Kerry's Health Care Populism -- How Deep?

It's a simple, but extremely important question: How do we evaluate Senator Kerry on health care policy? Centrist or populist?

Senator Kerry has proposed a robust national effort to expand health coverage. His proposal also contains some good ideas to improve health care quality. It even mentions malpractice reform, which is a bold (though soft) slap at the heavily Democratic trial lawyer lobby.

Health coverage is a key national priority. People are having enough trouble adjusting to the ultra-high productivity economy -- with jobs both scarce and impermanent -- without having to worry about being forced into a different health plan, or losing health coverage altogether.

For centrists, the good news is that Kerry's health plan has a large, market oriented component. By using the federal employees' program as a model, his proposal would give many people more choices of private health coverage. His plan would use socially provided "reinsurance" funds to help make the private insurance market work better.

The bad news is that Kerry's health proposals are expensive, and include a large expansion of government-run insurance programs for the near-poor and lower middle class. He has denounced HMOs and drug producers. He advocates importation of drugs from Canada, which is the same as importing that country's price controls.

Health care populism is very tempting on the campaign trail. Who isn't for lower drug prices or insurance premiums? Populism on health care creates great applause lines, as long as no one asks "Would a government-run system be better?"

Meanwhile, market-friendly health policies are tough to explain in simple sound bites. People do value choices, and some have heard that the federal employees' program is pretty good. But explaining the value of competition or the merits of new insurance pools would put audiences to sleep.

The question is: How deep is Kerry's populism?

As President, would he disparage the private health system? Would he encourage its replacement by government?

Or is his populist rhetoric just a campaign-induced veneer on an otherwise centrist, market-based health policy?

In an interview published by Businessweek yesterday, Senator Kerry frames his populism and anti-corporate statements as using government to prevent undue concentrations of power, not as a substitute for market forces and competition.

Q: "You frequently assail corporate bigness -- Big Oil, big insurers, big HMOs, and big drug companies. Are you surprised that some CEOs get nervous?"

A: "What I'm talking about is fairness. What the drug companies did in the [Medicare prescription] drug bill was unfair..."

Q: "Once you were described as a neoliberal, then a New Democrat. Now the Bush campaign calls you a Ted Kennedy-style retro-liberal. Which is it, Senator?"

A: "I don't think it helps to be ideological or doctrinaire. The principles that guide me are these: One, you want to maximize competition, you want to maximize freedom of entrepreneurial ability and create jobs and wealth. But you also need to regulate at an appropriate level so you're not concentrating too much power."

If that explanation holds up, it's not so bad. Letting markets work without allowing big companies to over-concentrate their market or political power is fine.

Moreover, some expansions in public insurance programs like Medicaid or SCHIP (a more flexible version of Medicaid for near-poor children) may be needed. Some truly poor people continue to fall through the various cracks in eligibility.

But centrists are rightfully suspicious of attempts to expand public health programs too far into the middle class. The mostly private-sector federal employees' model is a better choice for people who aren't poor.

It's tempting to believe that Senator Kerry's proposals to expand government-run health insurance were just early primary positioning, and that a Kerry Administration would not push for implementation on anything approaching the scale he has suggested. (Republicans in Congress would block that anyway, presuming they hold their majorities in the House and Senate this November.)

In a sense, proposing big expansions of Medicaid or SCHIP may have been mostly a partisan rite of passage for all the Democratic candidates, and can be safely forgotten now.

On the other hand, lots of centrists believed that President Bush's campaign proposal for vast tax cuts was just posturing for his conservative base, and that he would switch to more modest, evenly distributed tax cuts once in office.

That hunch proved to be wrong. If anything, the dividend and capital gains tax cuts of 2003 were more regressive than Bush's original proposals, and the cost of all the Administration's tax cuts now far exceeds candidate Bush's original plan.

So we'll wait and see. Senator Kerry -- presuming he becomes the nominee -- will have time to clarify his rhetoric and proposals as he gears up for a one-on-one campaign with President Bush.

As that happens, we'll evaluate his health care plan in much greater detail, and compare it on the "centrist-meter" with President Bush's conservative health agenda.

Links:
Senator Kerry's health proposal (announced May 16, 2003)

Businessweek Online John Kerry's To Do List (February 26, 2004)

Centrists.Org Issue Summary Health Costs, Competition and Chronic Care (Prescription Drug Prices and Importation)

Posted by Jeff Lemieux at February 26, 2004 07:19 PM