Plodding along a Cul-De-Sac

Published March 1, 2005

If there is one thing most tragic about the ideas promoted by the advocates of national health care, it is that they keep going around in circles, always starting and ending at the same place: more government regulation.

Over the years, the national health care concept has reached the same end point in every country that has tried it. Overutilization and underfinancing plague those systems in a textbook lesson in failed social policy: what governments give you, they can take from you, leaving you to pay the bill.

Costs Increase Steadily

Germany began its trip around the cul-de-sac in 1833, when the German royalty declared the state would provide a medical care “sickness fund” for all documented citizens. One by one, other countries across Europe (save Switzerland) joined them.

When it became clear the money needed to pay for medical care was finite but the demand for “free” medical care was infinite, government authorities admitted they could no longer afford to meet the demand. To keep the promise alive, governments increased taxes, assessed fees, required employers to pay a share of the cost, and created a plan for rationing care.

Today, the negative consequences are legendary.

Germany’s government-run health care system is running an annual deficit of $3.9 billion (€3 billion). In the U.S., Tennessee’s trip around the cul-de-sac, the TennCare Medicaid program, had a 2004 deficit of $650 million. Gov. Phil Bredesen (D) has said he will cut 320,000 Tennesseans from the program’s rolls in an effort to address the shortfall.

Calls for Repeating Mistakes

Earlier this year, Sen. Edward Kennedy (D-MA) stepped into the cul-de-sac (he’s been there many times before), once again calling for the creation of a national health care system to be phased in over the next decade.

Speaking at the National Press Club in Washington, DC on January 12, Kennedy said he would create “Medicare for All,” beginning with those between ages 55 and 64. According to reports in the Washington Post, Kennedy said the first stage of the phase-in would also “guarantee good health care to every young child.”

The expansion in coverage would be paid for, Kennedy said, by a combination of payroll taxes, general government revenue, and savings gained from technological advances, including the transition to a national medical database covering all Americans.

Kennedy Wants Tax Increase

In a return to an idea reminiscent of the Clinton administration and Sen. John Kerry’s (D-MA) 2004 presidential campaign, Kennedy resurrected the payroll tax increase for health care. He wants a 1.7 percent additional tax on employees and a 7 percent tax on employers. That, he says, will cover 85 percent of the cost of “Medicaid for All,” leaving the other 15 percent to be paid out of general revenue funds.

Kennedy conveniently disregards the experience of government-run health plans worldwide, awash in red ink and infamous for long waiting lines and denied care. Without massive tax increases and payroll deductions, our current Medicare plan can’t absorb what Kennedy proposes.

Kerry Ignores Facts, Too

In an effort to pull the public away from the path of successful health insurance initiatives like HSAs, Kerry has started a major push on legislation to provide a health care entitlement to every child in America, called the “Kids Come First Act.” Kerry’s proposal was introduced to the Senate on January 24.

On January 25, the Boston Herald quoted Kerry as saying, “Eleven million children without health insurance is unacceptable.” To finance his expansion of Medicaid, Kerry would roll back a portion of the Bush tax cuts.

Like Kennedy, Kerry is ignoring some very basic facts. Those 11 million “uninsured” children, whom he correctly identifies as being at or below the federal poverty level, are already automatically enrolled in Medicaid the first time they get care in a hospital or physician’s office. These kids are not uninsured.

Kennedy and Kerry can’t seem to find their way off the national health care cul-de-sac. Their proposals lead to just one destination: lower-quality health care more expensively for all.

Conrad F. Meier ([email protected]) is senior fellow in health policy at The Heartland Institute and editor emeritus of Health Care News.