Federally run health care: all pain and no gain - negative economic impact of Bill Clinton's health care proposals - Column

0 Comments | Insight on the News, Oct 4, 1993 | by Donald Devine

As politicians are being criticized by a New York Times political reporter for being "terrified to wear the awful label |tax and spend,' however much their constituents need government money for health care," the president and Hillary Rodham Clinton are boldly launching a health reform initiative to completely redesign one-seventh of the entire economy.

This industry of 10 million people is to be reorganized under the title of "managed competition," reforged from millions of groups of doctors, nurses, technicians, administrators, hospitals and other care institutions into a relatively few large organizations that would deal with big collectives of health care consumers to cut administrative costs, all under the watchful eyes of state and federal regulators.

Institutions providing health care, modeled after large health maintenance organizations, or HMOs, would send all patients through medical gatekeepers, which would decide what care they need. The regulators would determine what core benefits would be protected. They also would fix the total amount that could be spent nationwide for health care under a so-called global budget and would set limits on service fees, as ways to save money. The super-HMO-type organizations would be forced to act within budgets and allocate resources to those who, in their opinion, need care. All businesses would be required to purchase insurance for their employees, and the government would pay for people who remain uninsured, probably by capping Medicare and Medicaid and by employer and employee fees.

But what if the Clintons are wrong? What if, as a New York Times editorial put it, "trying to run the $800 billion health industry by government fiat is folly"?

"Price controls would spawn bureaucracies and wholesale evasion. Worse yet, they would rob health care providers of the drive to innovate that distinguishes the U.S. health care system," according to the editorial.

No less than the creator of Medicare, Joseph Califano Jr., now admits that controlling doctors' fees "created gigantic insurance bureaucracies to play catch-up with doctors who simply created additional procedures and performed them more frequently." The result of this largest of government medical programs, infused with billions of dollars in tax contributions since its creation, is that its trustees now say the system will go broke by 1999. Now we want to give these same authorities control over the entire health care system?

As for any use of cost controls, Robert Reischauer, director of the Democrat-controlled Congressional Budget Office, conceded in testimony that "cost controls are likely to be more painful than many envision, requiring consumers to accept some real limits on the quality or quantity of health care." That is, there could be government rationing.

Those likely to pay the costs are "those who right now have extremely generous benefits paid by their employers, [who] will probably see either their costs rise or their benefits shaved back, or a little bit of both." To Judith Randal, writing in the Progressive, "The |managed' part of managed competition is shorthand for managed care. This means that patients would not select physicians for themselves."

Speaking of physicians, one survey of doctors found that half the physicians in the United States say they would consider retiring if President Clinton's plan is too onerous -- and they have the means to do so. Now, that would be a crisis -- only half the physicians to go around to more people. Egging them on, Washington Post humorist Tony Kornheiser says: "Start chopping those exorbitant doctors' fees. Make America like China, where you can make as much money driving a cab as being a doctor -- so when you have a suspicious mole on your back, you may as well pull into Jiffy Lube."

Or how about the plan to give everyone a medical card, under a single computerized government system? Polls show that the possibility of centralized access to medical cords a loss of privacy worries a majority of Americans. Of course, confidentiality would be guaranteed by law -- but that didn't stop the 250 Internal Revenue Service bureaucrats recently caught illegally reviewing neighbors' and celebrities' tax returns.

And what is all this potential pain to accomplish, in what is clearly the world's highest-quality health care system? Clinton says it is to cover all the currently uninsurable and uninsured, to provide portability of insurance coverage between jobs and to reduce costs. There are many easier and more effective ways to do this. Conservatives propose a plan to give tax deductions to all, with a refundable credit for the poorer and for those who face higher premiums because of serious health problems. This covers everyone and gives portability, with any new costs to be offset by a "base-closing" type commission to cut spending from other, less important government programs.

A tax deduction would also be given to create medical savings accounts, like individual retirement accounts, with money now spent on health insurance paying for a catastrophic policy to cover large costs, plus a personal savings account to pay for small expenses, without any bureaucracy at all.