Bush’s State of The Union Proposals On Health Care Will Fuel Debate

Published February 1, 2003

The debate between Democrats and Republicans over health care issues in 2003 promises to be more productive than it has been in quite some time.

Republicans may finally show some interest in a topic that is near the top of voters’ lists of concerns, though early mishaps suggest they may once again blow the chance to lead. Democrats will update their version of the Fear Factor–emitting visions of people who are sick, dying, or dead without health care coverage–and offer Americans the opportunity to get medical coverage through Medicaid, mandates, and higher taxes.

Democrats Offer Bigger Government

The Democrat proposal–shaped largely by its liberal wing with the help of Families USA–bumps up against the state Medicaid programs already facing large deficits and comprising the largest portion of state budgets.

There are already 37 million adults and children served by Medicaid each year, and Democrats want to add 40 million more. The idea of having nearly half of all Americans enrolled in government-run health programs (if you include 35 million senior citizens receiving Medicare) might excite Families USA and others, but it’s highly unlikely states will want to take on the new burden. Medicaid spending is increasing at twice the rate of overall state government spending.

The Democrats will respond to state concerns by calling for higher taxes or mandates requiring private-sector firms either to cover their employees or pay into Medicaid. The other “choice” will be “allowing” the uninsured to buy into Medicaid with their own money, federal subsidies, or some combination of the two.

But states are already planning ways to scale back Medicaid to save money, including limits on who is eligible, cuts in fees paid to doctors, restrictions on access to new drugs, and reduced services to disabled children and the mentally ill.

Unlike people with private health insurance, Medicaid recipients must fight with other interest groups for scarce public dollars. Indeed, over the years, health services under Medicaid have taken on a Hobbesian form: nasty, brutish, and short-lived.

As Medicaid and the state-run CHIP program have become the insurers of first resort, they have crowded out appropriate care for the poor and disabled, placing inordinate demands on the public treasury. Now, real and ugly rationing is taking place at the very moment Democrats want to shove millions more Americans into these programs.

The right response is to make a wide range of health care plans more affordable and available, not to prop up Medicaid or scapegoat the usual suspect, the pharmaceutical industry. But Democrats will blame Medicaid’s woes on rising drug costs, ignoring the facts that (a) prescription drugs represent only 9 percent of federal Medicaid costs and 12 percent of total Medicaid program spending and (b) drugs are far less expensive than the alternative, in many cases hospitalization.

Republicans Send Mixed Signals

Since battling the Clinton health plan in 1993, Republicans have been largely bereft of any real conviction about health care issues. Rather, the past Republican accomplishments–including the expansion of Medicaid and the creation of the State Children’s Health Insurance Program–can best be characterized as Ted Kennedy with half the calories.

Today, President George W. Bush appears ready to lead congressional Republicans in a much different direction: giving Americans the money and tax breaks they need to choose their own health care and preserve their relationships with doctors and hospitals they trust.

But poor political habits are difficult to break. Tom Scully, director of the Centers for Medicare and Medicaid Services, has all but handed the Democrats their talking points by telling hospital executives the way for states to control Medicaid spending is to take on the drug companies. “Not many states have the courage to take this on,” Scully said. “I love the drug companies, but I think it’s insane (for Medicaid) to charge a $1 to $3 co-payment to buy Celebrex and Vioxx. … Celebrex and Vioxx are no better than Motrin. It’s a joke.”

What’s a joke is that the bleeding ulcers and stomach problems associated with long-term Motrin use used to be one of the primary reasons the elderly were admitted to the hospital, and Scully apparently doesn’t know it. It’s also a joke he doesn’t realize many of the “courageous” actions states are using to control drug spending–such as limiting access to new drugs for schizophrenia–are causing untold unnecessary suffering and driving up total Medicaid expenditures. Scully’s words and ignorance will come back to hurt Republicans as they seek to wage and win a principled fight on health care.

Medicaid is falling apart because it is a government-run health plan–not because of prescription drug costs. The sooner Republicans and moderate Democrats find and stick to that message, the better it will be for Americans in search of better health care.

Robert Goldberg is senior fellow and director of the Center for Medical Progress at the Manhattan Institute for Policy Research.