• Embed Doc
  • Copy Link
  • Readcast
  • Collections
  • CommentGo Back
Download
 
In1992Gov.BillClintonofArkansasunseatedincumbentPresidentGeorgeH.W.Bushinpartby tappingvoterdissatisfactionwiththerisingcostof health insurance and the growing number of  Americans without health insurance. Despite a massivelegislativecampaigndirectedbythen–firstladyHillaryRodhamClinton,theClintonadmin-istration’s sweeping proposal to increase federalcontroloverthehealthcaresectorlanguishedandeventually died in Congress. Today, with healthinsurance costs once again rising at double-digitratesandthenumberofuninsuredAmericansata newhigh,theDemocraticcandidatesforpresidenthave lined up their own health insurance reformproposals. The major candidates are Army Gen.Wesley Clark (ret.), former governor of VermontHowardDean,Sen.JohnEdwards(NC),Sen.JohnKerry (MA), Rep. Dennis Kucinich (OH), Sen. JoeLieberman(CT),andRev.AlSharpton.Beforeleav-ingtherace,Rep.RichardGephardt(MO)alsoputforwardamajorhealthcareproposal.Unfortunately, the candidates’ health plansreflect the same misconceptions as and rely onapproaches similar to those of the failed Clintonhealth plan. Like the Clinton health plan, they misdiagnose what ails the health care sector;would attempt to direct the provision of healthcare from Washington, DC, through increasedtaxes, government spending, and bureaucraticcontrol; and would magnify the perverse incen-tives created by past government interventions.Like that of the Clinton health plan, theirresponse to the use of unconstitutional govern-ment power in the health care sector is to wieldevenmoreunconstitutionalpower.The five major candidates (Clark, Dean,Edwards,Kerry,andLieberman)wouldtakeincre-mental steps toward a government-run healthcare system. The two long-shot candidates in therace(KucinichandSharpton)takeamoreaggres-sive approach, calling for an immediate govern-ment takeover. Although Sen. Hillary RodhamClinton (D-NY) disappointed many DemocraticPartyfaithfulbyforgoingaraceforpresidentthisyear, judging by the health care proposals of thecurrentfield,herinfluenceisbeingclearlyfelt.
 Mrs. Clinton Has Entered the Race
The 2004 Democratic Presidential Candidates’  Proposals to Reform Health Insurance
by Michael F. Cannon
_____________________________________________________________________________________________________
 Michael Cannon is a senior fellow with the National Center for Policy Analysis in Dallas.
Executive Summary 
No. 509 February 5, 2004
 
Introduction
 Americans endure rising health care costs,diminished access to health care, and highlevels of frustration as a direct result of health insurance being among the most gov-ernment-dominated sectors of the U.S. econ-omy. Instead of a market where health careproviders and patients benefit each other andsociety by pursuing their self-interest, gov-ernment involvement in health insurancemarkets has given America a system that sub-stitutes waste for economy, rising prices foraffordability, and bureaucratic dictates forconsumer choice.In a free market, consumers and produc-ers make voluntary exchanges that benefitboth parties. In a genuinely free market, con-sumers motivated by their own self-interestwill naturally make decisions that reward themost efficient producers, while punishinginefficiency and high prices. As a result, pro-ducers search for less costly ways of meetingconsumer needs. In that environment, pricesconvey information. They signal to con-sumers the cost to society of providing vari-ous products at different points in time. Toproducers, prices convey information aboutwhat consumers want, helping them identify activities useful to consumers and avoidunwanted activities. Over time, this processmakes an ever-increasing number of prod-ucts, of ever-increasing quality, available toan ever-larger number of consumers.In America’s health care sector, govern-ment blocks the market process by hidingprices from patients, thus encouragingpatients to consume more care and demandless value. This denies patients informationon how their actions affect others, a necessary component of controlling costs and eliminat-ing waste. At the same time, it denies produc-ers information about what consumers valuemost. Rather than let producers be guided by prices that reflect consumer preferences, gov-ernment distorts prices or sets them arbitrari-ly. This encourages producers to pursue law-makers’ preferences instead of consumers’—and to lobby for prices that reflect their ownpreferences. Denied the necessary informa-tion, consumers and producers are less ableand willing to circumvent waste, inefficiency,and high prices. Controlling health care costsand improving patient satisfaction requirereforms that bring consumers’ preferences tothe fore by removing government’s prefer-ences—by deregulating health insurance andrestoring incentives for patients to demand value.The health plan proposed by PresidentClinton in 1993 would have taken America inthe opposite direction. Government wouldhave encouraged patients to consume moremedical care and demand even less value,sending more distorted signals to producersthrough greater use of price controls. Theinformation necessary to promote healthcare quality and eliminate waste would havebeen even more severely restricted. Although the details of their proposalsdiffer, the Democratic candidates for presi-dent in 2004 are all basically following theapproach of the Clinton health plan. They would expand “coverage” with vast subsidiesand mandates, encouraging Americans toconsume even more medical care. And they would empower others—employers, insurers,and government bureaucrats—to tell con-sumers when they have had enough.The candidates’ plans reflect a consensusamong many observers that rising healthcare costs must be remedied with additionalregulations and subsidies, that the problemof millions of Americans who lack insurancemust be addressed by doing whateverexpands “coverage.” That is understandable.Many people who would like to purchasehealth insurance find it priced beyond theirmeans, and once one is “covered” many med-ical expenses are passed on to someone else.This analysis is a misdiagnosis of the prob-lem. Health care costs and the number of uninsured continue to rise, not for lack of government, but because too much govern-ment has crippled the normal marketprocesses that make health care of ever-improving quality available to an ever-largershare of the population. The candidates’ pro-
2
In America’shealth care sector,governmentblocks the marketprocess by hidingprices frompatients, thusencouragingpatients toconsume morecare and demandless value.
 
posals would add even more government tothe mix.How much more? Between 2005 and 2013,the candidates’ proposals would cost any-where from $591 billion (Edwards) to $6.268trillion (Kucinich). To put this in perspective,consider that the prescription drug entitle-ment, recently enacted as part of Medicarereform and considered the largest new govern-ment program since the Great Society, is esti-mated to cost only $410 billion
1
(Figure 1).Financing any of the proposals would requirethe next president to repeal all of the tax cutsenacted in 2003 ($140 billion from 2005 to2013) and a significant portion of the tax cutsenacted in 2001 ($1 trillion from 2005 to2011).
2
The U.S. Department of the Treasuryestimates that repealing the 2001 and 2003tax cuts would raise taxes an average of $1,544for more than 100 million Americans and costa married couple with an income of $40,000and two children $1,933 annually.
3
At leasttwo of the proposals would require further taxincreases.The proposals are likely to cost muchmore than projected and would add to analready growing burden on taxpayers. Costprojections have repeatedly and famouslyunderestimated future spending on govern-ment health programs and other entitle-ments.
4
Gail Wilensky, who administeredMedicare and Medicaid for President GeorgeH. W. Bush, said of the new Medicare pre-scription drug benefit:If history is any guide, it will cost morethan we think. . . . Not because peopleare deliberately low-balling the esti-mates, but because we have never beenable to correctly estimate the cost of anew benefit, and this one is much big-ger than most.
5
For example, when Medicare was enacted,hospital costs were projected to be $9 billionin 1990. Actual spending in 1990 was morethan $66 billion.
6
There is no reason tobelieve the costs of the candidates’ healthinsurance proposals will be lower than pro- jected; there is ample reason to believe theywill be higher.Government spending on those proposalswould compound the enormous budgetarypressures of existing federal entitlements.The present value of the future fiscal imbal-ance of Medicare and Social Security alone is
3
Between 2005and 2013, thecandidates’proposals wouldcost anywherefrom $591 billio(Edwards) to$6.268 trillion(Kucinich).
Figure 1Estimated Costs of Democratic Candidates’Health Insurance Reforms (2005–13) vs.New Medicare Rx Entitlement (2004–13)
Sources: Kenneth E. Thorpe; Congressional Budget Office; and Kucinich campaign.
Rx BenefitEdwards
      B      i      l      l      i    o    n    s
LiebermanClarkDeanKerryKucinich$6,268$972$959$796$775$591$410$250$0$500$750$1,000$1,250$1,500
of 00

Leave a Comment

You must be to leave a comment.
Submit
Characters: ...
You must be to leave a comment.
Submit
Characters: ...