The Public Fisc

Mark thinks that my public fisc problem can be solved through pay or play. That could be the case, although I have to admit to thinking that employer mandates as a tool for social policy are pretty lousy. There really is no good reason to have health care delivered through private employers in the first place. Not only that, if I were trying to figure out how to create a coalition for health care reform, I’d think that there were two big interests who are currently really unhappy with the current system:

a) Large employers, esp. those with huge health care obligations. They would be happy to see a system that relieved them of all their health care obligations, even in exchange for a tax (which would be lower than their prospective health liabilities);

b) Doctors, who are increasingly pinched by the health insurance industry. Many would rather have government breathing down their necks than HMOs.

These are two large, concentrated interests, who in the past have either sat out or obstructed health care reform. Long-term changes now, I think, make them persuadable to move to something more radical–that is, to totally throw out concerns with the public fisc and go to something like universal Medicare (here Jacob Hacker presents a plan for “Medicare Plus” that is pay-or-play but with very strong incentives to “pay.” It doesn’t go as far as I would, but Jacob is smarter than I am–that’s not self-deprecation because Jacob is smarter than EVERYONE–and knows a million times more about health care, so I would take what he says seriously). Basically folding the rest of the population into Medicare solves a number of problems. For large employers, it takes their health care obligations off their backs (if you had pay or play, there would be strong pressure from their unions to “play”–that is, pony up money above the federal tax, thereby solving none of their problems). For doctors, it promises to give them more room to practice medicine–whether it will I’m not sure, and I’m also not sure that, given what doctors are paid, I care. It also takes away the “scary new idea” argument against universal health care–most ordinary people (as opposed to some policy pros with large megaphones) think Medicare is actually working fine. The argument (like Galt’s) will be made that this “stifles innovation.” But frankly I’m highly underwhelmed by the innovatory qualities of the American pharma industry, at least as compared with, for example, NIH. You could put aside a part of the payroll tax in a trust fund for NIH research, which would almost certainly be better targeted at real medical problems than current pharma research is–and would substantially undermine the “it’ll squash innovation” argument.

This is NOT my ideal system. Frankly, my ideal system would be closer to folding everyone into the VA health system–that is, full-on, NHS-style socialized medicine. Not fashionable, I suppose, but there you are (I get ideological compensation points that preserve my credentials as a centrist because I think that the tobacco settlement was unconstitutional, Roe v. Wade was wrongly decided, and that we should have unilateral free trade and a voucherized public school system). The VA system, as Phil Longman carefully shows, provides better care, at a better price, than anything in the private sector, primarily because it can trace everyone throughout the entire system (thereby reducing medical errors and making preventive care rational to provide). So universal Medicare is a second-best solution for me. But I think that it is politically viable, which is a threshold that everyone with a plan should be made to pass before they are taken even remotely seriously.

Author: Steven M. Teles

Steven Teles is a Visiting Fellow at the Yale Center for the Study of American Politics. He is the author of Whose Welfare? AFDC and Elite Politics (University Press of Kansas), and co-editor of Ethnicity, Social Mobility and Public Policy (Cambridge). He is currently completing a book on the evolution of the conservative legal movement, co-editing a book on conservatism and American Political Development, and beginning a project on integrating political analysis into policy analysis. He has also written journal articles and book chapters on international free market think tanks, normative issues in policy analysis, pensions and affirmative action policy in Britain, US-China policy and federalism. He has taught at Brandeis, Boston University, Holy Cross, and Hamilton colleges, and been a research fellow at Harvard, Princeton and the University of London.