WASHINGTON. — Washington -- To illustrate the difference between principled conservatism and empty politics, compare the health-care reform proposal of the right-wing Heritage Foundation with President Bush's proposal.
The Bush plan is clearly based on the Heritage idea. The heart of both proposals is the use of tax breaks to enable people to afford health insurance. The claim of both is that this will provide universal coverage without the heavy hand of government. But Mr. Bush merely notes that his plan will cost $35 billion a year and says he looks forward to working with the Congress on how to pay for it. Heritage, by contrast, would pay for its tax credits by ending the tax deduction for employer-financed health insurance.
Fiscal dishonesty makes Mr. Bush's health care plan a metaphor for the Republican stewardship of the past decade. But that is only half the problem. Ending the subsidy to employer-provided health care is central to Heritage's contention that its plan will control health care costs through market incentives. Bush makes the same claim, but without the crucial mechanism.
Most Americans get health insurance through employers. The trouble with employer-financed coverage, besides the fear of losing it, is that it insulates consumers from the cost of their health-care decisions. Even the Heritage Foundation recognizes that the free market cannot control costs under such conditions. So Heritage envisions a world where individuals are responsible for making their own health-care arrangements, and for at least part of the cost of each decision they make. By contrast President Bush -- while eschewing direct government cost controls -- would leave most consumers in health cost Fantasyland.
The Heritage proposal should have great appeal to principled liberals as well as principled conservatives. It would guarantee universal access to affordable health care. It would be financed through what amounts to a progressive tax increase. It has the Thatcherite conservative virtue of not leaving out the unpleasant bits. Mr. Bush's plan, by contrast, is pure Reaganism: all dessert, no spinach.
The most the Bushies will say about paying for their plan is that much of the money can come from ''capping'' Medicare and Medicaid. This talk of ''caps'' is vague regarding Medicare, but fairly specific regarding Medicaid -- reasonably enough, since Medicare is for the politically powerful elderly, whereas Medicaid is merely for poor people.
Even for Medicaid, though, the proposed ''cap'' is not actual cost control. The federal government will simply give less money to the states, which administer and partly finance the program, and tell them: ''You figure it out.'' The result might be superior health care delivered more efficiently, as the Bushies piously hope. Or state treasuries might get stuck with the difference. Or hospitals might shift costs onto those with private insurance. Or the poor might simply get less health care.
With this proposal, George Bush concedes the liberal principle that the government should guarantee every citizen's right to decent health care. But he does it with no grace. Instead, he attacks liberal alternatives to his own proposal as ''socialized medicine.'' Years ago Ronald Reagan, as a paid flack for the American Medical Association, used this same phrase to attack Medicare -- a program now so sacrosanct that neither President Reagan nor President Bush would dare to touch it. In contrast to ''socialized medicine,'' Mr. Bush says, his arrangement will ''preserve choice.''
Let's be honest. Any arrangement that works to control costs will do it by severely limiting consumer choice. Mr. Bush's own proposal repeatedly touts the merits of what it calls ''co-ordinated care,'' the administration's preferred euphemism for ''managed care,'' itself a euphemism for systems that restrict what doctor and hospital you may use, what treatment you get and so on. Health maintenance organizations are the prime example. They can provide excellent and cost-effective health care. What they don't provide is free choice. That is exactly why they work.
And Mr. Bush's proposal is hardly free of the heavy hand of central government. Fortunately, it is not likely to be enacted until after his fatuous 90-day freeze on government regulations, because it entails many new ones: regulations requiring the insurance industry not to discriminate against those with pre-existing ailments, regulations requiring employers to help their workers find insurance, though not to help pay for it, federal regulations forbidding the states to do this or that.
The rule requiring insurance companies to take all comers is a sleeper. It is needed to solve the problem of people who lose their insurance when they change or lose their jobs. But to make it work will inevitably involve the government in setting insurance rates, assigning people to different companies, and generally interfering in the free flow of market forces.
Meanwhile, genuine cost control -- whether by the market or by the government -- is a medicine Dr. Bush is unwilling to prescribe. We need a second opinion.
TRB wrote this commentary for The New Republic.