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Hillary's Health Care Team Needs An Injection Of Reality


Economic Viewpoint

HILLARY'S HEALTH-CARE TEAM NEEDS AN INJECTION OF REALITY

Hillary Rodham Clinton's top-secret health-care reform seems star-crossed. So far, she has had fender benders with U.S. District Judge Royce C. Lamberth and the Association of American Physicians & Surgeons, and she seems headed for a major clash with the Democratic leadership in the House and Senate. She may even have stepped on Vice-President Al Gore's toes by substituting her portrait for his in the Old Executive Office Building, where the health task force meets.

On Mar. 10, Judge Lamberth ruled that the secrecy of Hillary's meetings was in violation of the 21-year-old Federal Advisory Committee Act. The headstrong First Lady decided to ask the U.S. Court of Appeals to overturn the decision, and in the meantime she is continuing the secret meetings. But her hubris proved politically unwise because it galvanized the Democratic House leadership into action against her. In April, House General Counsel Steven R. Ross, acting mn instructions from Speaker Thomas S. Foley (D-Wash.), informed the Appeals Court that the House of Representatives is filing a detailed brief in support of Judge Lamberth's ruling.

The next bombshell came from Senate Majority Leader George J. Mitchell (D-Me.), who used his Apr. 18 appearance on Meet the Press to tell the White House to forget about financing health-care reform with a value-added tax and government-imposed price controls. Mitchell said that "in a free-market economy, we're better off without" price controls. New health taxes struck the senator as putting the cart before the horse: "The problem with the American health-care system is not that we need to spend more money. The problem is we're spending too much money in wasteful and inefficient ways."

COSTLY PREMIUMS. With comeuppances like these, it behooves the health task force to get real. My first suggestion is that it cool its sky-is-falling rhetoric and not fix something that is not broken. A rising percentage of the gross domestic product spent on health care is not, per se, evidence of a "health-care crisis." As a society becomes richer and medical technology improves, it is natural that people choose to spend more on health. Formerly, a bum knee was a reason to give up tennis.

Today, magnetic resonance imaging locates damaged cartilage, and arthroscopic surgery removes it.

The task force needs to take a hard look at the unchallenged assumption that there are 37 million uninsured Americans. This number seems to consist primarily of people who are temporarily without coverage while between jobs. It doesn't mean that there are 37 million people outside the medical system. Among the actual uninsured, there is a large contingent of healthy young people who choose to be uninsured because their annual medical bills are less than their health-insurance premiums. The bulk of the uninsured-ill appear to be provided for within the present system as "uncompensated care." In one way or another, the hospitals pass this $10 billion annual cost on to the rest of us. Other suggestions:

-- Recognize that government programs have a knack for producing more problems than solutions. Government health programs notoriously do so because they increase demand while curtailing supply. The result is rationing, which means either a deterioration in the quality and timeliness of care, or denial of treatment in cases where the patient's prospects are deemed not good or the cost is reckoned to exceed the value of the person's life.

-- Remember that government health-care systems inevitably founder on the matter of capital cost. In our present health-care system, much of the capital cost is provided privately by business and other contributions to hospitals and locally by bond issues. All of this stops when health care becomes a federal budget item financed with taxation. Peoria will not be issuing bonds for the local hospital, and businesses will not be donating CAT scanners. All of these costs are dumped on the federal budget, and they swamp the assumed savings in health-care delivery.

-- Bear in mind that third-party payments, whether made by private insurers or government health programs, always drive up the price of health care. The patient's incentive is to demand all he can get, and the provider doesn't have to prescribe with the patient's budget in mind. Inevitably, insurance companies and governments respond with fee schedules and political demagoguery against "obscene" profits of health-care providers. Regulations mount, and doctors are diverted from patients by mountains of paperwork.

If the First Lady's health task force wants to perform a public service, it can focus on two goals: First, reestablish health insurance as insurance once again instead of a prepaid form of health care. Insurance was supposed to pay for budget-busting medical bills, not every office visit and prescription. Second, curtail the extraordinary regulation of health-care practitioners and limit malpractice awards. It's a lot cheaper for a doctor to check your urine in his office than to send you off to an accredited lab. Above all, beware of curtailing supply with disincentives, while piling more demand on the system.Paul Craig Roberts


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