What's good for business is the Clinton plan - health care reform

Business & Health, Sept, 1993 by John D. Rockefeller, IV

Anyone who watches C-SPAN and CNN, who reads the local newspaper, or who simply pays bills and balances a budget knows that health care has moved near the top of America's political agenda. Not that long ago, health care was someone else's problem. But today, the vast majority of Americans--especially small business owners--say it is the problem that most burdens them financially and emotionally.

In the coming weeks, the White House will unveil its plan to reform the health care system. Most Americans should conclude that it is a good deal for them personally, and a great deal for our nation as a whole. Small business leaders and owners must measure the plan against the likely alternatives--the status quo, or nibbling at the edges by changing the system piecemeal.

Undoubtedly, the president's plan will seem complicated at first. But remember, simple solutions to complicated problems are rarely fair, and what is fair is rarely simple. The president's plan will be fair because it is rooted in an idea that is careful balance--what the president has called "competition with a budget." It proposes a marriage of free-market dynamics and regulatory discipline that gives total reign to neither. It will be an American approach, given that Americans, in poll after poll, say they trust neither government nor private enterprise enough to hand health care over to either one.

The president has rejected the idea of socialized medicine, government-assigned doctors, and long waiting lines. The health care system will remain privately run and privately financed. Incentives will be changed to get the private health care system to work more effectively and efficiently--by empowering consumers with the leverage of group purchasing to demand high-quality service without increased costs.

These are the same demands consumers make of every other industry. Companies price themselves out of customers' reach when they raise prices too high. If they cut quality in the name of cost, they lose customers that way, too. Health care providers will prosper only by performing the same balancing act. The regulators' job will be to see to it that insurers and health care providers cannot cheat, or compete, in other, more destructive ways.

What to expect

The new system is being designed to squeeze out waste and abuse, but that takes time. For one thing, most "wasted" dollars are currently going into somebody's paycheck somewhere in the health care system. A new system will require shifting many health care jobs, by having fewer paper pushers and more family doctors, for example. Accomplishing that goal will take years. But bringing all Americans into the system is something that cannot wait. Until every American is insured, costs of the un-insured will continue to be shifted to the paying public.

This plan will not be perfect. But perfection is an unreasonable test. We should expect a basic framework, direction, and principle that will produce sound results. We must not let fear of the unknown--or bickering over ideology--paralyze us.

This country can produce a better health care system. We can make choices about our future, and decide to reject the consequences of allowing the status quo. In fact, the status quo is the truly terrifying and most likey alternative if the president's proposal fails. If it fails, we wll face stiff co-payments and deductibles, and insurers will continue to charge whatever they want, based on health history and where our lives or works.

Insurers will continue to pressure doctors and hospitals by micromanaging and second-guessing every decision--sort of rationing health care by red tape. And, they will continue building mountains of paper by using their own billing and claims forms.

Big employers and the government will have the clout that comes with size to demand better prices from insurers and health care providers. But individuals and small businesses will not. Small businesses will continue to pay as much as 40% more than big businesses, just to cover administrative overhead and cost-shifting. Businesses that do offer coverage--which is the vast majority--will continue to give those that do not a free ride. Moreover, policing the system against incompetence will be left to a medical malpractice mechanism that often rewards frivolous claims and ignores thousands of legitimate ones.

It goes without saying that the status quo offers no hint of universal coverage. As many as 25% of those on welfare will remain stuck there solely to keep Medicaid benefits--a hidden health care cost in every tax bill.

The status quo is expected to cost an extra $100 billion in the first year, and even more in the future. It may not call for new taxes at the moment, but it does add to the deficit. In fact, government's share of this system's cost will eat up more than 60 cents of every new dollar of federal revenue over the next five years. The bulk of these new costs will fall squarely on business. The biggest corporations can expect their costs to go up 12% to 15% a year, and small businesses will face increases of 20% to 30%.