Safety Dance

Why the latest call for "market driven health care" will go nowhere fast.

Hope glimmered for America's bloated medical economy Monday when Thomas Scully made his public debut as head of the Health Care Financing Administration, the federal agency that provides health insurance to over 74 million people through Medicare, Medicaid, and the State Children's Health Insurance program. Scully was appearing at a symposium called "Transformative Change: Market Driven Health Care," and the spark of hope was that under the wonkese there might lurk actual plans for common-sense pricing and deregulation. "My real goal at HCFA is to change things… to make a radical change," promised the enthusiastic Scully.

But hope's spark quickly turned into the usual Washington ash. Instead of real systemic change, the assembled bureaucrats seemed poised to deliver–at best–a few name changes to existing agencies and programs. Judging from the symposium, we can expect to go down the capital's well-worn path to nowhere, paved with "bipartisan compromise." Indeed, the event drew heavily on the political habit of invoking change as a way of sidestepping it entirely.

The Galen Institute and the National Center for Policy Analysis—both market-oriented think tanks—co-sponsored the event with the American Medical Association. It went down on prime real estate, at the U.S. Chamber of Commerce, just across Lafayette Square from the White House. But not even the heavyweights assembled could change the fact that the American health care system will get worse before it gets any better.

The event started out well enough, with a steady stream of business interests and policy wonks cheering the notion of tax credits that would liberate people from the current system of employer-mandated, government-restricted care. This is a pretty straightforward line: Let people pick their own damn health insurance.

Here's how it would work. Like so many other theories that promise to free us from tyranny, this one rests its hopes on the Internet. Technology gives workers better access to information; information allows them to make the best health care choices for their own families. In the future, we'll all use "defined contributions" from employers and generous pre-tax income rebates to buy what we want from the company we like. Want better coverage? Pony up the cash. Rather roll the dice? Stick with a more basic plan and spend the dough on something sexy for the wife (or the husband). Either way, by letting people know how much they actually spend on health care and by giving more coverage to people who are willing to pay for it, the new system would address our current woes by implementing "market" solutions.

Two immediate problems arise. First, forcing people to buy health care with money you've "given" them in the form of tax rebates doesn't seem like much of a market solution. Second, managed-market schemes have proven miserable failures in the past (anyone remember California's phony "market" solution to high energy prices?).

Not to worry. Odds are slim to none that any plan Congress hashes out over the next few months will resemble a market in any real sense. That became clear over lunch, when Scully gave his virgin presentation to the 120-or-so people assembled. He seemed like a likable guy: young, ambitious, and affable. He even managed to break D.C. convention and show his down-home commitment to results by dropping a few harmless obscenities into his speech. (I counted one hell and two damns.)

To his credit, Scully did focus on some marginally market-based approaches, such as medical savings accounts that consumers can roll over year-to-year. He also boldly admitted that the bureaucratic culture at HCFA, infamous for red tape and non-responsiveness, needed to change. Unfortunately, even these half-steps took a back seat to what Scully said was one of the top priorities of Health and Human Services Secretary Tommy Thompson: "So where are we going to start? The first thing is, people think this is a joke but it's not, but we are going to change the name. Guaranteed. You can bet your life on it." Scully said Thompson had already received thousands of suggestions, and all but promised to deliver the agency's new moniker by July 1. How can years of bureaucratic ineptitude stand a chance against such an innovative approach?

That was Scully's first step in a well-known Washington dance, the one bureaucrats do whenever they hear reformers striking up the band. Its purpose is to show that they, too, are willing participants at the ball, though without actually making progress across the dance floor. Scully quickly took another such step. He threatened to "do something" about a variety of issues. "There clearly needs to be something done in the prescription drug area, in cost and on access." He promised that the agency would "gradually and rationally redesign the way we deal with prescription drugs without blowing up the system."

Participants at a panel after lunch soon showed that they too had fleet feet, confirming the administration's devotion to decidedly non-market-based schemes. Sally Canfield, counselor to the HHS secretary, demonstrated the "political" two-step. She said of prescription drug coverage: "We can't let that go. It is so important. It's so fundamental." Then she performed the "streamlining" back-step. Canfield explained that HHS would be streamlined–a point that might have been more convincing had it not come after she finished discussing plans to double the budget at the National Institutes of Health by 2003. Dean Rosen, staff director for the Senate Health, Education, Labor and Pensions Committee, showed off the down-the-middle minuet. He promised the newly reorganized Senate would get in on the act by creating bills that will satisfy both sides of the aisle: "There is no all-or-nothing solution."

New names. Expanded coverage for prescriptions. Bipartisan legislation that appeals to both Democrats and Republicans. Why hadn't anyone thought of this before? It's all "transformative change," as the name of the conference suggested, but in reality it's not going to be all that "market driven" at all. In Washington, the band plays on.