Special Report

Palin Bucks the Health Care Establishment

The Republican VP nominee is pugnaciously pro-consumer and pro-competition.

By 9.4.08

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Judging from the number of disrespectful, disingenuous and just plain dumb attacks they have already leveled at her, the Democrats and their media allies are very much afraid of Sarah Palin. And well they should be. John McCain's VP nominee is the liberal establishment's worst nightmare. She's young, smart, successful and female, a combination of virtues that -- according to progressive mythology -- does not come in a conservative package. But Governor Palin is a conservative, and proud of it, which means that her mere existence refutes that carefully crafted liberal fiction.

Indeed, now that Palin is on the campaign trail unabashedly promoting conservative ideas on family-oriented issues such as marriage, public education and health care, she has the potential to upset the status quo vis-a-vis the Democrat advantage among women voters. And, make no mistake about it, the Governor's career is a study in gainsaying the status quo. It was this impulse that led her to challenge the Republican old guard in Alaska by running against her own party's incumbent governor in the 2006 primary, and to continue that challenge after her election victory by opposing Republican Senator Ted Stevens on the infamous "bridge to nowhere."

A good indicator of how Palin's buck-the-establishment bent informs her approach to family-oriented policy issues can be found in her recent push to open up Alaska's health care market to greater transparency and competition. During her gubernatorial campaign, she supported "flexibility in government regulations that allow competition in health care that is needed, and is proven to be good for the consumer.... I also support patients in their rightful demands to have access to full medical billing information." So, shortly after taking office, Palin established the Alaska Health Care Strategies Planning Council (HCSPC) and tasked it with developing specific policy recommendations.

The recommendations of the HCSPC were decidedly pro-market and emphasized the power of the health care consumer: "With respect to lowering costs, insurance that is portable and consumer-owned plays a central role... consumerism is an essential component of bringing rationality to the health insurance structure in Alaska." Such a consumer-driven approach assumes, of course, that the patient possesses useful data about hospitals and physicians. Thus, the HCSPC also advocated providing patients with "cost and quality information about health care providers and services."

Having received HCSPC's report in December of 2007, Governor Palin subsequently introduced the Alaska Health Care Transparency Act to the state legislature. The bill not only called for the kind of price transparency recommended by her planning council, it also included a provision advocated by many free market health care reformers -- repeal of the state's Certificate of Need (CON) statute. This provision was designed to introduce much needed competition into Alaska's health care market, and it created trepidation in the state's health care establishment. As the Juneau Empire phrased it, "Gov. Sarah Palin frightened Alaska hospitals when she proposed repealing Certificate of Need regulations that many say help them stay in business."

STATE CON LAWS originated, like so many bad health care ideas, with a mandate from the federal government. In 1974, states were effectively told by Washington that no new medical facilities could be built unless a "public need" had been demonstrated. The idea was to reduce costs, but the only measurable effect of this federal decree was a morass of bureaucratic red tape that stifled competition in the health care market. In 1987, the federal statute was finally repealed, but many states inexplicably kept their CON processes in place. Alaska was one of them and, as Governor Palin put it in an editorial for the Anchorage Daily News, "Under our present Certificate of Need process, costs and needs don't drive health-care choices -- bureaucracy does. Our system is broken and expensive."

Not surprisingly, the health care providers that benefit from the absence of competition are much more enamored of the status quo than the governor. And, for the time being, they have successfully thwarted the governor's reform effort. An aggressive lobbying campaign by the Alaska Hospital and Nursing Home Association (AHNHA) prevented Palin's legislative allies from garnering enough votes to pass the measure during this year's session. Echoing the general relief of the health care establishment, Shawn Morrow of Bartlett Regional Hospital in Juneau said, "We're very pleased that repeal of CON didn't make it through."

Morrow, the AHNHA and Alaska's other vested health care interests are probably fighting a losing battle, however. The movement to eliminate burdensome and counterproductive CON statutes is gaining momentum nationally. In Florida, for example, Governor Charlie Crist recently signed a bill that streamlines the CON process for his state, and similar initiatives are underway in a variety of other states. Even the Department of Justice has weighed in against CONs: "CON programs risk entrenching oligopolists and eroding consumer welfare."

REGARDLESS OF ITS ultimate fate, however, the Alaska Health Care Transparency Act confirmed that Sarah Palin means it when she says she's in politics to "challenge the status quo and to serve the common good." Moreover, her push for greater competition also demonstrates that she understands the potential of the free market to cure much of what ails American health care. This combination -- the threat she represents to business-as-usual and her affinity for market solutions -- cannot but create fear and loathing among liberal elites.

During her first appearance with John McCain, Palin said, "I didn't get into government to do the safe and easy things. A ship in harbor is safe, but that's not why the ship is built." It's good that she realizes this because she's sailing into very dirty weather. The buffeting she has already endured suggests that the Democrats and their media accomplices are so threatened by her that they plan to hit her with a Category Five hurricane of calumny. If she weathers the storm, she and her new boss will be good for health care.

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About the Author

David Catron is a health care revenue cycle expert who has spent more than twenty years working for and consulting with hospitals and medical practices. He has an MBA from the University of Georgia and blogs at Health Care BS.