Dose of Reality

Why ClintonCare is ailing

Carolyn Lochhead from the August/September 1994 issue

(Page 2 of 2)

But employers do not "pay" for insurance. They offer it as part of the wage package. Mandating it will reduce money wages or employment. The CBO said the mandate is a tax. Proponents of nationalized health care, such as Ways and Means Chairman Sam Gibbons (D-Fla.) and health subcommittee Chairman Pete Stark (D-Calif.), say it is a tax. But because the tax appears to be levied on employers and not workers, it retains some public appeal.

* Cost containment. The administration, hoping that constant repetition of patent falsehoods will erode the truth, has insisted that its plan has no price controls. Congressional Democrats have adopted the term "cost containment" for the variety of price controls that are a key element of the major Democratic bills offering insurance to all Americans. Price controls remain in the legislation despite strong Republican opposition because they are the only thing standing between expansion of coverage and fiscal meltdown.

Price controls do not work. Government cannot contain by fiat an explosion in health-care demand. If controls hold, non-price rationing will set in, sharply reducing the quality of care. If the resulting political pressures become too intense and the controls are eased, costs will skyrocket. In fact, price controls now operating in Medicare and Medicaid are causing the cost shifting that is helping to drive up the price of private insurance.

As economists have been saying for decades, the health-care market is not functioning properly. As time goes by, the dysfunction gets worse. The source of the problem is the tax code. The tax exclusion of employer-provided health insurance ties health care to the workplace, insulates patients and providers from cost, drives up demand, fosters inequities, and limits individual choice.

In classic fashion, Congress and the administration are trying to remedy a problem caused by government with more government. But should they fail this year, perhaps Clinton, who ignited this giant debate, will have done the nation a great service after all--if the lessons learned clear a path toward true reform.