[StBernard] Health Care Reform: A Better Plan

Westley Annis Westley at da-parish.com
Tue Aug 11 11:53:23 EDT 2009

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

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.

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