Reform running into roadblocks

Even though the President’s Task Force on National Health Care Reform has been in business since January 25, it looks like the wheels are coming off — and it has not yet left the garage.

Late last week task force director Ira Magaziner said the group would not make the president’s May 3rd deadline. Sources close to the process say it will be released around Memorial Day; other insiders say it will be closer to Labor Day. Whatever the date, the group has many problems.

Public hearings held last week at George Washington University showed that many Americans have substantive objections to their approach. Example: there are many niche markets in the health care customer base — and not just children and the poor. Many of these niches cannot be well-served by the “managed competition” model the group is said to favor.

Second, cost is a matter of growing concern as estimates of $90 to $150 billion a year are causing sticker shock. These costs will be covered by imposing more new taxes. New taxes on booze and cigarettes move the applause needle, but they don’t begin to raise levels of revenue the new healthcare plan will require. The administration and Congress will have to come up with new middle class taxes that raise real money — such as a value-added tax (VAT) or a national sales tax. However, the current debate over the $16 billion “stimulus package” shows a president with growing problems in Congress, where many centrist Democrats worry about Clinton’s tax and spend proclivities.

Third, according to many reports, the task force is seriously considering “global budgets” and other forms of price controls. If they take this route there is no chance for success because price controls don’t work. Price controls always increase costs and require more controls and an expanded government to police the system. Price controls decrease quality and distort markets. So, if the group sticks with this idea, they’re in for a big fight with Congress — including both Democrats and Republicans.

Fourth, people are slowly beginning to learn more about healthcare. They now know that national health insurance has never been successful in controlling costs; that rationing health care does not make the system more efficient even if it drives down costs; that every nationalized system tends to push the poor and the elderly to the back of the line; that spending a lot of money for healthcare is not all bad in a society that is growing older and more health conscious.

Most important, people may come to understand that privatization, competition and market incentives will provide better and cheaper healthcare for more people than more socialized medicine. If the price of healthcare “reform” is fewer services, higher taxes and bigger and more intrusive government, the president’s comprehensive approach to healthcare reform may get sidetracked. Using states as laboratories for reform (see new experiments in Oregon and Florida, for example) is the alternative to the grand scheme of the president’s philosopher-kings.