The Right Opinion

Conservative Think Tanks on Health Care

By John C. Goodman · Feb. 20, 2013

Why have the Republicans been unable to propose an alternative to ObamaCare? Anyone can criticize. Where is the Republican alternative?

Okay, I’ll grant some exceptions. Newt Gingrich had a comprehensive health plan in last year’s Republican primary. It was my plan. Four years ago John McCain had a comprehensive health reform. That was also basically my plan. Mitt Romney oversaw health reform in Massachusetts. That was a Heritage Foundation plan.

Yet none of these ideas has garnered the support of the Republican rank and file. Why not?

Think about the special interests Republican politicians are likely to talk to. Doctors, hospitals, insurance companies, drug companies, device manufacturers, employers, etc. Their interests are all different. I doubt if you can come up with any significant health reform that won’t be vigorously opposed by at least one of these. Since heath care is a $2.6 trillion industry, special interests are willing to spend megabucks to oppose reforms they don’t like.

Then there are the conservative/libertarian think tanks. You would think they would at least share a common vision of health reform that many Republican officeholders would find appealing. But they don’t. The messages from the think tanks have been almost as diverse as the views of the special interests. Did you know that each of the major right-of-center think tanks has its own reform plan? And they are all different!

Oh, I get by with a little help from my friends

Mm, Gonna try with a little help from my friends

What brings this to mind are two American Enterprise Institute (AEI) publications – one by Joe Antos on Medicare reform and the other by Tom Miller on more general health reform. Both are quite good. They are informative. There is little that I saw that I disagreed with. (I plan to write more about them in the future.) Then I begin thinking about the short-term Medicare reforms that Tom Saving and I proposed in Health Affairs and the long-term Medicare reforms Tom and his colleagues at Texas A&M developed for the National Center for Policy Analysis (NCPA). I suspect that there is not much in the NCPA proposals that Tom and Joe would disagree with. But in terms of the written text, I would guest there is only about a 10% overlap between our work and theirs.

A politician following the AEI publications would miss out on about 90% of what the NCPA proposes. A politician following the NCPA publications would miss out on about 90% of what the AEI scholars think is important.

Overall, think tanks on the right have a habit of ignoring each other. Often, they don’t even footnote each other. We proposed the idea of Health Savings Accounts (HSAs) in the early 1990s. The proposal was quickly endorsed by the Cato Institute and other more libertarian organizations. Today, HSA plans are the fastest growing products in the health insurance marketplace and I think it’s safe to say that the idea is no longer even controversial. But I believe it was at least a decade before the idea was embraced in any publication produced by the Heritage Foundation, the American Enterprise Institute or the Hoover Institution.

Is this state of affairs the result of being overly competitive? Of seeking product differentiation? Of each organization trying to develop its own market niche? Possibly. A more likely explanation, I suspect, is that the folks on the right really do have very different visions of health care.

About two decades ago, I wrote Patient Power with Gerry Musgrave. More recently, I wrote Priceless. If you skim the introductions to both books, you will quickly see the idea that the doctor-patient relationship lies at the core of everything that is important in health care. However, I can’t recall any other major, right-of-center think tank ever writing about the doctor-patient relationship.

The NCPA web site is about the only place on the Internet where you will find a continuing, ongoing interest in how we can create a genuine market for medical care in which providers compete for patients based on price, quality and convenience. This is the entire focus of the Medicare reforms I proposed with Tom Saving. By contrast, most of our friends in other organizations are inordinately focused on third-party payers and see the activities of these entities as being central to health reform. In my ideal world, health insurance companies would have a shrinking role – eventually becoming no more active than a garden variety life insurance company. (The social function of a life insurance company, by the way, is to do nothing more than verify deaths and pay claims.)

Another difference: the NCPA and the Cato Institute seem to be the only organizations with an interest in creating a real market for health insurance in which risk is priced accurately. Only in such a world will health plans compete aggressively to take care of the problems of the sick. Failure to understand this point is why AEI scholar J. D. Kleinke thinks that ObamaCare is market-based reform.

The news is not all bad. More thinkers on the right are openly advocating the fixed sum tax credit (defined contribution) subsidy that Mark Pauly and I proposed years ago as the ideal way to subsidize private health insurance. In addition to Joe Antos and Tom Miller, see the Weekly Standard piece by James Capretta (AEI and Ethics and Public Policy Center) and Jeff Anderson (Pacific Research Institute).

Even so, there are differences among the think tanks that are real and ongoing.

At the time of the debate over HillaryCare, there was a major clash among the right-of-center think tanks over the direction health reform should take. Peter Ferrara recounts some of the history here. Partly in response, Grace-Marie Turner (Galen Institute) established the Consensus Group – to try to forge…well…a consensus. In the early years, we actually did find some common ground. We even published a book.

Yet with the passage of time, the consensus seemed to dissolve and the organizations drifted apart. The Heritage Foundation continued to push ahead with the idea of managed competition, modeled on the Federal Employee’s Health Benefits program. Hoover Institution scholars published their proposal for tax subsidies – completely ignoring the Goodman-Pauly analysis and provoking a backlash from others in the conservative health policy community.

In the six months leading up to the passage of the Medicare Modernization Act (which created the prescription drug benefit under Medicare), I believe the Consensus Group never met. At the time of its passage, the right-of-center think tank community was deeply divided. The group did meet occasionally leading up to the passage of ObamaCare. But it was never able to agree on principled opposition – such as the NCPA’s Health Contract with America.

Josh Barro, writing at Bloomberg on the Republican failure to develop a credible health agenda, agrees with my point about the special interests. But he goes on to fault the conservative think tanks for putting too much faith in free markets – regurgitating arguments that I thought I demolished some weeks aback. The conservative think tank problem is not their belief in free markets. It is that each think tank seems to have a different idea about how markets can solve problems.

Bottom line: there is no common health policy vision on the right. Come to think of it, there is none on the left either. But I’ll save those guys for another day.


Tod the tool guy in brooklyn ny said:

Amen wjm, and furthermore, what did the Nazi party do,in the 1930's, inside Germany? ANWER---THEY TOOK OVER HEALTH CARE FIRST, to control and dictate!!! Wake up blue dog Demokrats, wake up!!!

Wednesday, February 20, 2013 at 9:12 AM

XCpt in the ether said:

If you want to fix the health care system remove the insurance industry from it completely. The market will repair itself as the health care industry will not be able to survive trying to sell a service that nobody can pay for. Currently its just a scam between the provider and the insurer to determine the value of any service and how much each of them will charge or cover in relation to that fee.

Wednesday, February 20, 2013 at 11:25 AM

jddotman in SC replied:

I think XCpt has an idea. I believe the way to "fix" healthcare is to give all the power to the individual and let the market work. Originally I envisioned this as either a fixed tax or a voluntary contribution to a "Medical Account". This account is tied to an individual. It is either a tax deductable contribution or as I said a tax. The account is the individuals to use to buy health insurance or health services as they deem. The government has no so or ownership of the money. The money in the account can be donated to other individuals/family members or charities for those entities to use for their own individual medical accounts/expenses or in the case of a charity to help individuals that were unable/unwilling to contribute on their own. This account follows the individual no matter the state or job you move or switch to. The money in it could be invested in certain long term stable investments at your own risk and is inheritable to your heirs. I envision that in the near term the insurance companies would be needed but as the wealth in these accounts over generations grows they (the insurance companies) would have a diminished role in healthcare. Think of all the money you'd have in this type of investment account if you were allowed to have kept all the monies yourself and employer had contributed to your medical insurance of the course of your lifetime vs losing that money when you switch jobs. This is just a rough plan but at the heart of it, big government and big business loses their control and you and I gain it. That to me is the only solution.

Wednesday, February 20, 2013 at 12:37 PM

septuagenarian in Canada said:

Those of us who are old enough can remember a time when medical insurance did not exist. Doctors were paid their fee whenever a patient was seen, and patients paid at the reception desk for blood work, X-rays, etc. I recall that my doctor charged $125 for 9 months of prenatal care and delivery, and the hospital also charged $125 for labor room, delivery and a 3 day stay in the hospital following delivery. Then the insurance companies came along and told doctors they would double those fees if their patients bought insurance, and patients were told they could greatly reduce their medical costs if they bought insurance. And ever since, both insurance fees and doctor's remuneration have exploded exponentially. The health care system here in Canada is free of insurance, but far from free. It is, however, on a fee based system that makes it considerably less expensive on a per-capita basis, and is paid for through income taxes. The US has always had the world's best health care because of its accessability. Obamacare will destroy that.

Wednesday, February 20, 2013 at 12:48 PM

M Rick Timms MD in Georgia said:

HSA's are the solution. Of course, Obamacare does all it can to eliminate them. I know of no doctor that is not willing to compete on the basis of quality care, affordability, access, patient care when dealing with patients directly.

As a patient, I shop for elective services to find the best price among providers that are highly recommended to me. My high deductible plan is there for the big stuff, but I control how much and when and where I spend my HSA dollars.

The system has been controlled by governmnet since medicare began in the 60's. There is no competition anymore, and the regulation has destroyed the best health care system in the world. After the coming collapse we will return to a fee for service model and HSA's will emerge as the common sense workable solution,,, but not with these socialists in charge.

Wednesday, February 20, 2013 at 2:09 PM

Pete in Oklahoma replied:

The medical plan I have is awesome! I have a high deductible paln with a health savings account. I am an insulin dependent diabetic and all "maintenance medications" such as insulin, test strips etc. are covered 100% with no deductible. I currently have almost $13K in the HSA and hope to have over $100k by the time I retire. The HSA (I'm spending my own money) makes me question everything my doctor says.

Wednesday, February 20, 2013 at 2:31 PM

Howard Last in Wyoming replied:

Rick, I can't find that section of the Constitution that authorizes the feds to get involved with health care. By the Tenth Amendment it is left to the states. It is no business of Big Brother what I pay my doctor, what kind of tests or procedures he performs. The other problem is the ambulance chasers. Have surgery recently how many of the various tests performed prior to surgery actually serve a purpose other than to keep the lawyers at bay?

My daughter had a patient come in the other day who was limping. After examining him and taking x-rays, she determined knee surgery was required. She performed the procedure the same afternoon. He stayed overnight in the clinic and went home the next day. The clinic and she were paid the same week. Oh, the patient was a Black Lab and my daughter is a DVM.

Thursday, February 21, 2013 at 12:30 AM

M Rick Timms MD in Georgia replied:

Love it Howard! And I bet she was not required by law to give her patient a blood thinner, or a particular amount of antibiotics before surgery ( actually, must be administered within one hour prior to incision in order to meet compliance ). Just a few of the thousands of micro-managing regulations that Washington puts in our way. I am jealous of your daughter's freedom to practice her profession and care for her patients based on her education, training and experience. I remember when we had that in surgery, but those days are gone, replaced by bureaucrat mandated cookbook medicine.

Thursday, February 21, 2013 at 12:51 AM

Tod the tool guy in brooklyn ny said:

Personal responsibility in HSA's---that's all-American,after all!

Wednesday, February 20, 2013 at 4:46 PM

Wayne in Hinesville, GA replied:

Tod, You hit on the very thing that most of us would work at, perosnal responsibility. Unfortunately, we now have at a minimum 48 to 49 % of the people in this country who have no personal responsibility. They depend on the taxpayers for health care, housing, food, and free cell phones. Changing that mind set will always be an uphill battle as long as the Socialists/Marxists/Communists are in charge of the country.

Wednesday, February 20, 2013 at 5:51 PM