New Clothes same destination

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REVIEW & OUTLOOK

HillaryCare's New Clothes

Different means but the same political destination.

Wednesday, September 19, 2007 12:01 a.m.

Hillary Clinton has been blasted for months by her Democratic Presidential rivals because, until Monday, she hadn't delivered her formal campaign promises for "universal" health care. But John Edwards and Barack Obama were unfair. She beat them to the punch by at least 13 years.

The former first lady's 1993-94 health-care overhaul ended disastrously. Still, it poured the philosophical and policy foundations of the current health-care debate. As she unveils HillaryCare II, Mrs. Clinton likes to joke that it's "deja vu all over again"--and it is, unfortunately. Her new plan is called "Health Choices" and mentions "choice" so many times that it sounds like a Freudian slip. And sure enough, "choice" for Mrs. Clinton means using different means that will arrive at the same end: an expensive, bureaucratic, government-run system that restricts choice.

Begin with the "individual mandate." The latest fad after Mitt Romney's Massachusetts miracle, it compels everyone to have insurance, either through their employers or the government. Not only would this element of HillaryCare require a huge new enforcement bureaucracy, it is twinned with a "pay or play" tax on businesses that don't, or can't afford to, provide health insurance to their employees.

The plan also creates a new public insurance option, modeled after Medicare, and open to everyone, regardless of income. To keep insurance "affordable," HillaryCare II offers a refundable tax credit that limits cost to a certain percentage of income. Yet the program works at cross-purposes, because coverage mandates always drive up the price of insurance. And if the "pay or play" tax is lower than a company's current health insurance costs, a company will have every incentive to dump its employee plan and pay the tax.

Meanwhile, the private insurance industry would be restructured with far more stringent regulations. Mrs. Clinton would require nationally "guaranteed issue," which means insurers have to offer policies to all applicants. She would also command "community rating," which prohibits premium differences based on health status.

Both of these have raised costs enormously in the states that require them (such as New York), but Mrs. Clinton says they are necessary nationwide to prevent "discrimination" that infringes "on the central purposes of insurance, which is to share risk." Not quite. The central purpose of insurance is to price, and hedge against, reasonably predictable risks. It does not require socializing every last expense and redistributing wealth.

No liberal reform would be complete without repealing the Bush tax cuts of 2001 and 2003; Mrs. Clinton would foot the bill for her plan with this tax increase. The rest of the estimated $110 billion per year in new government spending would be achieved by "modernizing" health-care delivery and "promoting wellness," though this $35 billion in savings is speculative, if not fanciful. Further tax hikes would be required: That $110 billion is a back-of-the-envelope calculation, and Team Hillary is keeping the specifics in its pocket.

Given how poorly "universal" policies fared the last time around, who can blame them? Mrs. Clinton and Ira Magaziner headed a health-care task force with more than 500 members that eventually produced 1,342 numbing pages of proposals. It's hardly surprising this boondoggle died without so much as a Congressional vote.

Yet Mrs. Clinton insisted that the public had been spooked by Rush Limbaugh, an article in a marginal political journal and advertising campaigns such as "Harry and Louise." In other words, the lessons she learned were political, not substantive. She thought she had overreached with too-sweeping changes. So she and her husband began to slice their universal health-care ambitions into smaller initiatives like the 1997 State Children's Health Insurance Program (Schip).

This is her strategy now. HillaryCare II is designed to cause minimal disruptions to current private insurance coverage in the short run, while dressing up the old agenda with slightly different mechanisms and rhetoric. Rather than fight small business, this time she is trying to seduce it with tax credits for small companies that provide insurance. Only later when costs rise will the credits shrink or other taxes rise. To court large manufacturers, like the auto and steel industries, she'll offer another, "temporary" tax credit to subsidize their health-care liabilities. Her plan, in short, is HillaryCare I in better clothes--a transitional platform to shift people to the default option, which is government insurance.

What's striking about all this is how little new thinking there is. Like the other Democratic proposals, HillaryCare II would mark another major government intrusion into health care. It would keep all of the system's current problems, most of them created by government policies, and entrench and expand them. The creativity is all in the political repackaging.

http://www.opinionjournal.com/editorial/fe...ml?id=110010623