FORCE THE FREE MARKET:

Health Care's Unlikely Surgeon: Newt Gingrich is probably the most visible spokesman for a set of ideas about health care that is gaining support in the Bush administration and in business. (STEVE LOHR, 1/16/05, NY Times)

He advocates applying the principles of the "ownership society" to medicine, notably health savings accounts and consumer-directed health care. The idea is to give individuals tax breaks to assume the responsibility for paying more of their own medical costs and to rely less on the government and insurers. Market forces, supporters have said, will bring more options, lower prices and higher quality to health care, as they have done for other categories of goods and services.

Critics fear that such policies risk magnifying the problems of a costly American health care system that now leaves 45 million people uninsured.

"The danger here is that all you're doing is creating incentives for rich, healthy people to break away from poor, sick people," said David Cutler, a health economist at Harvard. "You end up penalizing sick people, making their insurance more expensive and harder to obtain. That may just increase the burden on community hospitals, states and the federal government."

Mr. Gingrich disagrees, saying he sees a historic opportunity to transform the American health system and make health care policy a conservative issue. Republicans, he said, have traditionally been portrayed as the bad guys who want to curb entitlement spending and thus limit care. So conservatives, he added, have tended to surrender health policy to the Democrats. Mr. Gingrich says the arrangement is beginning to change because of Republicans like President Bush and Senator Bill Frist of Tennessee, the majority leader.

"You've never had a politician of the center-right be willing to talk about health for a sustained period of time," Mr. Gingrich said. "That's what we're talking about here - a center-right model." [...]

Over the years, his ability to grasp complex issues and distill them into simplified messages has been crucial to his success as a policy advocate. The notion of health savings accounts had been circulating in conservative research organizations since the 1980's, but it was not until the Republicans assumed control of Congress in 1994 and Mr. Gingrich became speaker that the proposal received a hearing in Washington.

"Gingrich liked it immediately because he's an idea man," recalled John C. Goodman, an economist and a leading proponent of the accounts.

Mr. Gingrich backed a provision in a 1996 bill that led to a pilot project for the tax-free accounts. In November 2003, he was brought in to persuade members of the House Republican caucus to set aside their qualms about the high cost of a prescription drug benefit for Medicare recipients. His pitch was that a Medicare drug benefit was inevitable and a small price to pay for the Medicare bill's endorsement of health savings accounts - a decisive step, in Mr. Gingrich's view, toward a more market-oriented health care system.

SO far, there has been no rush by companies or individuals to health savings accounts. The accounts allow people to set aside tax-free savings but typically require individuals to pay the first $1,000 of their yearly medical expenses, and families the first $2,000. People have been slow to embrace the accounts because they are new and different, Mr. Gingrich said, but he is certain that the plans will become popular and more varied. "These are much more radical proposals than people thought at the time," he said.

Mr. Gingrich is a conservative of a libertarian bent, emphasizing the role of individual choice and responsibility. Health savings accounts appeal to his libertarian sympathies: the higher the deductible, the lower the insurance premiums. Make your choice, take your bet, live with the consequences.

Well, besides President Bush, who ran on the issue in 2000 and actually passed the HSAs that Mr. Gingrich had never been able to turn into law. If Mr. Gingrich wants to get ahad of the curve he needs to propose ways to make them mandatory and universal and a way to pay for them for the poor.

Posted by Orrin Judd at January 16, 2005 10:26 AM