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Manhattan Institute

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Talk health care, senator!


Talk health care, senator!

April 7, 2008
Health PolicyOther

In November, Americans will have on the presidential ballot a candidate advocating bold ideas for health-care reform. Hillary Clinton? Barack Obama? Think again: John McCain.

The Arizona senator's health-care plan may be the last, best hope to prevent a Europeanization of American health care.

Not only are his health-care proposals far superior to the lightweight ideas of Sens. Clinton and Obama, they also fundamentally would change our health-care system by putting families, not employers or the government, in charge, and potentially tame costs as well.

On the issue of cost, everyone agrees: American health care is too expensive. Between 2000 and 2006, premiums for health insurance doubled. As a result, despite rising labor costs, the median earnings of American workers stagnated. With no end in sight for health inflation—total spending is forecast to double by 2017—the system is collapsing, and both corporate America and middle America are pining for relief.

The problem, of course, has deep roots. Our present system, rising out of World War II-era wage-and-price controls, allows employers but not families to pay premiums in pre-tax dollars, leading to an employer-centered system in which people pay directly just 13 cents of every health dollar.

McCain would scrap 60 years of bad tax policy and get employers out of the health-insurance game by giving every family a tax credit to purchase its own insurance.

People would then get coverage directly or through their church, union or trade association.

Envisioning a vibrant health-care sector, McCain proposes more competition among health-insurance companies and less regulation of insurance markets. He also supports a focus on paying for outcomes, not treatments, within Medicare, increased competition among providers and greater pricing transparency.

In stark contrast, the Democratic candidates are largely for maintaining the status quo, even though they and other Democrats recognize that the status quo is sinking under unsustainable costs.

Sens. Clinton and Obama have exchanged harsh words over their respective plans, but in truth their policies are remarkably similar —and weak. Both, in essence, advocate further government subsidy of the health-care system.

Even the sharpest point of contention between Clinton and Obama— whether people should be forced to buy health insurance—amounts to a lovers' quarrel.

He favors the idea for children, while she champions it for adults, too. Further, Clinton wants to give Americans more "choice," allowing them to opt into Medicare, regardless of age.

If her idea were realized, millions of Americans would leave private insurance for Medicare, swelling enrollment for a public program that's headed toward insolvency.

Obama proposes that Washington cover large medical bills, meaning taxpayers would foot the bill for the most expensive treatments. Neither Clinton nor Obama offers a plan that would alter the underlying economics of our system. Costs are likely to keep rising under their proposals, albeit with a heavier taxing of the Treasury.

With such a contrast between his and rivals' plans, McCain should be making much more of this issue on the campaign trail. Since his October policy announcement, he has rarely discussed it. Health care ranks as the biggest domestic issue besides the overall state of the economy; McCain's silence is a political miscalculation.

McCain has made no secret of his fondness for the trustbusters of the early 20th century. He could fashion himself as their modern heir, beating down the barriers to individual choice and competition in health care.

While Sens. Clinton and Obama seem content to debate mandatory health insurance, McCain has an opportunity to present Americans with a fresh alternative. Now, if he'd only speak up.