Miller’s Centrist Tale

The Two Percent Solution: Fixing America's Problems in Ways Liberals and Conservatives Can Love, by Matthew Miller

(PublicAffairs, 283 pp., $26)

If good politics is more art than science, as Otto von Bismarck once suggested, then German chancellor Gerhard Schroeder is a master artist. In less than five years, Schroeder has skillfully avoided certain political death, pulling off a reelection victory after trailing by 9 percent. But his greatest masterpiece is his overhaul of Germany's state-run health-care system, a plan that was endorsed by his political rivals this summer. Schroeder is giving the health-care system a dose of market reform: For the first time since the Second World War, patients must pay small fees when they visit a doctor or fill a prescription. Private insurers, once viewed with a skeptical eye by members of Schroeder's Social Democratic party, will be given a more prominent role. But there are also leftist ideas in his plan, such as price controls for pharmaceuticals. Schroeder's reforms come from the right and the left, aimed at twin goals: curbing runaway spending while maintaining the country's universal health-care system.

Matthew Miller, a syndicated columnist and contributor to The Atlantic Monthly , doesn't mention Germany in his clever new book -- but Schroeder's ideologically ambiguous reforms seem to be the exact template Miller espouses for change in the U.S. The spirit of compromise dominates this elegant read; labeling Miller can prove tricky. He is a Democrat, and served as a senior adviser to President Clinton's Office of Management and Budget. He views the impeachment of his former boss as entirely politically motivated; he frets about defense spending; he portrays conservatives as obtuse Neanderthals. But he's also no ordinary Democrat: He favors Social Security privatization with a zeal that would make the boys at the Cato Institute blush, and his views on Medicare reform would give Senator Kennedy heartburn.

There's an old psychiatry joke that Attention Deficit Disorder is when your son breaks your neighbor's living-room window with a baseball, but psychopathy is when your neighbor's son breaks yours. For Miller, Democrats are timid, afraid of repeating the HillaryCare debacle and of offending suburban fiscal sensibilities; Republicans, in contrast, are just ignorant and psychologically damaged. Still, he remains optimistic. Solutions to vexing public-policy problems are not impossible, he says, but they require that liberals and conservatives set aside their differences.

Take health care. Polls consistently suggest that Americans are worried about the issue. This should not be surprising, because health insurance is built on the dated concept of third-party payership; in other words, someone else is paying for your health care. That's an inherently unstable situation. Further complicating the picture is an almost endless list of federal and state regulations. In New York, for example, every policy is required to cover a variety of services, including infertility treatments, second opinions, and podiatric care. All Americans deserve healthy, bunion-free feet, but should podiatric coverage really be required by law? If car insurance were designed like health insurance, our employers would pay for coverage that included everything from gas to new paint jobs -- and millions would not be able to afford a car at all.

To work out a solution for American health care, Miller sits down with two ideologically opposed congressmen, Republican Jim McCrery of Louisiana and Democrat Jim McDermott of Washington. McCrery favors a free market for insurance; McDermott fantasizes about a Canadian-style single-payer system. But both recognize the importance of compromise. McDermott concedes that private plans will deliver the best care to Americans; McCrery accepts a role for government in looking after the ailing poor. By chapter's end, they reach a neat agreement, embracing conservative and liberal ideas to forward a more sane (and universal) health-care system. Most remarkably, McCrery and McDermott both see the folly of employer-sponsored health insurance: Your boss doesn't buy your food, clothes, or home -- why should he buy your health care?

The bad news is that, like so many great health-care schemes, their compromise is totally unworkable. What they have agreed on is total price control for health-insurance premiums, set uniformly for all Americans; this, coupled with other requirements, would make health insurance something more like a regulated utility.

This compromise is a perfect example of Miller's work: innovative in its approach but not innovative in the solution it proposes. Scrapping third-party payership is a step in the right direction, but politicians have already spent a long time micromanaging health care in the way Miller envisions: In attempting to protect patients with various measures aimed at safety and fairness, they have succeeded chiefly in distorting the health-insurance market. To date, the result has been high-cost insurance and millions of uninsured Americans. Far from being a remedy, government regulation is part of the problem. The Miller-McCrery-McDermott health-care plan is a non-starter.

Miller tries to put together a similar compromise on education. He argues that school vouchers could, in principle, appeal to everyone, and tries to persuade different groups. In the end, though, it looks like he'd have more luck trying to craft a Middle East peace settlement. His proposals are shot down by various union officials. Kweisi Mfume, president of the NAACP, agrees to Miller's voucher idea -- only to have an aide call later to say that no, he doesn't, really. Another Miller education initiative -- higher teacher pay for greater teacher accountability -- falls on deaf union ears. Moon landings and fiber-optic technology are feasible, but appraising the performance of a teacher is impossible.

Some of Miller's other ideas are not quite as well conceived. For example, he likes the concept of a living wage, whereby the government would top up private-sector salaries so they reach $9 an hour. Neat stuff -- but it would surely become a giant corporate handout as companies pared back salaries so that their workers would qualify. Miller's lengthy list of initiatives also includes public day care and public funding of campaigns.

Miller reasons that America could afford all these initiatives by spending two cents on every dollar generated by the economy (or $220 billion, a 10 percent increase in federal spending). He says his plan would deliver the realization of LBJ's dreams with a government that's smaller than it was under President Reagan -- but most of the money to finance his proposals comes from hiking taxes, trimming the growth of defense spending, and canceling the Bush tax cuts. Howard Dean would find little to object to in this agenda.

Miller seeks to reinvigorate American politics from the political center. He draws ideas from liberals and conservatives, envisioning Schroeder-style compromises. But reality intervenes: German health care, for example, is still centrally planned and inflexible. Schroeder celebrated his compromise this summer, but he will be back to the drawing board next summer when costs are higher and the problems have resurfaced. That is the fate of "New Democrats": They champion thinking big, but end up thinking big government.