Orange County Register, September 23, 2007

Hillary Clinton wants everyone to have health care insurance. Her American Health Choices Plan would require it, at an annual cost to American taxpayers of a mere $110 billion.

What could be more American? No more uninsured people. What a veritable heaven on Earth if only we adopt Mrs. Clinton's magic solution, government's omniscient, benevolent, guiding hand.

Is she on to something? Nearly every politician today advocates some degree of government intervention to make health care better. The public's behind it. What else explains that 74 percent of Americans want government to forceemployers to provide more health care?

That's probably why leading candidates for president hawk detailed health care plans for government at least to tinker with if not overtly manage your health care.

Not so fast. As Ronald Reagan said, government's the problem, not the solution.

Utopian dreamer Michael Moore says American health care is sick and needs a major dose of government. But more government medicine at best may temporarily forestall certain death. At worst, it accelerates euthanasia. Prescribe more government medicine, and kill health care.

The real solution for what ails American health care isn't more government control, funding, preferences or involvement. The real solution is to get government out of health care, and let the market correct the damage before it's too late. Alas, it may be too late for many people to accept this message, accustomed as we've become to someone else paying for our health care. Familiarity has bred a deep sense of entitlement.

Long ago people bought health care the way they bought groceries, automobiles or shoes. They shopped and stayed within budget. Then came government to improve on the free market. During World War II employers were constrained by wage controls but allowed to grant employees health insurance benefits in lieu of pay raises. To encourage this, government made the benefits nontaxable, something enshrined permanently in law in 1954.

Tax breaks had arrived. Health care hasn't been the same since. Companies increasingly offered benefits, on which they and employees paid no taxes. People paying for coverage (employers) were rewarded by the government, but had no relationship to the benefit received. People receiving the benefit (employees) paid little if anything for it.

If someone else pays the bill, how much would you like to receive? For more than half a century, the overwhelming answer has been: "More."

Imagine if "hunger" insurance were offered the way health insurance is. Suggests Joseph Bast of the Foundation for Economic Freedom: "The company will purchase a hunger insurance policy for you that covers about 95 percent of your food costs whenever you enter a grocery story or restaurant, and a smaller share of the miscellaneous snacks and condiments you purchase from street vendors and the corner drugstore."

"[S]ome of us would stop checking prices before we ordered food just as we don't check prices when we ask for medical treatment," says Bast. "If there were such a thing as hunger insurance, the price of food would begin to soar, just as the price of health services has steadily risen faster than the price of other goods and services."

Perhaps because we're generations removed from the genesis, most Americans don't realize their tax-free health benefits translate directly into less take-home pay. Here's another unpleasant truth. Tax-exempt insurance coverage is subsidized by all the uninsured, self-employed, unemployed and small businesses that don't get the tax break but must pay the tax, to the tune of about $200 billion a year. Those without coverage pay for those with. Socialists call that income redistribution.

As medical care costs increased even more with new technical advancements, those receiving insurance demanded ever-more expanded coverage. After all, they weren't paying for it. If the third-party payer problem was bad when only employers and insurers were buying and providing, it leaped to a new heights of woe once the government provided Medicare and Medicaid in the 1960s.

Government bureaucrats, who never lose their jobs by overspending, have less restraint than employers. Real costs were even further removed from the people receiving the benefits. Out-of-pocket payments for medical care declined from 50 percent in 1960 to 13 percent by 2005. Even as benefits increased, the people receiving them paid a smaller and smaller percentage of the cost.

Any street-corner apple seller knows, the more demand, the higher the price. People receiving the benefit increasingly demanded more, immune from real costs. Government increased demand further, and prices followed.

Sooner or later, the money pool is drained. Eventually, even government reaches a limit. When no one can pay for the next price increase, supply must be rationed.

"[A]s costs continue to soar, health care becomes less available, not universal," observes Diana Ernst, a health care public policy fellow at the Pacific Research Institute.

Much is made about the supposed 47 million uninsured Americans. But it's more like 20 million (in a nation of 302 million) after subtracting illegal immigrants and others who can afford health insurance but choose not to buy it. Many of those left are uninsured only when between jobs.

The current crisis isn't that there are some uninsured. It's that so many are overinsured. Third parties pay 86 cents of every medical care dollar, according to Michael F. Cannon, the libertarian Cato Institute's director of health policy studies. It costs $12,000 to insure one family for one year, but that family has no concept of the cost, paying at most a small fraction. Yet that family still wants more, and state governments oblige by forcing insurance companies to sell as many as 64 different benefits, ranging from hair restoration to breast reduction, further increasing costs.

"[F]ederal laws have created a health care system where patients are too often spending someone else's money when they purchase medical care," Cannon says. "As a result, U.S. patients demand too much medical care and pay too little attention to whether that care is cost-effective."

You wouldn't buy groceries, automobiles or shoes that way. The current rash of health care "solutions" range from Mrs. Clinton's big government scheme to more limited, yet government-oriented proposals by Republicans Rudy Giuliani and Mitt Romney.

Mrs. Clinton would force everyone to have insurance – even if they have better things to do with their money. That creates more demand, and higher prices. She would force all employers to provide insurance, or pay a tax. More demand. Everyone will be forced to buy or provide what the government decides people need. The government will "decide whether capping 1,000 teeth is worth more than extending a person's life for one week by kidney dialysis," says Bast.

Mrs. Clinton would expand existing government health care to include something like Medicare for the non-elderly. She says she wouldn't force you to sign up. But imagine your choices. How many employers will pay for coverage if they can pay Mrs. Clinton's lower tax instead? How many employees will receive employers' coverage if the subsidized government program doesn't require them to pay as much as their employers do?

If you think Mrs. Clinton's choices tilt toward the government, you're correct. What kind of care can we expect as people increasingly file into government health care stores? "I'll also ensure that the federal reimbursement system rewards care based on how effective it is," Mrs. Clinton promises. There you have it. The government will decide what's effective. Not you.

"Her plan would regulate health insurers until they become little government-managed utilities," says Grace-Marie Turner, president of the Galen Institute free-market think tank.

Remember Bast's comparison with hunger insurance? "The nation will face a difficult choice," Bast writes. "Either abandon the idea that all food should be paid for by hunger insurance or impose Draconian rationing measures, price controls and restrictions." Ditto for Mrs. Clinton's health care insurance.

As a nation we're traveling the entitlement road to Michael Moore and Hillary Clinton's utopia, where the ultimate third-party provider will dictate what health care we get, when we get it and from whom. Moore points to Canada's socialized national health system as a model.

"Canadian doctors tell us the system is cracking," observes columnist John Stossel. "More than a million Canadians cannot find a regular family doctor. One town holds a lottery. … The clerk pulls out one slip to determine the winner. Others in town have to wait."

The alternatives offered by Giuliani and Romney don't impose new taxes or universal requirements on individuals or companies. They do, however, revert to the sort of tax-break incentives pioneered in World War II that first got us into this mess. However, they offer tax credits to individuals rather than companies.

That's a significant improvement. It provides recipients incentives to shop, which is absent when employers pay the bill. Even so, that improvement relies on tax breaks, and every tax break means someone else is subsidizing it. The Giuliani and Romney approach might slow the rush toward utopian health care. But they travel the same road, in the same direction.

The solution isn't to let more folks in on the scam. The solution is to end the scam. Rather than taking more of peoples' money in taxes than needed, only to dole it back to them as bribes to do what the government wants done, it would be better not to take the unneeded money in the first place. The solution is for the government to stop subsidizing health providers and buyers, stop bribing health care recipients with their own money and stop dictating what must be bought and sold.

When people keep their money and weigh their purchases, they spend as much on groceries, automobiles, shoes – and health insurance – as they want to. Unfortunately, in an entitlement-oriented society, that's not a popular campaign platform.

Contact the writer: Mlandsbaum@ocregister.com or 714-796-5025