By Clive Crook, National Journal
© National Journal Group Inc.
Friday, Nov. 2, 2007

Last week National Journal's Marilyn Werber Serafini provided the best, most detailed, and most balanced account I have seen of the leading presidential candidates' health care proposals. Drawing on interviews with a politically mixed group of scholars and policy experts, she laid out the proposals' respective drawbacks and advantages.

	The Republican plans are cheaper, of course, but only because they are so much less ambitious.

The conclusion I drew from her reporting is that you cannot have something for nothing. Obvious as this might seem, it is a point that all of the candidates, in their different ways, are trying to deny. In simplest terms, the Democrats argue that you can achieve universal coverage without loss of quality (in fact, with better quality) at no great extra cost.

And Republicans argue that you can achieve universal "access" -- not the same thing as coverage but meant to sound as good -- not only without spending a lot more but also without mandates or new regulation.

Both claims are wrong, and voters know it. The big question for the electorate is simple: Do Americans want universal coverage enough to put up with significant additional cost and added government interference? If so, Democrats have found a winning issue.

You cannot repeal that basic trade-off, although you can improve its terms and make it less severe. But it is difficult to do even that unless you acknowledge that the trade-off exists -- and neither side is apparently ready to do so.

The politics of the issue has moved a long way in the Democrats' favor. Public opinion has shifted, the polls say, in favor of universal coverage as a goal. Worries over the rising cost and availability of health insurance are a big part of the wider trend of rising economic anxiety. Americans' desire to see this problem fixed is greater now than it was in the early 1990s, when Hillary Rodham Clinton's previous health reform proposal was shot down.

At the same time, the Democrats -- and, above all, Clinton herself -- have radically altered their approach to the issue. Look at the way she pitches her plan on her campaign website. If you are happy with your existing health insurance arrangements, she insists, nothing will change. After the "Hillarycare" fiasco, that reassurance is crucial.

The Democrats' schemes all envisage an expanded government role -- as they must, if universal coverage is to be achieved -- but they are not single-payer "socialized medicine" plans. Moreover, that fact is obvious. The Republicans' insistence that these schemes amount to socialized medicine is implausible and smacks of desperation. The voters are not buying it.

Clinton's promise that nothing will change if you are happy with your health insurance underscores the notion that she is not proposing a government-run near-monopoly such as Britain's National Health Service. Private insurance goes on. You stay on the plan you already have, if you like it. Under the Democrats' proposals, more people will have private insurance (initially at least) than do now.

The Democrats call for more regulation -- an individual mandate in the plans of Clinton and John Edwards (Barack Obama's approach is a bit less sweeping), plus requirements on employers and leverage applied to insurers and pharmaceutical companies. Critics can fairly say that some of this regulation is really about shifting and disguising costs, but voters are unlikely to mind much. Yes, they should be worried about what these new rules will cost their employers because in the end much of it will come out of their pay -- but as a matter of practical politics, few will be concerned. A cost imposed on business is fine with voters. The Democrats' chief vulnerability, now that the socialized medicine scare has been neutered, is the fear that the cost of wider coverage will push up taxes -- everybody's taxes, not just the taxes of the rich.

This fear is justified because the Democrats' plans are weak on cost control. In the interviews for last week's report, National Journal asked the health care experts to grade the candidates' plans from 1 to 10 on their chances of achieving a variety of goals, with 1 being the lowest score and 10 being the highest. On the goal, "Reform would be funded with existing health care dollars," the experts gave the Clinton, Edwards, and Obama proposals scores of 4. On the goal, "Brings the rate of growth in health care spending in line with the economy's growth rate," Clinton's plan got 4 again, and Edwards's and Obama's plans got just 3. On that second test, by the way, the timid plans of Republicans Rudy Giuliani and Mitt Romney did no better than Clinton's: The experts marked both a 4. John McCain's plan for a refundable tax credit to pay for private insurance did better, scoring a 6.

All three Democrats are counting on savings from providing better and more efficient care, through such initiatives as the adoption of electronic patient records, better prevention, and better management of chronic disease. These things are all worthy aims in their own right, of course. How much money they would save, and how quickly, is more debatable. (Britain's attempt to computerize its medical records turned into one of the biggest and most expensive information-technology fiascos ever seen.) In addition, the Democrats' plans would let some or all of the Bush administration's tax cuts expire for the "highly paid" (which they define in different ways, if at all), and would apply that money to health reform. The experts doubt, however, if the savings would be enough to balance the books over time.

The greatest challenge is to curb the long-term growth of health care spending. Only two ways exist to do that. One is to ration on the supply side -- by the government denying or discouraging certain kinds of treatment that it deems not cost-effective. The other is to ration on the demand side -- by confronting patients with more of the costs of their care, so that they economize and force suppliers to compete on price.

Neither mechanism operates well in the current health care system. There is no single-payer to police the use of the system, and patients think that their health costs are small because most have insurance provided by their employers. The result is exploding costs and increasingly unaffordable insurance.

McCain's proposal gives demand-side rationing a nudge -- by taxing employees on the portion of their health insurance that their employers pay. Those costs would be offset for many employees by providing them with a tax credit of $2,500 for individuals and $5,000 for families. But employees with generous health insurance plans could face higher taxes. He throws in tort reform for good measure, as a way to cut medical costs. None of the other plans, Democratic or Republican, has much to say about incentives for cost control.

Suppose Clinton becomes president and puts her plan into effect: How would the government accommodate the upward pressure on costs? Partly through taxes, one imagines; partly through price-curbing regulation of insurers and drug companies. Another possibility would be to promote price competition among insurers through the management of the Medicare-style public plan that Clinton proposes to offer as an option. Moves to encourage the use of plans with high co-payments and deductibles would increase the demand-side discipline on costs -- one way to improve the trade-off between coverage and outlays.

The Republican plans are cheaper, of course, but only because they are so much less ambitious. Giuliani proposes some tax incentives to encourage people to buy insurance, McCain proposes a more generous subsidy scheme, and Romney (the only candidate who, as former governor of Massachusetts, can claim to have implemented a market-based, individual-mandate, universal-coverage scheme) merely wants to grant more flexibility to the states. None of these ideas -- not even McCain's, the best of the bunch -- frontally addresses the belief that the system is broken and, as a high national priority, needs far-reaching reform.

Do Americans really believe that reform is needed? They do, I think -- and if they do not, they should. Republicans may be underestimating one factor in the shift of opinion on the issue. Lack of insurance is no longer partly a matter of choice (as in the case of the young and fit who prefer not to buy coverage even if they can afford it), or else a problem only for the poor. Economic insecurity is on the rise for most Americans, not just for a static minority of poor people. People change jobs more often than they used to, whether they like it or not. And in the United States, when you change jobs you worry about your health insurance.

What if your next employer offers no coverage? What if a pre-existing condition makes an individual policy too expensive or altogether unavailable? The guarantee of universal coverage is something that almost all Americans, including those covered at present, would value and be willing to pay something for. And they know that every other rich country in the world provides it. As long as reform does not put them at an immediate disadvantage -- either by forcing them off plans they are happy with, or by pushing up their own taxes -- it is something they will vote for. The Democrats are offering reassurance on both points (more plausibly on the first than the second). They are on to something.

-- Clive Crook is a senior writer for National Journal magazine, where "Wealth Of Nations" appears. His e-mail address is ccrook@nationaljournal.com.

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