Policy Relapse

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The United States seems to have hit a ripple in the space-time continuum. Suddenly, it's 1971 again.

We have snapped back to that period of political adolescence when any problem—no matter how complicated—seemed solvable if only Congress would pass a law. As Sen. Jay Rockefeller told the Wisconsin Democratic convention in June, "We in Congress define what is possible with every roll-call vote."

Rockefeller is all-but-officially running for president, and he's doing so on what the Democrats' polls say is the party's most promising issue—health care. "Our health-care system is an outrage," Rockefeller said in Wisconsin, "and it will not change until we get everyone together and work out a plan."

Health care has obvious appeal for Democratic candidates. It lets them sound populist. It lets them sound compassionate. It even lets them sound pro-business. Everybody has to go to the doctor sometimes, and nobody—management or labor, rich or poor, old or young—wants to worry about the bills.

Best of all, nobody in voterland is likely to question candidates on the details of their health-care reform plans. Health care is what Wall Street Journal reporters call DBI—dull but important. Saying "insurance" is the fastest known way to put an audience to sleep.

To keep from boring audiences, candidates don't get specific. This also keeps everyone on their side. Real plans, after all, have to make tradeoffs. Vague speeches do not. They just hint of magic power, of the ability to grant Americans three wishes: as much great health care as we want, at no cost, with no waiting.

Back before the Jerry Brown-Jimmy Carter age of limits, Democrats used to be big in the wish-granting business. They'd tell us, for instance, that there'd be no more unemployment if Congress would just pass the Humphrey-Hawkins bill and outlaw it. Rockefeller's notion of the possible suggests a return to a Congress constructed notion of reality.

The déjá vu gets even stronger. Elliot Richardson recently went before a Senate committee to praise Richard Nixon's health-care plan—the plan Richardson unsuccessfully promoted as Health, Education and Welfare secretary in 1971. Richardson, who has lost both his firm jaw and his bearings over the past 20 years, now backs a Democratic proposal to force all employers to provide health insurance or to pay an additional payroll tax of up to 8 percent. "In 1971, this was a Nixon administration proposal—a conservative, middle-of-the-road proposal," he said. "I find it ironic that Republicans are attacking Richard Nixon's proposal now."

Irony has nothing to do with it. Since 1971, experience has taught most Americans to be skeptical of crusades and promises, particularly crusades to reform anything as complicated as the U.S. health-care system.

Consider the mess that is Medicare. On June 5, the same day that Senate Democrats announced their mandatory-insurance scheme, the Bush administration unveiled a 628-page plan to generate a national fee schedule for Medicare. The schedule would set payment amounts for every kind of medical procedure and each type of physician. Among other details, it would favor low-tech medicine and rural physicians and would set limits on how much above government reimbursements doctors could charge Medicare patients.

Medicare pays physicians $43 billion a year—a figure that is rapidly rising—and the program now accounts for 25 percent of the average doctor's practice. The Bush fee-setting plan, says National Journal, "may be the most sweeping regulatory scheme since the government imposed wage and price controls in the early 1970s." (More 1971 déjá vu.) Having started out simply to care for the elderly, the federal government now finds itself engaged in out-and-out central planning.

Nor is that planning likely to get any less tangled. Already, skeptics are predicting that doctors will simply compensate for lower fees with more billable procedures. The incentive for rural doctors may turn into another farm subsidy, or it may transform these physicians into specialists for the elderly, leaving the rural young even more bereft of care.

These sorts of unintended consequences are just what naïfs like Jay Rockefeller ought to be looking out for, but aren't. The Senate Democrats' plan might give more people access to health care. It would also drive some employers out of business, force others to cut back on payroll, and, in the words of Fortune writer Lee Smith, "bring more people into hospitals for more overtreatment."

Smith notes that the public bears more responsibility for the "health care crisis" than is politic to factor into government plans: "The fastest-growing item on corporate medical bills is mental health care, caused in part by the alcohol and drug abuse of workers and executives and their families." And patients inflict many physical problems on themselves—by smoking and drinking to excess.

More promising than quick-fix plans in Congress is the slow process of reform going on in the private sector. Employers spent $1,402 on group health insurance per full-time equivalent employee in 1989, up 36 percent from 1980 and 461 percent from 1960—even after accounting for general inflation. To get more for that money, they've experimented with health-maintenance organizations, preferred provider plans, and managed-care networks. They've subjected doctors to supervision and market discipline. And they've looked for ways to encourage employees to take better care of themselves.

Such promising programs could be wrecked by government favoritism. Nixon's '71 plan would have promoted HMOs, seeking to channel 90 percent of Americans into them by 1980. (Today, about 37 million people, roughly 15 percent of the population, are HMO members.) Had Nixon succeeded, HMOs might have flourished. But more-recent innovations, such as the managed-care networks that let patients opt (for an additional charge) to see non-network doctors, would have never come along. Jay Rockefeller's planning won't solve our health-care ills, any more than Nixonian wage and price controls cured inflation. But it may forestall the very experiments we need to find a cure.

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