Health Care a la Contract

Sure, the Congress and its Contract With/On America bulldozed through a lot of legislation last spring. But compared to this fall's agenda, which includes health care reform, last spring was child's play.

Will the Republicans manage to create a sensible plan in their area of least expertise--social programs? It's hard to believe that they could do any better than President Clinton and his team of academic economists did last summer. But past history holds some inklings of what we can expect.

Last summer, the two Republicans most involved in health care reform were Senators Bob Dole (R-Kans.) and John Chafee (R-R.I.). Chafee and the Finance Committee were involved in a moderate plan for national health insurance through managed care. His bill was most closely associated with that of Rep. Jim Cooper (D-Tenn.) in the House and had the support of many Democrats. However, it lacked sufficiently aggressive advocacy (especially on Chafee's part) to become law.

The Republicans are much more likely to draw ideas from Dole's plan, one of the last to be introduced last summer. Dole had decided that the Republicans needed a plan of their own--not one to share, like Chafee's. So he threw together an austere (and by consequence relatively inexpensive) program in order to have something to tout, even though it would never pass a still-Democratic Congress.

Dole provided for the elimination of Medicaid, a policy objective which has widespread support on both sides of the aisle this year. He offered health coverage for families with income under 90 percent of state poverty thresholds, where some Democratic plans (including that put forward by Sen. Edward M. Kennedy '54-'56 (D-Mass.) would have extended coverage up to 185 percent of poverty levels. Standard coverage by Medicaid today can be as high as 133 percent in some states. In addition, Dole left out many of the benefits including prescription drugs and outpatient mental health care, that Democratic and consensus plans would have instituted.

Dole's idea of basic coverage has some merit, as long as every American is guaranteed that safety net. But forcing so many families currently covered by Medicaid to obtain private insurance or do without it entirely will hardly contribute to the nation's health and well-being. Most of these families will probably be priced out of the private insurance market, and their increasingly inferior health care could end up costing the country even more.

In any case, Medicaid is not the largest health insurance monster that the Republicans will have to confront. Medicare, as the primary insurer for 31 million Americans, outranks Medicaid's 21 million. Unfortunately, Republicans shudder with the mention of cuts in any program for the elderly, one of their prime constituencies. They'll probably end up leaving Medicare for 1997, with the hope that a Republican president will make their job easier.

Whether the Congress cuts Medicaid or Medicare, the fundamental problem of health care privatization will remain. Health care and health insurance are not goods like apples or oranges; their distribution and trading greatly influences many sectors of the economy. Letting the health market run wild could give rise to deeper problems, such as a movement in medical research to lower-cost treatments rather than new and better alternatives. When the agents in the market are driven solely by profit, the overall quality of care is usually reduced. Complete privatization could also cause an arms race in technology, as managed care facilities compete for wealthy customers by offering--redundantly--the hottest new treatments and procedures.

When it comes to health care, government could be the only source of an equitable solution that ensures a tolerable standard of care. A government-run system also has the advantage of keeping all administration under one roof. But let's remember who owns that roof these days; they're not the most hospitable hosts, especially for social programs.

Daniel Altman's column appears on alternate Mondays.