Recently, Rahm Emanuel, President Barack Obama’s chief of staff, urged the leaders of corporate America to join the new administration in a push for universal health care reform, telling a group of CEOs that “incremental changes” (in our health care system) won’t be acceptable. If this sounds like deja vu all over again—a Clinton aide warning corporate America to either work on universal coverage or face—as Mr. Emanuel put it, “a revolt”—you’re not alone. That’s not Honest Abe from Springfield, that’s Al Capone from Chicago.
However, it is not clear that, in electing Mr. Obama, Americans gave the President or his new advisers a mandate to increase the role of government in running or paying for health insurance. And in particular, it is far from certain that most Americans signed onto to the details of the Obama, Clinton or any other Democrat proposal to create a single-payer health care system. Indeed, if past is prologue, the imperious demand for government-controlled health care is the surest path to losing political support and reviving the Republican Party.
The foundation of the Obama plan (as well as all other Democrat plans) to provide universal coverage is to stabilize the employer-based health care system. Every “blueprint” claims that doing so will allow Americans to obtain better care at a lower cost. Every liberal think tank and foundation—from the Kaiser Foundation to the Commonwealth Foundation—have weighed in with estimates asserting that subsidizing the employer-based system and providing the rest of Americans a way to buy into what’s referred to as “public” insurance can get the job done. And what’s more, the entire package will bring about a wholesale improvement in America’s health.
There are a few problems with this scenario. First, subsidizing the employer-based system is bailing out the auto industry or the auto unions to be more precise. The congressional proposal to provide General Motors a $25 billion loan covers what its CEO Rick Wagoner calls “operating expenses.” Over half of that money will pay the health care benefits for current GM workers and retirees for the next six months. That’s money GM will get a tax break on in addition to the bailout, a tax break that rewards higher income Americans than it does poorer ones. The rampant rise in the auto industry’s health care spending is a direct result of the structure of its health benefits and the corporate tax breaks that reward them.
Second, these benefits have been shaped not by the clinical or consumer value of care, but by the same pork barrel politics that have shaped the Democrat plan to both protect the employer-based system and the benefits package it would require every American to accept. And those benefits are unparalleled on the planet. For generations, auto workers paid nothing for health care. For GM, the annual deductibles for employees and retirees using managed care will be $100 for individuals and $200 for families. If you want to use a doctor or hospital outside of your health plan, your out of pocket expense is capped at $500 for individuals and $1,000 for families. Many other workers and retirees pay no premiums or deductibles at all, for life. If, as most liberals claim, coverage equals better health, then UAW members and retirees should be the healthiest people in the universe. In fact, they are some of the most chronically ill of all Americans.
Mr. Emanuel claims that unions are addressing the concerns of the middle class. Yet, the way Mr. Obama and other Democrats pay for propping up the tax advantages of big corporations and the excessive health benefits of a powerful union is by shoving 51 million Americans into Medicaid or something like it. Further, how doctors practice medicine and what they get paid will be tied to a Comparative Effectiveness Institute, a new national agency that decides the most valuable care for the price. According to the Lewin Group, doctors and hospitals will get paid 22 percent less than what they are getting from private insurers—a revenue loss of about $140 billion. Cuts in doctor pay in Medicaid and state-run “universal” health plans like those in Massachusetts have led to hollow health care coverage: people with insurance but without doctors who can afford to treat them.
Two years ago, Drew Altman, president of the Kaiser Foundation, noted rampant growth in the auto industry’s health care spending “begins to call into question whether employers can continue to be the backbone of our health care system.” The fundamental problems of the employer-based system have gotten worse. Yet Mr. Emanuel and others want to keep propping it up by restricting the medical choices of consumers, reducing what’s spent on health care and having government tell doctors how to practice medicine.
If Mr. Emanuel believes there is a mandate for such a plan, he is mistaken. Americans want protection against the unexpected cost of necessary medical care. When they pay premiums they expect health care companies to help them get and stay well in return, not repay the favor by fighting them or denying them treatment. But that’s exactly what the Democrat proposal has in mind for most Americans. That’s the only way the Democrats can afford to continue to bail out a failing and flailing employer-based system.
