Health Policy Placebos

We don't administer useless nostrums for curable cancer--even when effective treatment is arduous. Yet Hillary Clinton and Barack Obama prescribe the health policy equivalent of placebos. (John McCain suggests arsenic, but more about him another time.)

The Democratic contenders proffer a superficially plausible reform model that has a long record of failure. Their proposals trace back to Nixon's 1971 employer mandate scheme, concocted to woo moderate Republicans away from Ted Kennedy's single-payer plan. Like mandate reforms subsequently passed (and failed) in Massachusetts (1988), Oregon (1989) and Washington (1993), Clinton's and Obama's plans would couple subsidies for the poor with a requirement that large employers foot part of the bill for employee coverage. These earlier reforms also required the self-employed to buy coverage, an individual mandate that Clinton (like the 2006 Massachusetts reform) would expand to virtually all; Obama limits his mandate to children. In both versions, a federal agency would serve as insurance broker, selling a new public plan and a menu of private ones--reprising the format of Medicare's ongoing privatization, implemented through competition rigged to favor private plans [see Trudy Lieberman, "The Medicare Privatization Scam," July 16/23, 2007].

The earlier state reforms foundered on the shoals of cost. As health spending soared, employers rebelled and legislators rescinded the mandates and subsidies. Massachusetts looks set to replay this experience; only 7 percent of those required to buy unsubsidized coverage have yet to sign up, while the state wrestles with massive cost overruns for subsidies.

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