The Public Policy

Big Business for Socialized Medicine

Beware of big-government features in supposedly market-based health care reforms.

By 6.11.07

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A group of big businesses is pushing increased government control of health care as a means of beating its market competitors. The Coalition to Advance Health Care Reform, a new corporate lobby founded by Safeway CEO Steve Burd, includes a number of companies, like Safeway, that provide health benefits to unionized employees and have long wanted to force non-union companies like Wal-Mart to do the same.

The Coalition has hired Virginia GOP Chairman Ed Gillespie to aid in its cause. If it succeeds, it will undoubtedly help its members' bottom lines -- but at the cost of fewer choices for patients, higher taxes, and lower-quality care for everyone.

Of course the Coalition doesn't come right out and say it wants to follow Hillary Clinton down the road to national health care. In fact, its first principle, as stated in its mission statement, is that health care reform should be "market-based." But it then goes on to outline a series of steps that would take market forces out of health care.

For example, the Coalition at least tacitly supports California Governor Arnold Schwarzenegger's plan to require all businesses in his state to provide their workers with health insurance or pay a four percent payroll tax. This comes as no surprise, since Coalition members include not only Safeway and Kroger but also large insurers like Aetna and Cigna HealthCare, who would be all too happy to have customers forced to buy their products. But employer-provided health insurance is not free. Employers faced with added costs will have to raise prices, hire fewer workers, or cut back on wages and other benefits. The Coalition is a little vague about its exact position on an employer mandate, but Burd has been actively campaigning for Schwarzenegger's plan.

The Coalition explicitly endorses an individual mandate, like the one Massachusetts Governor Mitt Romney imposed as part of his vaunted health care reform, requiring everyone in Massachusetts to purchase a government-designated insurance product or face thousands of dollars in tax penalties. This mandate is an unprecedented intrusion on individual liberty, and it is almost certainly unenforceable. Consider that, according to the Insurance Research Council, in the 47 states that mandate auto insurance, 14.5 percent of drivers are uninsured. In every state there are more uninsured motorists than people without health insurance.

Burd's group also neglects to inform us that if the government is going to force people to purchase insurance, it will also have to define what coverage qualifies. Massachusetts has already mandated that every health care policy sold in the state must cover prescription drugs, and it has outlawed policies with deductibles of more than $2,000, despite the fact that some people might want less comprehensive but less costly coverage.

The Coalition also endorses a host of new health care regulations, such as prohibiting insurers from considering a person's age, health, or other factors in deciding whether or not to sell that person insurance or what to charge. Such "guaranteed issue" and "community rating" requirements drive up the cost of health insurance for young, healthy people, the group most likely to go without insurance today. Making insurance more expensive is hardly the way to get more young people insured.

Finally, these business-backed health reformers call for massive new government subsidies, not just for the poor but also the middle class. Some of the plans supported by the Coalition include taxpayer-funded subsidies for families of four earning as much as $62,000 year. This represents an enormous expansion of the welfare state.

Where's the "market" in all this?

For all its problems, the American health care system is still the best in the world. If you are seriously ill, this is where you want to be. That is why tens of thousands of people from countries with national health care systems come to this country every year for treatment.

It looks as though big business and big-government Republicans now want to run down the road to socialized medicine. We should be very wary of following them.

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