Hillary's Learning Curve

How long before she becomes a libertarian?

On most issues, you can line up Hillary Clinton on one side and the Bush administration, free-market think tanks and conservative economists on the other. It would be a surprise to find the former first lady lifting ideas from her longtime opponents. But in this case, there is not one surprise but two: She's not only doing it, but she's doing it on health insurance, where she once embodied Big Government.

The chief question before the country right now is what to do about the 47 million people in the United States who lack health insurance. Their being uninsured is regrettable because it prevents them from getting adequate care and forces the rest of us to shoulder the cost when they get sick.

Not only that, it causes anxiety among the insured, who worry about losing coverage. The magnitude of the problem is such that this year, the presidential candidates have been forced to come up with plans to assure everyone, or almost everyone, will be covered.

For years, many conservative experts have proposed a way: making health insurance more affordable by changing how it's treated in the tax code. In this year's State of the Union address, President Bush urged that individuals who buy medical insurance get the same tax break that businesses get when they purchase policies for their workers. In his plan, any family that obtains private coverage would get a $15,000 tax deduction.

But more is required to expand coverage among low-income Americans. Since they pay little or nothing in income taxes, the deduction wouldn't help them much. So the president's plan would provide them a "refundable" tax credit—a fancy way of saying that if they don't owe taxes, they would get money to buy health insurance. It amounts to a federal voucher for medical coverage.

Bush's solution certainly appeals to his ideological allies. His former chief economic adviser, Harvard professor Gregory Mankiw, has praised the concept. So has Tyler Cowen, a George Mason University economist affiliated with the libertarian Cato Institute. David Gratzer, a physician at the conservative Manhattan Institute, raised the idea in an article for National Review Online.

The case has been neatly summarized by Nina Owcharenko, a policy analyst at the Heritage Foundation who says approaches like this have a host of conservative virtues. "Instead of building on bureaucratic structures or relying on outmoded welfare programs," she writes, "they can promote personal choice in health plans and benefits by transferring decisionmaking power in the health care system to individuals and families."

The change would also make a huge difference. Mark Pauly, a health care economist at the University of Pennsylvania's Wharton School, says that with a credit of $2,000 per person, "I'd guarantee a 50 percent reduction in the number of uninsured." A larger subsidy could boost that figure to 85 percent.

Part of the value of this strategy is that it would vastly expand the individual insurance sector, which now performs poorly because it is so small, has such high overhead expenses and attracts so many high-risk individuals. Arming millions of healthy people with tax credits, Pauly ventures, would be a potent stimulus to competition and efficiency in the private market.

This is not a goal of those who favor government-run health care. So you wouldn't expect Hillary Clinton to embrace the idea. But her new plan says, "Working families will receive a refundable tax credit to help them afford high-quality health coverage." (How big, she doesn't say.)

Is that a change? Well, back in 1993, when we got the original version of HillaryCare, it was opposed by a coalition called Citizens Against Rationing Health, whose alternative plan included—what's this?—a refundable tax credit for the poor.

This is not to say that Clinton has joined the Milton Friedman fan club. Her program is still heavy on the kind of intrusive government dictates she has always found so alluring. It would compel employers to provide coverage, force insurance companies to offer policies to everyone, with no "excessive premiums," and order pharmaceutical manufacturers to sell drugs at "fair prices." It would force private insurers to compete with a government-sponsored program that could be priced at a loss to put them out of business.

When it comes to health care, Clinton has a long way to go. But conservatives can hope that she has only begun to learn from them.

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