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Healthcare - A Line in the Sand

David Gratzer
January 21, 2009

For the better part of 2 years, the Bush White House, fighting a long side a small army of conservative activists and free-market-minded think tanks, battled Democrats over the State Children's Health Initiative Program (SCHIP). Republicans tried to reshape the program, which they considered unfocused; Democrats wanted to expand it without reforms. It was a draw, with SCHIP being re-approved and unreformed but not enlarged. That was 2007 and 2008.

They didn’t even wait for Inauguration Day. Last week, Democrats in the House of Representatives took just hours to vote in a massive expansion of the program -- no hearings, no amendments; their Senate colleagues followed suit. In 2 days, the SCHIP was reshaped.

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Welcome to 2009.

President Obama enters the White House today with grand ambition. Though he proposes much -- from the environment to fiscal stimulus -- it is health care that will probably see the most change. Already, the agenda seems dramatic: regulating insurance companies, ending Medicare Advantage plans that cover some 10 million elderly, allowing the reimportation of drugs from foreign countries, creating a program to help the uninsured get coverage similar to members of Congress, investing in and probably standardizing electronic medical records, establishing a federal health board to guide (and possibly dictate) clinical decisions made by doctors. That’s just this year’s agenda -- and it grows by the day. Other ideas in the air include a temporary, federally-funded expansion of Medicaid to millions of non-poor unemployed Americans and a subsidization of COBRA benefits.

Washington has seen bold agendas before. It’s not surprising, then, that several Republican staffers that I spoke to fantasize that a rift among Democrats will slow their momentum, a repeat of the HillaryCare debacle.

This isn't 1994. Then, Republicans faced a president who had won office with barely 43% of the vote. For the crucial work of championing health-care reform, President Clinton chose his wife and Ira Magaziner, whose previous policy work included helping to write an economic plan for Rhode Island that was rejected by voters. As Ezra Klein observes on his blog, "The resulting bill might have passed a meeting of the Brookings Institute’s Executive Committee."

In contrast, President Obama just crushed his opponent in a landslide, enjoys an incredible approval rating, and has tapped a veteran of the Senate to champion his cause. And every one of the above ideas is popular.

Republicans and their allies in the conservative movement need to ask a simple question: where is the line in the sand?

There is much to fight about, after all. But to be effective, we need to be smart. Our efforts will require determination and discipline. And good strategy: we simply can’t oppose everything.

The line in the sand should be the flirtation of the Obama Administration with allowing a public program to compete with private plans.

Mr. Daschle, President Obama's health-care czar, supports the concept of "a government-run insurance program modeled after Medicare." It would, he says, give consumers, especially the uninsured, an alternative to private plans. Jeanne Lambrew, his incoming deputy director of the White House Office of Health Reform, asked in a Senate hearing last June: “Why should policy makers give private insurers the exclusive right to cover Americans? If private insurers can better meet our goals for the health system, why object to a level competition with public plans?”

Choice and competition sound great. And Ms. Lambrew’s question is a good one -- who objects to competition? The problem is that public programs have an advantage over private plans: they employ wage and price controls. A physician working for Medicare or Medicaid gets a fraction of the compensation that he or she does when she sees a patient covered by private insurance.

Here’s the point: allow people the option of, say, Medicare for All and their usual private options, and many will opt for the government program. Why? The pubic option charges artificially low premiums since it pays fees well below private rates. These low premiums will serve as a magnet, swelling enrollment for public health care. Mr. Daschle can engineer quickly and easily what Mrs. Clinton could not a decade and a half ago: an orderly transition to government-run health care.

Unless, of course, Republicans and their conservative allies get in the game. So far, they haven’t. At Mr. Daschle’s hearing earlier this month, Republicans failed to ask a single question on public-plan competition. After, Senator Enzi issued one press release criticizing his idea.

We can look north for motivation. Back in 1984, the Liberal Party of Canada put forward legislation that effectively outlawed the non-government practice of medicine. Conservatives at the time, shy of a confrontation, voted for the bill figuring that they could undo the damage once in power. Canadians are still waiting for them to forward such legislation. Socialist eggs, as one Canadian politician observed, are difficult to unscramble.

Republicans and their conservative allies need to draw the line in the sand. Now.

David Gratzer, a physician, is a senior fellow at the Manhattan Institute.
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