Republicans Can Win on Health Care

A market-based system can give us freedom, innovation and health security.

By Karl Rove
Tuesday, September 18, 2007 12:01 a.m.

All around America, families are grappling with health-care concerns. They wonder if they'll have insurance at a price they can afford. They worry about how much out-of-pocket health costs take from the family budget. They question if they'll be able to pick their own doctor. Some feel trapped in jobs they don't like out of fear of losing their health insurance.

As the latest government-heavy plan announced by Hillary Clinton yesterday once again shows, the answers politicians offer on health care highlight the deep differences between liberals and conservatives. This is a debate Republicans cannot avoid. But it is one we can win--if we offer a bold plan. Conservatives must put forward reforms aimed at putting the patient in charge. Increasing competition will ensure greater access, lower costs and more innovation.

Liberals see the concerns of families as a failure of private insurance, and want the U.S. to move toward a government-run, single-payer model. This is a recipe for making problems worse. Socialized medicine inevitably leads to poor quality, inefficiency, rising taxes and rationing. The waiting lines and poor care that cause people from other countries to come here for treatment are not the answer.


Government can help poorer and older Americans get quality health care without sacrificing what everyone wants--the ability to choose their own doctor and health coverage that meets their family's particular needs. What reforms will do that?

• Level the tax playing field. People who work for companies get a tax break on the health insurance they get from their employer. Many small business employees, farmers and the self-employed are unable to benefit from the same tax advantage, because they or their employers can't afford health insurance. It's not fair or wise to penalize people who have to pay for health insurance out of their own pockets. They should benefit from the same tax advantage employees from bigger companies get.

The mortgage interest deduction made it easier for people to own a home and all America benefited. Similarly, every worker should get a deduction for health-insurance premiums. This would ease the burden on working families and make it possible for millions more Americans to own health insurance. Some Republicans in Congress support a tax credit rather than a deduction: that's reasonable, too. A deduction or a credit puts patients in charge by helping them get private coverage that meets their needs.

• Tax-free savings for health costs. We are encouraged to save tax-free for retirement and college; we should make it easier to save tax-free for out-of-pocket medical expenses, too. Tax-free savings accounts, paired with low-cost catastrophic health insurance, make coverage affordable for working families. For example, a youth minister told me his Health Savings Account (HSA) gave his family peace of mind because they now had insurance coverage for big emergencies and could save tax-free for everyday health expenses.

That's why, in less than three years, more than 4.5 million families have set up HSAs. Some Democrats want to rein in HSAs because they fear HSAs put the individual--not government--in charge and once someone gets to pick a plan that meets their needs, they won't like being dictated to by government.

And when people see they can save money by eating better, exercising and making healthy lifestyle choices, guess what? They do. I met with workers at Wendy's Headquarters in Ohio who were eagerly taking steps to lead healthier lives because it saved them money.

• Portability. When you change jobs, you don't have to change auto insurance, but you may have to change your health insurance and even your doctor. That's important in a world where young Americans are likely to have 10 jobs before they are age 36. Too many people are locked into jobs they don't like out of fear they'll lose health coverage. The solution is obvious: People should be able to take their health insurance with them when they change jobs.

• Arming consumers through more competition. Rep. John Shadegg (R., Ariz.) argues that people should be able to buy health insurance issued by a company based in another state. Lack of interstate competition helps to explain why the same health policy costs $8,334 in North Dakota but $10,312 in South Dakota. If consumers in South Dakota could buy that North Dakota policy, prices for health insurance would go down.

• Pool risk, lower costs. Large companies get purchasing power and savings because they share risk across large numbers of employees. Sen. Mike Enzi (R., Wyo.) and Rep. Sam Johnson (R., Texas) believe small businesses should be able to join together to pool risk, too. It would mean more competition and lower costs, and more people able to afford coverage.

• Greater transparency. Today, patients rarely know what a procedure will cost or how good a clinic or hospital is, except by reputation and word of mouth. For example, a study of metropolitan hospitals found prices for services varied widely--by as much as 259%--even after controlling for geographic variations in the cost of doing business. Putting information about cost and quality in the hands of patients would lower the cost and improve the quality of health care. Patients making informed choices would create market pressures for lower prices and better care.

• Stop junk lawsuits. I've heard sad stories from doctors and patients. The doctor who had to close her clinic in her hometown and move across the state to work at a hospital that would pay her rising liability insurance premiums. The head trauma specialist afraid that when he retired, his community in one of the poorest regions in the country couldn't attract a replacement. The pregnant woman who drove 80 miles from home in Las Vegas to get prenatal care.

Communities are losing talented health-care professionals who simply can't afford the bigger liability premiums caused by frivolous lawsuits. More than 48% of all counties in the U.S. have no ob-gyn physicians. Hospitals are finding it tougher to provide obstetrics, emergency room care or neurosurgery because of frivolous lawsuits. And doctors, afraid of lawsuits, practice "defensive medicine," ordering unnecessary tests and procedures which add to the cost of health care.

Whose interest does that really serve? If we want richer trial lawyers, let them keep filing junk lawsuits we all pay for. If we want better health care, curb frivolous lawsuits.

• Build on the progress already made by putting patients in charge and letting competition work. When Congress considered prescription drug coverage under Medicare, Democrats tried to have government set prices and deliver the drugs. When the Congressional Budget Office estimated the first year's monthly premium for seniors would be $35, Democrats tried to lock in that price.

Republicans disagreed, arguing competition would lower prices and provide more choices. They were right: Competition led to more options and an average monthly premium of around $23--an annual savings of $144 in the first year. Competition continues to save seniors (and taxpayers) money. When the bill passed, independent actuaries estimated the monthly premium for 2008 would be $41. Recently, Medicare officials announced that the 2008 average monthly premium will be around $25. Seniors would have paid over $4 billion more in prescription drug premiums the first two years of the program had Democrats mandated a $35 monthly premium. Taxpayers are saving also: This past January, the actuaries projected that the prescription drug benefit will cost $113 billion less over the next 10 years than estimated the previous year, primarily because of competition and low bids.


In short, the best health reform proposals will be those that recognize and build on the virtues of our market-based medical system. Sick people around the world come here because they can't get quality care in their home countries. Many health-care professionals come here to practice, leaving behind well-meaning health-care systems where government is in charge, bureaucrats make the decisions, and where the patient doesn't have the choice he or she does in the U.S.

Mrs. Clinton may think Americans want to trade freedom and innovation for the illusory security of government regulation and surrender control of their health decisions to government bureaucrats. My bet is 2008 will teach us something different if Republicans make health care a centerpiece issue.