[StBernard] Health Care Reform: A Better Plan

[Westley Annis]

Health Care Reform: A Better Plan
by Charles Krauthammer

WASHINGTON - In 1986, Ronald Reagan and Bill Bradley 
created a legislative miracle. They fashioned a tax reform 
that stripped loopholes, political favors, payoffs, patron-
age and other corruptions out of the tax system. With the 
resulting savings, they lowered tax rates across the board. 
Those reductions, combined with the elimination of the 
enormous inefficiencies and perverse incentives that go 
into tax sheltering, helped propel a 20-year economic boom. 

In overhauling any segment of our economy, the 1986 tax 
reform should be the model. Yet today's ruling Democrats 
propose to fix our extremely high quality (but inefficient 
and therefore expensive) health care system with 1,000 
pages of additional curlicued complexity -- employer 
mandates, individual mandates, insurance company mandates, 
allocation formulas, political payoffs and myriad other 
conjured regulations and interventions -- with the promise 
that this massive concoction will lower costs. 

This is all quite mad. It creates a Rube Goldberg system 
that simply multiplies the current inefficiencies and 
arbitrariness, thus producing staggering deficits with 
less choice and lower-quality care. That's why the 
administration can't sell Obamacare. 

The administration's defense is to accuse critics of being 
for the status quo. Nonsense. Candidate John McCain and a 
host of other Republicans since have offered alternatives. 
Let me offer mine: Strip away current inefficiencies before 
remaking one-sixth of the U.S. economy. The plan is so 
simple it doesn't even have the requisite three parts. 
Just two: radical tort reform and radically severing the 
link between health insurance and employment. 

(1) Tort reform: As I wrote recently, our crazy system of 
casino malpractice suits results in massive and random 
settlements that raise everyone's insurance premiums and 
creates an epidemic of defensive medicine that does no 
medical good, yet costs a fortune. 

An authoritative Massachusetts Medical Society study found 
that five out of six doctors admitted they order tests, 
procedures and referrals -- amounting to about 25 percent 
of the total -- solely as protection from lawsuits. 
Defensive medicine, estimates the libertarian/conservative 
Pacific Research Institute, wastes more than $200 billion 
a year. Just half that sum could provide a $5,000 health 
insurance grant -- $20,000 for a family of four -- to the 
uninsured poor (U.S. citizens ineligible for other 
government health assistance). 

What to do? Abolish the entire medical-malpractice system. 
Create a new social pool from which people injured in 
medical errors or accidents can draw. The adjudication 
would be done by medical experts, not lay juries giving 
away lottery prizes at the behest of the liquid-tongued 
John Edwardses who pocket a third of the proceeds. 

The pool would be funded by a relatively small tax on all 
health-insurance premiums. Socialize the risk; cut out the 
trial lawyers. Would that immunize doctors from careless-
ness or negligence? No. The penalty would be losing your 
medical license. There is no more serious deterrent than 
forfeiting a decade of intensive medical training and the 
livelihood that comes with it. 

(2) Real health-insurance reform: Tax employer-provided 
health care benefits and return the money to the employee 
with a government check to buy his own medical insurance, 
just as he buys his own car or home insurance. 

There is no logical reason to get health insurance through 
your employer. This entire system is an accident of World 
War II wage and price controls. It's economically sense-
less. It makes people stay in jobs they hate, decreasing 
labor mobility and therefore overall productivity. And it 
needlessly increases the anxiety of losing your job by 
raising the additional specter of going bankrupt through 
illness. 

The health care benefit exemption is the largest tax break 
in the entire U.S. budget, costing the government a quarter-
trillion dollars annually. It hinders health-insurance 
security and portability as well as personal independence. 
If we additionally eliminated the prohibition on buying 
personal health insurance across state lines, that would 
inject new and powerful competition that would lower costs 
for everyone. 

Repealing the exemption has one fatal flaw, however. It 
was advocated by candidate John McCain. Obama so demagogu-
ed it last year that he cannot bring it up now without 
being accused of the most extreme hypocrisy and without 
being mercilessly attacked with his own 2008 ads. 

But that's a political problem of Obama's own making. 
As is the Democratic Party's indebtedness to the trial 
lawyers, which has taken malpractice reform totally off 
the table. But that doesn't change the logic of my 
proposal. Go the Reagan-Bradley route. Offer sensible, 
simple, yet radical reform that strips away inefficiencies 
from the existing system before adding Obamacare's new 
ones -- arbitrary, politically driven, structural 
inventions whose consequence is certain financial ruin.