Free-Market Reformers Are Winners in Election 2002

Published December 1, 2002

The 2002 election was not a referendum on health care issues. A post-election survey by pollster Dr. Whit Ayres found only 9 percent said health care was the issue that had the most influence on their vote. Health care trailed the economy (29 percent), terrorism (20 percent), and education (16 percent).

An analysis of key races, however, finds candidates who talked about sensible free-market solutions to health care issues fared better than those who advocated big-government solutions.

One telling event was voters’ decisive rejection of the Oregon single-payer health care initiative, Measure 23. Oregonians overwhelmingly rejected this universal health care scheme 79 percent to 21 percent.

Under the proposal, all public and private health care payments, including Medicaid and Medicare, would have been funneled into a “single-payer” account controlled by the government. Because payment decisions would have been made by government bureaucrats, the system would have inevitably led to rationing of care for patients and an exodus of physicians from the state.

A study conducted by LECG Consulting showed every Oregon taxpayer would have paid an additional $4,000 to $5,900 in taxes to pay for the single-payer system. That would have been devastating to Oregon’s economy.

Prescription Drugs

The Medicare prescription drug benefit passed by the House of Representatives in June 2002 gave Republican candidates an edge on an issue that traditionally favors Democrats.

The House bill used competing private health plans to administer a drug benefit for senior citizens at a cost of $350 billion over the next 10 years.

Several House incumbents who had been targeted for defeat, including Rep. Nancy Johnson (R-Connecticut) and Rep. John Shimkus (R-Illinois), could point to their support of the House bill as proof they did something to help seniors with high prescription drug costs. Both won their races.

The House bill also laid the groundwork for Senate candidates to take the lead on the issue. Representatives John Sununu (R-New Hampshire) and Saxby Chambliss (R-Georgia) could tout their support of the House bill in their Senate races. Both won, with Chambliss pulling off one of the biggest upsets of the election cycle, defeating Democratic incumbent Senator Max Cleland.

Victories by Jim Talent (R-Missouri), John Cornyn (R-Texas), Norm Coleman (R-Minnesota), and Elizabeth Dole (R-North Carolina), all of whom supported the market-based reform approach taken by the House bill, were crucial to the change in control of the Senate.

The Democrats’ message didn’t seem to resonate with voters. Many, including Sen. Jean Carnahan (D-Missouri), Gov. Jeanne Shaheen (D-New Hampshire), and former Vice President Walter Mondale (D-Minnesota) supported a big government-run prescription drug benefit within the current Medicare program that could cost up to $1 trillion over the next 10 years.

The issue of prescription drug prices also played a role in many races. Democrats were generally in favor of taking measures to promote the use of generic drugs and to reimport prescription drugs from other countries.

Republicans, particularly Sununu and Rep. John Thune (R-South Dakota), were aided by President George W. Bush’s announcement in early October to limit pharmaceutical companies to one 30-month stay on a drug patent when challenged by generic drug manufacturers. That afforded Republican candidates the opportunity to say they were doing something about the high cost of prescription drugs. Sununu won, but Thune was narrowly defeated by incumbent Senator Tim Johnson (D).

Health Care Costs

Rising health care costs and access to care were important issues in many campaigns. Conservative candidates were successful in articulating a positive message that included the expansion of Medical Savings Accounts (MSAs) and creation of Association Health Plans. Liberals advocated expansion of coverage for the uninsured primarily through existing government-run programs, including Medicaid and the State Children’s Health Insurance Program.

House candidates Chip Pickering (R-Mississippi), Clay Shaw (R-Florida), and Chris Chocola (R-Indiana) were among those successful in touting MSA expansion as a solution to rising health costs. They advocated making MSAs permanent, tax-exempt, and available to all small business employees and individuals who purchase their own insurance.

Victorious Senate candidates Lamar Alexander (R-Tennessee) and Talent were also helped by their support of health insurance purchasing groups for small businesses. Called Association Health Plans, these allow small businesses to enter into purchasing pools to provide health benefits while avoiding costly mandates and gaining the same discounts for which large firms qualify.

Medical Savings Accounts and Association Health Plans are consumer-driven approaches voters seemed to like. They were a positive message in an environment where consumers seem to be seeking more choice and control over their health care decisions.

The New Landscape

While the 2002 elections may not have produced a mandate for free-market health care reform, advocates of market-driven approaches now see an environment undoubtedly more receptive to their ideas than before.

With Republicans in control of the White House, House, and Senate, we can expect a revisit of free-market principles in health reform in the coming year. President Bush, House Speaker J. Dennis Hastert, and Senate Majority Leader Trent Lott all have said health care legislation will be a top priority in the 108th Congress.

Specifically, their priorities on health care reform include a targeted Medicare prescription drug benefit, tax credits for the uninsured, and tort reform for medical malpractice.

A prescription drug benefit for Medicare beneficiaries that includes broader reforms in the Medicare program and uses the private sector to administer the benefit now stands a better chance of advancing in the Republican-controlled Senate. It is imperative Republicans act on a prescription drug benefit in the upcoming Congress, lest voters hold them responsible for inaction in the 2004 Presidential election year.

How to assist the 41.2 million Americans without health insurance is an issue policymakers will probably have to address in the coming session. Giving the uninsured tax credits to purchase private health insurance is a free-market approach to this problem with bipartisan support in Congress. The Trade Act of 2002 contained tax credits for uninsured workers who lost their jobs due to trade negotiations and seed money for establishing and funding High-Risk Insurance Pools.

Limiting medical malpractice awards is a must issue to address at both the state and federal levels. The 2002 House bill capping noneconomic damages at $250,000 stands a better chance of passage by the Republican-controlled Senate and has the backing of the President.

Medical malpractice reform also stands a better chance in the states, where Republicans netted four state legislative chambers and now have control of both chambers in 21 states, compared to 16 for Democrats. Republicans also retained control of governorships by a 26 to 24 margin.

Overall, the 2002 election brightened the prospects for free-market health reform in the coming years. The voters have spoken, choosing men and women who endorse market-based, consumer-driven health care solutions over big government.

Joe Moser is a health policy analyst at the Galen Institute, a not-for-profit public policy research organization based in Alexandria, Virginia. The views expressed here do not necessarily reflect the views of the Galen Institute.