continue tolerating government intervention because there is always some seemingly compelling situational need for it.
Opposing government growth only works in emergencies. At some point, you have to state your philosophy and act positively on it. If it is not going to be a rollback agenda, it will be by default more of the same "compassionate" big government statism that has brought us Medicare, SCHIP, and other government schemes that redistribute wealth and kill businesses and people. We now need an active freedom agenda, and statist solutions like mandating coverage for pre-existing conditions have no place in it.
Floating| 12.25.11 @ 12:54PM
A fascinating, behind-the-scenes account of how public policy in this country really gets made. It deserves a wide audience. Ferrara's political instincts have proven more sound than those of Heritage top brass.
Rationing Health Care| 12.30.11 @ 2:55PM
You complain about the government rationing health care, but is there no concern that using money to ration healthcare is the problem? Shouldn't healthcare be given to those who need it the most? Not those who simply have the money to buy premium healthcare, which in turn decreases the quality of healthcare to the poor?
Why shouldn't healthcare be given based on need?
Lantern | 3.4.12 @ 10:08PM
The entire problem is the misconception that we need a healthcare plan.
Obamacare is our future.
- Soylent Green
- Logan's Run
My suggestion is the same like Colin:
- Don't get old.