http://www.washingtonpost.com/wp-dyn/content/article/2006/01/15/AR2006011500929_pf.htmlBush's Turn to Health Care
Is the President Ready to Expand the Public Role?
By Sebastian Mallaby
Monday, January 16, 2006; A17
This time last year, President Bush was preaching Social Security reform; that got nowhere. This time six months ago, his team was thinking tax reform; it soon got cold feet. Now the new theme is health reform. "This is a big priority for the president," Al Hubbard, the White House national economic adviser, told me Friday. "The system has got to be reformed."
He's right, of course. The U.S. economy as a whole is extraordinarily efficient: Since 1995 productivity has grown twice as fast as in the 1980s and 50 percent faster than in euro land. But U.S. health care is the opposite. It's notoriously inequitable, it generates tens of thousands of fatal errors annually, and it's unbelievably wasteful. It achieves shorter life expectancy than the British, French, German, Canadian or Japanese systems, but it eats up 16 percent of the resources in the economy, compared with between 8 and 11 percent in those other countries. The difference -- 6 percent or so of economic output -- suggests that the waste in the American system comes to $700 billion a year.
Back before Bush was elected, Hubbard convened a private-sector group to wrestle with this challenge. He recruited three academics -- R. Glenn Hubbard of Columbia University and John F. Cogan and Daniel P. Kessler of the Hoover Institution -- who continue to influence Hubbard as he ponders what Bush should say about health care in the forthcoming State of the Union address. Conveniently, the trio's thoughts are not a secret. Their five fixes for health care have just been published as a short book.
Some look at the U.S. health mess and see a failure of the market, but the authors insist that government clumsiness prevents the market from working. Modest tort reform would free doctors from practicing expensive defensive medicine. Tougher antitrust policies would prevent price-raising alliances among hospitals. Pruning mandates on health insurers -- which often reflect lobbying by doctors' groups -- might free insurers to cover only the most cost-effective procedures.