Why Republicans Should Back Universal Health Care

The time for universal health insurance coverage has come. Everybody seems to know that -- except for the Republicans, all too many of whom cling to traditional denunciations of universal coverage as socialism. Senate Finance Committee Chairman Max Baucus has been holding talks with Republican lawmakers over the past week, and all signs point to opposition from the GOP.

But for the welfare of the country and their political party, Republicans should, instead, seize the lesson of Nixon's trip to China. With one brilliant foray, Nixon converted the massive threat posed by the isolated China into an asset, secured a favorable mention in history, and stripped the Democrats of a key issue. By embracing their own brand of universal health coverage, Republicans can do the same. There's a massive constituency behind the policy. Buffeted by the recession and the threat of losing their employer-provided health insurance, the American people want universal coverage. Much of the US business community wants it too. CEOs rarely say "Know what I love about my job? Buying health care." The chore is so unrewarding -- corporate buyers have failed to create effective cost or quality improvements -- that many small business CEOs simply skip it. As a result, millions distort the efficient allocation of labor in our economy by opting for jobs in dying, big companies that offer health insurance, rather than productive ones in small companies that do not. Furthermore, our employer-based health insurance system forces American businesses to pack our massive health care costs -- about 70 percent greater as a share of GDP than other countries' -- into the cost of their exports, a huge albatross in a globally competitive economy.

The Republicans can do a Nixon-goes-to-China by offering a better version of universal coverage. There is, after all, substantial concern about the Democrats' reliance on universal coverage through a government-controlled system like Medicare. Some distrust government's ability to make good on its promises. Medicare currently owes $36 trillion in services to those who paid for its use when they hit 65. Have you seen a spare $36 trillion hanging around? (For perspective, that amount is equivalent to about three years of US GDP.)

Another concern is that government will control costs by rationing health care to the sick. The government-controlled UK health care system, for example, has the lowest uptake of cancer drugs among the five biggest European economies and correspondingly low cancer survival rates. Concerns about rationing are not demagoguery. How else can a government control costs? Many experts dismiss as wishful thinking the Democrats' claims of achieving efficiency by implementing dazzling information technology and other technocratic tools. And because the truly sick constitute only 20 percent of health-care users, but account for 80 percent of health-care costs, they may as well wear a bull's eye on their backs: they are a politically vulnerable target for cost control through rationing.

Transforming the government into a monopolistic buyer of health care will also affect the supply of doctors. All too many doctors, saddled with massive educational debts, refuse to see Medicaid patients because they are pay so little. But if government were the only payer, some prospective physicians, facing the prospect of incomes totally controlled by the government, would reluctantly enter other professions.

Presented by

Regina Herzlinger

Regina Herzlinger is the McPherson Chair at Harvard Business School and author of Who Killed Health Care? (McGraw Hill, 2007). She was a health care adviser to John McCain's presidential campaign.

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