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.