Clicking on banner ads keeps JWR alive
Jewish World Review June 23, 1999 /9 Tamuz, 5759

Mona Charen

Mona Charen
JWR's Pundits
World Editorial
Cartoon Showcase

Mallard Fillmore

Tony Snow
Michael Barone
Dave Barry
Kathleen Parker
Dr. Laura
Michael Kelly
Bob Greene
Michelle Malkin
Paul Greenberg
MUGGER
David Limbaugh
David Corn
Marianne Jennings
Sam Schulman
Philip Weiss
Mort Zuckerman
Richard Chesnoff
Larry Elder
Cal Thomas
Jonathan S. Tobin
Don Feder
Linda Chavez
Mona Charen
Thomas Sowell
Walter Williams
Ben Wattenberg

Econophone

How to avoid Mediscare

http://www.jewishworldreview.com --
THE FINANCING OF health care has not gone away as a political issue. It isn't just the probable Senate run by Hillary Clinton that will give the matter new life. The political reality is that health care is just too tempting a target for Democrats to leave alone for long.

Writing in the July/August issue of The American Enterprise, Dr. William C. Waters III offers a lucid explanation of medical costs and how we came to be where we are today. Before the government began permitting companies to deduct the cost of providing medical insurance (and before the government began paying the bills of the elderly outright), individuals either purchased their own insurance or paid for medical expenses out of pocket. In either case, they had an incentive to use medical services prudently.

But after medical insurance became a fringe benefit -- after a third-party payer forked over 80 percent or 100 percent of the price of a visit to the dermatologist or psychiatrist or podiatrist -- the individual had little or no incentive to curb his appetite for medicine. If the same system applied to food expenses, who wouldn't choose filet mignon and caviar every night?

Food sellers would have every incentive to raise prices and to offer ever more enticing specialties. Those with food insurance would dine on lobster and champagne while those lacking food insurance would find prices prohibitively high.

That's what has happened in the realm of medical care. In 1960, medical spending amounted to 5 percent of gross domestic product. By 1997, it was 14 percent, and unreformed, federal spending on Medicare and Medicaid are expected to triple as a percentage of GDP over the next 40 years. Dr. Waters, one of three generations of doctors in his family, summarizes this way: "My father and his patients were prudent; my patients and I were spendthrift; my son and his patients will be told what to do by people without training or knowledge of the individual consumer's situation."

The Democrats have used the threat that "Republicans want to take away your Medicare" to good effect in countless election contests. The difficult but necessary task for Republicans is to explain that Medicare isn't free, and neither is employer-provided health insurance. Medicare is paid for in taxes, and employer-provided insurance is paid for in forgone wages.

The typical head of household with a wife and child, Waters explains, currently earns $36,000. But when his employer calculates the cost of hiring him, he figures his cost as $39,600. The $3,600 difference is used to purchase a hybrid -- part pays for catastrophic insurance, and another part pays for ordinary office visits and other medical expenses. An excellent reform would be to give the tax deduction to individuals instead of employers. Employers would then pay higher salaries in place of offering the medical benefit. With the extra cash, the employee could purchase catastrophic insurance for between $800 and $1,200 per year. He could use the remainder to purchase more insurance (depending on his family's needs), or he could pay for medical expenses out of pocket as they arose. The consumer would then have an incentive to shop around for bargains and to use his funds carefully, as he would keep anything he didn't spend.

This would be a dramatic departure from our current system, which suffers from too much regulation and too little competition. We are chasing our tails now: The high costs encourage HMOs. HMOs then ration care in ways we dislike. Legislatures in turn pass laws invalidating the actions of HMOs, and medical inflation continues apace. (Medical costs have risen faster than inflation for the past 30 years.)

Reform would have to entail a system for the uninsured. Waters suggests government subsidies or vouchers for the poor to buy catastrophic insurance. This is more economical than paying big bucks, as we now do (it's a hidden part of all medical bills), for the uninsured to be treated in hospital emergency rooms.

Economics is not easy to explain or sell politically. But it does sink in over time. New Democrats proudly proclaim their conversion to belief in markets. Republicans should remind themselves that they were the ones who never doubted.


JWR contributor Mona Charen reads all of her mail. Let her know what you think by clicking here. Please bear in mind, though, that while all letters are read, due to the heavy amount of traffic, not all letters can be answered.


Up

06/21/99:Taking back our streets
06/16/99:Hide and seek
06/14/99: Impervious to the evidence
06/09/99: Unsung heroes
06/01/99: For $ale
05/26/99: Best friend these girls ever had
05/24/99: Baby Hope continued
05/20/99: Say no to the Gore tax
05/17/99: Baby Hope
05/13/99: Other high crimes
05/10/99:Three cheers for uniforms
05/05/99: Voucher opponents' worst nightmare
05/03/99: Lessons of Columbine High
04/28/99: Kevorkian is stopped
04/26/99: "Senseless tragedy"?
04/22/99: Hey, hey, ... Bubba
04/19/99: Why we are in Kosovo
04/15/99: Hooray for the NYPD
04/09/99: How to do something about taxes
04/06/99:Can the private sector handle foster care?
03/31/99: The Flower Child goes to war
03/29/99: Foreign-policy meltdown
03/25/99: 'Just doin' it'
03/22/99: Return of pay equity?
03/16/99: St. Hillary
03/10/99: Rodney King in perspective
03/08/99: Monica's story: No morals
03/04/99: Not home but library alone:
3/02/99: Tuning our racial sensitivities
2/27/99: Cease-fire in war between sexes?
2/23/99: Where were the religious voices?
2/19/99: Depends what you mean by "acting"
2/17/99: As Minn., goes so goes the nation?
2/09/99: Prepare for post-impeachment spin
2/03/99: Teaching morality
2/01/99: What did he say?
1/26/99: The truth about the Peace Process
1/22/99: The vulgar decade
1/19/99: Was Jefferson libeled by DNA?
1/13/99: The backlash picks up speed
1/11/99: Who invented politics of personal destruction?
1/07/99: Shall we dance?
1/05/99: Try him!
12/30/98: The price of virtue
12/28/98: The gift of giving
12/22/98: Party of shame, party of shamelessness
12/18/98: Wag the country
12/16/98: Is this impeachment constitutional?
12/14/98: Republicans find courage
12/09/98: Nappy Hair and other racial slurs
12/07/98: Stranger in a strange land
12/02/98: Dangerous ground
11/30/98: Involuntary fatherhood?
11/24/98: Lies, damned lies, and sex lies
11/18/98: Another victory for cowardice
11/16/98: Separatism plus welfarism equals a dead end
11/10/98: Did conservatism lose campaign '98?
11/06/98: Democrat venality, Republican timidity
11/04/98: Are girls being shortchanged?
11/02/98: Believe the children?
10/28/98: What 'Measure 58' would do
10/26/98: The officers are bailing out
10/20/98: Using Matthew Shepard's murder
10/19/98: The school voucher that saved a family
10/14/98: Are powerful women different?
10/09/98: Can just sex be impeachable?
10/07/98: Repeal Miranda
10/02/98: Understanding the polls
10/01/98: What school texts teach about marriage
9/28/98: Fear of choice
9/23/98: A fork in the road: Bubba's fate and ours
9/18/98: Christianity and the Holocaust
9/16/98: The national dirty joke
9/11/98: Are we in crisis?
9/09/98: Does Burton's sin let Clinton off the hook?
9/07/98: Liar's Poker
9/01/98: One, two, three
8/28/98: Fat and folly
8/25/98: When homework is a dirty word
8/21/98: The unravelling
8/18/98: The wages of dishonesty
8/17/98: Sex, honor and the presidency
8/12/98: Pro-choice extremist
8/10/98: Switch illuminates biology's role
8/05/98: The presumption of innocence and the American way
8/03/98: An American hero
7/29/98: Lock up those who need psychiatric care
7/24/98: Making the military more like us
7/22/98: The 'Net sex hoax... and us
7/20/98: Disappointed by Cosbys
7/15/98: Feelings, not morality, rule
7/10/98: Guns as the solution?
7/8/98: Teacher preacher
7/6/98: The China behind the headlines
7/1/98: What is the First Amendment for?
6/26/98: The Republican city
6/24/98: Poison pen
6/22/98: Clinton: inventing his own reality?
6/16/98: Senator mom?
6/12/98: Wisconsin: a trail blazer?
6/9/98: These girls say no to sex, yes to excellence
6/5/98: Lewinsky's ex-lawyer would feel right at home as Springer guest
6/2/98: English? Si; Republican? No!
5/29/98: The truth about women and work
5/27/98: Romance in the '90s
5/25/98:Taxing smokers for fun and profit
5/19/98: China's friend in the White House
5/15/98: Look out feminists: here comes the true backlash
5/12/98: The war process?
5/8/98: Where's daddy?
5/5/98: The joys of boys
5/1/98: Republicans move on education reform
4/28/98: Reagan was right
4/24/98: The key to Pol Pot
4/21/98: The patriot's channel
4/19/98: Child-care day can't replace mom
4/15/98: Tax time
4/10/98: Armey states obvious, gets clobbered
4/7/98: A nation complacent?
4/1/98: Bill Clinton's African adventure
3/27/98: Understanding Arkansas
3/24/98: Jerry Springer's America
3/20/98: A small step for persecuted minorities
3/17/98: Skeletons in every closet?
3/13/98: Clinton's idea of a fine judge
3/10/98: Better than nothing?
3/6/98: Of fingernails and freedom
3/3/98: Read JWR! :0)
2/27/98: Dumb and Dumber
2/24/98: Reagan reduced poverty more than Clinton
2/20/98: Rally Round the United Nations?
2/17/98: In Denial
2/13/98: Reconsidering Theism
2/10/98: Waiting for the facts?
2/8/98: Cat got the GOP's tongue?
2/2/98: Does America care about immorality?
1/30/98: How to judge Clinton's denials
1/27/98: What If It's Just the Sex?
1/23/98: Bill Clinton, Acting Guilty
1/20/98: Arafat and the Holocaust Museum
1/16/98: Child Care or Feminist Agenda?
1/13/98: What We Really Think of Abortion
1/9/98: The Dead Era of Budget Deficits Rises Again?
1/6/98: "Understandable" Murder and Child Custody
1/2/98: Majoring in Sex
12/30/97: The Spirit of Kwanzaa
12/26/97: Food fights (Games children play)
12/23/97: Does Clinton's race panel listen to facts?
12/19/97: Welcome to the Judgeocracy, where the law school elite overrules majority rule
12/16/97: Do America's Jews support Netanyahu?


©1999, Creators Syndicate