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Bush’s Health Care Proposals

Matt Craighead

It was to virtually no media fanfare that President Bush announced his health care agenda a month ago. Maybe they were following too many other things at the time; I don’t entirely know. It’s a shame, though, because Bush seems to understand better than our previous occupant of the Oval Office what’s wrong with health care in America and how we can fix it.

America’s health care woes can be traced back to wage and price controls imposed during World War II. Wartime economic policies created inflation; since employers couldn’t increase wages, they instead offered their employees health care benefits. Such benefits were soon treated as tax-free, and it became much more efficient for employers to pay for health care than employees.

After all, it’s bizarre, if you think about it, that it is standard for employers to pay for health care. Our employers, by and large, don’t provide us with food, or cars, or housing; instead, they pay us cash. An employee can typically do a better job of spending that money on himself than the employer would on his behalf.

Employer-provided health care has had three insidious side effects. First, it has become difficult for individuals or small businesses to buy health care -- the system isn’t designed for them, and individuals and the self-employed effectively pay more due to taxes. Second, it reduces accountability and choice. Most employers only offer a few health plan options, and employees spend more because it’s “someone else’s money,” while employers struggle to keep costs down. Third, and most ominously, it has encouraged the spread of the vicious idea that individuals are not the ones responsible for providing for their own health care, and that someone else -- be it a business or government -- must do so.

It is this latter point that aided the Democratic Party, starting in the 1960s, in proclaiming that everyone has a “right” to be provided with health care. Under President Johnson, socialized medicine became a reality in America, just as it had some years earlier in Europe.

Fortunately, repeated attempts by Senator Ted Kennedy and others in the 1970s to broaden socialized medicine beyond Medicare and Medicaid (for the elderly, poor, and disabled) failed, and with Reagan in the White House such ideas were shelved. The backers of socialized medicine made one final push in 1994 in the guise of “Hillarycare,” but with its defeat and Newt Gingrich’s coup later that year, the movement to centralize all delivery of health care at the federal level died a well-deserved death.

In the meantime, nations that had gone down this road provided ample evidence that it was a failure. In England, the best and brightest doctors and scientists left in the “brain drain” of the 1960s, while quality deteriorated and costs exploded at the National Health Service. Waits for even simple procedures grew so long that many travel to America and pay for an operation now rather than wait. Canada’s situation is similar.

The situation in the United States, though better, is still hardly ideal. Medicare is a tangled web of price controls, and its regulations are three times longer than the tax code (over 100,000 pages in total). Doctors’ malpractice lawsuit payments have exploded, since the legal burden for malpractice is unfortunately not negligence. Many states mandate such broad insurance coverage of ailments that prices go through the roof. In the meantime, HMOs and their associated bureaucracy have strangled both doctor and patient.

What American health care desperately needs reinjected is the free market.

We should begin by recognizing that health care is not a right -- nor is a minimum income, a “living wage,” or an education. Unfortunately, those of us desiring such a return to 19th-century style laissez-faire capitalism are in the minority, and so we must settle for less at present. (Whatever some on the left may scream about cuts in these programs, even Reagan barely made a dent in the Great Society welfare state, and Bush isn’t about to do so either.)

While the president’s health care agenda doesn’t eliminate or even trim Medicare and Medicaid, he is creating a new framework in which such programs will look a lot less important. Sure, he’s included the Democrats’ number one wish, a prescription drug benefit, in his proposal to “modernize” Medicare -- but he’s also talking about opening up Medicare to real private competition, allowing seniors to spend their Medicare money on a real private health plan. He’s already taken steps to give states more flexibility to run Medicaid.

The centerpiece of his plan, however, is to begin the restoration of health care into something that individuals pay for themselves. He proposes massively expanding MSAs (Medical Savings Accounts), a device by which individuals can save money tax-free to pay for small medical expenses while retaining health insurance for catastrophic problems. He’s also providing new tax credits to help individuals buy their own health insurance. In short, your health care expenditures come out of your own pocket, not someone else’s. If nothing else, this will encourage more individual responsibility.

A small point worth mentioning is that some have criticized these tax credits as enlarging, not shrinking, the government’s role in medicine. Such criticisms miss the mark; federal laws already prohibit hospitals from turning away the uninsured. We are already all paying indirectly for such health care. At worst these proposals will shift the burden a bit, while making the accounting a bit more honest.

The Bush proposals aren’t perfect, but they move in the right direction for the first time in many years. It’s a relief indeed to have a President who doesn’t think the solution to every problem is more taxes, more spending, and more regulation.