McCain Makes a Start on Health Care

On April 29, John McCain delivered an address outlining his proposal for dealing with health care, an issue which Republicans have generally ceded to Democrats for years.

Since persuading Americans to ditch the Clinton health care reform in 1994, Republicans have generally been complacent about the issue. Satisfied that they had beaten off the latest spasm of medical socialism to emanate from the Democratic Party, they were reluctant to offer anything in its place. Indeed, they grew rather defensive about the whole issue, caving in to demands for greater insurance regulation in 1996, a bigger subsidy for children’s health care (the SCHIP program), and, worst of all, the Medicare prescription drug entitlement in 2003. They succeeded in winning a trial of Health Savings Accounts, but it was a small start. Mostly the GOP has alternated between hoping the health care issue would go away and trying to prove how much they cared by signing on to dubious expansions of big government.

It is already apparent that health care will be a major issue in the 2008 presidential election, and John McCain joined the fight with his April speech. While he praised Health Savings Accounts, called for medical tort reform, and promised to promote preventative medicine, the heart of his address consisted of a proposal to begin shifting from employer-based health insurance to individual-based health insurance that subscribers could take with them from job to job.

As McCain pointed out, such a system would have many advantages. Individuals and families could shop for policies that fit them best, promoting greater competition and innovation among insurance companies. Because rates would presumably, as with life insurance, be determined on an individual basis, individuals would have greater incentives to protect their own health and be more careful about the use of services. There would be a tighter connection between individual decisions and the cost to the individual. It is precisely that lack of connection that promotes spiraling health care costs today. And no one would lose insurance just because he or she lost a job.

In McCain’s plan, Americans could choose to go this route, receiving a direct $2,500 tax credit for individuals or $5,000 for families to use purchasing their own health insurance, or they could remain in their employer-based program.

In economic terms, McCain’s plan would try to solve the nation’s health care problems by harnessing the free market rather than working against it.

The Republican will nevertheless face an uphill climb convincing Americans to accept his prescription. Largely due to Republican neglect, Democrats start off more trusted on the issue, and there are more than a few Americans who don’t honestly want any more choices in an already chaotic and seemingly insecure world.

For McCain to succeed with this gambit, he will need to do three things.

First, he will need to stick on this issue and make it clear that he really cares about it. No matter how good the proposal may be on paper, it will not have the desired effect if voters come to conclude that it is just window dressing to try to blunt the Democrats’ advantage. If McCain handles health care the way Obama handles national security—as an annoyance that must be addressed from time to time in order to retain credibility—he will fail.

Second, McCain needs to be a teacher, though not a scold. He has already taken pains to remind people of the economic history of the 1960s and 1970s as a warning against going down the road of centralization again. It is a lesson Americans need to remember. He also needs to point out something that doubtless few Americans know: that the employer-based health insurance system is a relic of World War II wage and price controls that pushed business into offering, and government into subsidizing, health insurance as a substitute for wages. It could be a powerful point in his favor that he is the only one in the race ready to fundamentally modernize an obsolete 1940s system that is supposed to be serving a twenty-first century nation. What happened to Obama and Clinton as agents of “change?”

Finally, McCain’s argument will gain greater resonance if he can connect it to a context of broader principles. Bill Clinton won the 1995-96 budget battle with Congress by framing the question (in an admittedly skewed way) as one of values. Perhaps McCain can win this battle in the same way. Imagine the candidate pressing for his health care proposal by saying:

Everyone in America wants more Americans to have access to affordable health care. But there is a right way to do it and a wrong way to do it. There is a way to do it that is consistent with our fundamental values as a nation, values of freedom, of limited government, of opportunity and individualism. And there is a way to do it that does violence to our fundamental values as a nation. I believe we must do it in a way that reaffirms our values, that reaffirms what is most special about America. My opponents, though well-meaning, are committed to a way that would undermine those values, perhaps fatally. Americans decided in 1994 that they did not want to go down the road to socialized medicine. But presidents and congresses of both parties failed to move forward to find a solution that addressed the problem and upheld our values. Now is the time, and I have the plan.

The health care sector represents about one-sixth of the economy of the United States. It is no exaggeration to say that the battle over health care will go a long way toward determining whether the United States retains is special character as a free nation. It is well worth pointing that out to the electorate—before it is too late.

Andrew E. Busch is a Professor of Government at Claremont McKenna College and an Adjunct Fellow of the Ashbrook Center.