Big Business’s New Friends

This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.

The New York Sun

Now that the Democrats have taken control of Congress, “universal health care” is once again front and center on the national political agenda. House Speaker Pelosi wants it. The party’s presidential front runner, Senator Clinton, wants it. And so does that new star in the party pantheon, Governor Spitzer of New York.

Mrs. Clinton went down in flames in 1994 when, as first lady, she concocted a federal takeover of the health care industry behind closed doors, violating a few rules about task force secrecy. The first lady’s indiscretion, abetted by some that were being committed by the first man, helped the Republicans seize control of Congress in 1994, something they didn’t relinquish until two months ago, when the voters threw out them and their pork barrel projects.

But 1994 was then, and 2007 is now. It is a certainty in politics that once a political party gets an idea in its head it doesn’t give it up easily, especially if it seems to be winning votes. And national health is very much alive and well in the left wing of the Democratic Party, the sector that is, as Ms. Pelosi’s accession last week reminded everyone, riding high at the moment.

The thing to watch now is the Democrats’ strategy of enlisting the support of big business. Rep. Barney Frank, in his “grand bargain with business” speech at the National Press Club recently, offered a sweet-looking Popsicle to CEOs at companies such as General Motors and Ford that are drenched in red ink. Asserting that it costs more to build a car in Detroit than in Canada solely because of the differing health care systems, he said it was in business’s own interest to support universal health care. It would, he said, “take health care out of the wage system.”

That is a beguiling message for CEOs who aren’t sharing in the general resurgence of corporate profits. The federal government already is responsible for nearly half the nation’s health insurance, through Medicare, Medicaid, and the like. Private insurance accounts for only about a third of total premiums, and employer-sponsored group plans, many of which are sponsored by big corporations, are a large part of that. But the total outlay for health care in America is so huge, about $2 trillion, that even the employer share involves big sums, in excess of $400 billion. That’s a lot of money to have wiped off the books.

That, however, doesn’t wipe it off the nation’s books. It just transfers it from the corporate expense account to the bill the government sends to taxpayers every year, week, or month. There’s no free lunch, as Milton Friedman once said. Somebody has to pay. So Mr. Frank is offering big business a chance to transfer a large cost to John Q. Public. Who would have ever imagined such a role reversal in the Democratic Party?

Promoters of national health argue that a “single payer” system would be more efficient. That requires them to make an argument that the federal government is more efficient than profit-making corporations. The sharp growth in Medicare and Medicaid costs at a time when private employers are exercising some control through co-pay programs and the like doesn’t bear that out.

The government has one weapon private employers don’t have. It can fix prices. It isn’t necessary to go back to how well that worked in the 1970s when price controls caused fuel shortages. A look today at Canada, Mr. Frank’s shining example, finds long waits for elective surgery that often send Canadians south of the border to get treatment. Germany’s heavy-handed national health system is causing an exodus of doctors seeking better pay and working conditions abroad. Our own Veterans Administration, in the interest of “efficiency,” is denying patients access to modern drugs.

America has been wrestling with the economics of “third-party payers” since the federal government got into the health care business 40 years ago, when Medicare was launched by the Johnson administration. Medicare is a popular program in that it insures that the elderly most in need of care will not do without. But the government-created expansion in health insurance coverage, plus the lack of any incentive for either patient or provider to control expenses, has had a major role in inflating costs. The good side is that Americans on the whole are among the most fortunate in the world in the quality of care they receive, particularly their easy access to life-saving drugs and medical procedures.

There are indeed distortions in the system, and some impact the poor. But if CEOs are tempted by Mr. Frank’s “grand bargain” to emulate the British or German national health system, the questions to ask are these: Would they rather provide medical insurance to employees and learn how to control that expense? Or would they prefer to pay their employees the higher wages employees will demand once they are saddled with the higher taxes government health care will require?


The New York Sun

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