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Back to Basics on Health Care : When we resume the battle next year, the nation must remember why reform was needed in the first place.

October 02, 1994|Gregg Easterbrook | Gregg Easterbrook is a contributing editor to Newsweek and the Atlantic Monthly. His book on the historical significance of environmentalism, "A Moment on the Earth," will be published by Viking Penguin

WASHINGTON — By now you've read all the convoluted reasons health-care reform officially died for 1994. It's because Harry and Louise were more believable than that other fun couple, Hillary (Rodham Clinton) and Ira (C. Magaziner). It's because Senate Minority Leader Bob Dole (R-Kan.) makes Haitian Lt. Gen. Raoul Cedras seem like a reasonable guy. It's because Rep. Dan Rostenkowski (D-Ill.) was caught giving away official chairs. It's because voters want change but only if nothing is different. It's because President Bill Clinton got distracted by events in Lower Koda-Chromistan and the crisis over amphibian rights. And so on and on.

Yet, the most important factor has been missed in last week's zillions of words of commentary. This reason is the simplest: All parties lost sight of why health-care reform was needed in the first place.

There are two underlying reasons for significant reform of the health-care system. One is the moral imperative of universal coverage: both to protect the 37 million Americans who lack health insurance, and to guarantee that those who have insurance don't lose it if they change jobs. The second reason is the U.S. approach to health care costs too much.

Throughout this year's debate, the U.S. health-care system has been variously portrayed by the Hillary Clinton faction as falling apart at the seams, by the Dole faction as totally peachy-keen. Both views diverge from the clinical reality. In terms of quality, American health care is ab-fab (absolutely fabulous, if you missed this summer's slang). But not everybody qualifies, and for those who do, the price is too high--14% of U.S. gross domestic product vs. 9% to 10% in countries like France and Switzerland, which offer just as much high-tech care, yet insure everyone at lower cost.

The worst flaw of the President's plan was that rather than offer a simple system of cost controls specified by the federal government but carried out by the private sector, Clinton would have created multiple new bureaucracies to attack the wrong question in health care. The bureaucracies would have gone after care delivery--generally, the ab-fab part of the system--while skirting the core problem, the price of care.

As the debate progressed, the White House abandoned cost controls, putting its energies behind what were, in effect, new taxes (the "employer mandate") on the assumption that since health costs can never come down, universal coverage means spending must go up, and for that, somebody must pay.

This represents at once a spectacular misreading of public sentiment on taxes and of proven ideas that have worked in countries with high-tech universal care at reasonable prices. Focusing on universal coverage and lower costs could have allowed a far more intelligent, politically appealing reform proposal to emerge and be enacted last year. But first, let's look at the lessons learned from the health-care collapse:

* Don't propose 1,400-page ideas. The initial Hillary Clinton-Magaziner package was so overwrought with mandates and formulas that, from the moment the forklift lowered it to the President's desk, there existed zero chance it could be enacted. Whatever health plan rises from this year's ashes must be simple, focusing on the two things that matter--universal coverage and cutting costs.

* Washington should mandate goals, but leave the details to the people in the field. In the Clinton plan, hundreds of pages of details were supposed to micromanage every aspect of hospital and physician life. Give it up! Next year's health-reform plan must take the federalist approach of setting a few vital goals but leaving doctors, hospital administrators and other professionals to achieve those goals using superior knowledge of what happens in the real world.

* Forget the Medicare magic asterisk. Both Democratic and GOP alternatives to the Clinton plan seemed nice in that they imposed no new taxes, but lacking cost controls sought to finance themselves in a preposterous way--by assuming unspecified future cuts in Medicare spending. But in the past decade, typical Medicare fees paid to doctors and hospitals have already declined to about 60% of typical private-pay fees.

Rather than cutting Medicare, health-care reform ought to drive private-pay fees toward the Medicare level. It is important to note that about 60% of the U.S. private-pay level is about where medical fees in France and Germany now sit. At this level, doctors still are affluent, but social costs for health care are within reason and universal care is affordable.

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