The political limits of "universal" health care

"Universal" government health care has once again returned as a political cause, with many Democrats believing it's the key to White House victory in 2008. They might want to study last week's news from Illinois, where Democratic Governor Rod Blagojevich's tax increase to finance health care became the political rout of the year. The Democratic House in Springfield killed the proposal, 107-0, after Mr. Blagojevich came out against his own idea when it became clear he was going to be humiliated. Only a month earlier he had said he was prepared to wage "the fight of the century" in defense of his plan to impose a $7.6 billion "gross receipts tax" on Illinois businesses.

Easily re-elected in November, the Governor used every trick in the "progressive" political playbook to sell his proposal. Instead of a general tax increase, he claimed it would be "targeted" for universal health care and education. Instead of raising individual taxes, he aimed at business and even built in an exemption for smaller firms. "These corporate guys, they can't avoid this tax," declared the Governor, sounding one of the "populist" themes that liberal columnists are now recommending for national Democrats.

Mr. Blagojevich also pitched his plan as a moral imperative, unveiling it while standing in the Fourth Presbyterian Church in Chicago and saying it was necessary to force businesses to pay their "fair" share of the tax burden. He wanted to force most employers to offer health insurance or pay a 3% payroll tax. Liberal special interest groups--including the state AFL-CIO and the Illinois Education Association--initially supported him.

But a funny thing happened on this road to Canadian health care. The state's more rational Democrats revolted, arguing it would drive businesses out of Illinois. Chicago Mayor Richard Daley was an early opponent, and Democratic Lieutenant Governor Patrick Quinn was cool to it. House Speaker Michael Madigan very publicly withheld his support and last week came out against the tax hike.

As tax increases go, this was one of the worst. A "gross receipts tax" is popular with politicians because it applies to every dollar of company revenue, not merely on profits, or on final sales the way a retail sales tax does. But this means the tax tends to hit hardest those small and medium-sized businesses that have healthy sales volumes but narrow profit margins. The tax is a huge revenue-raiser but can also be a job killer.

Mr. Blagojevich tried to soften this impact by creating an exemption for business with annual revenues of less than $5 million. But even with that exemption, retailers would feel the squeeze from the higher cost of goods. And because the tax applies to all business transactions, it creates what economists call a "pyramiding" effect that has a damaging overall economic impact.

The Tax Foundation estimated that Mr. Blagojevich's proposal would have been the largest state tax hike in the last decade, as a share of state general fund revenue--at 27% nearly double the next closest, which was Nevada's 14% increase in 2004. In per capita terms, the tax hike would average about $550 per Illinois resident.

All of this piled on top of the $1.5 billion in new taxes and fees that the Governor imposed in his first term. State revenue has been rising at a respectable 5% annual pace, but spending is rising faster. Jonathan Williams of the Tax Foundation says the Governor's proposed budget this year calls for a 13.2% spending increase, which comes on top of a near double digit increase a year ago. The cumulative impact of this rising tax and spending burden has been to drive businesses out of the state.

"To describe every major CEO in Illinois as fat cats is a mistake," said Chicago Mayor Daley. "They don't have to be here. They can go to Wisconsin. They can go to Indiana. They can go to India. They can go to China. So if you want to beat up businesses, go beat 'em up, and when they leave, just wave to 'em and they're going to wave back to you." Even Jesse Jackson disowned the Governor's plan, noting that "We all want health care. But business closer is not good health."

One lesson here is that it is far easier to talk about "progressive" political causes than to pay for them without doing larger economic harm. In today's global economy, the margin for policy mistakes is smaller, even for individual states. Mr. Daley may appreciate this better than Mr. Blagojevich because he knows the consequences of bad policy will harm Chicago long after the Governor retires to private equity, or some other "fat cat" job.

As for national Democrats, Presidential candidate John Edwards has already proposed a huge tax increase to pay for national health care. At least he's honest about what such promises require, but we doubt it will help his Presidential prospects. Illinois Senator Barack Obama has been silent on his Governor's tax implosion, but someone should get him on the record. And Hillary Clinton, well, we can't wait to see how "universal" her promises will be.

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Empowering patients: New Labour's unhealthiest idea?

Everyone slates Blair for Iraq while praising his health reforms. Yet his interventions in the NHS have alienated patients and degraded doctors

After Tony Blair's lip-trembling resignation speech, commentators were inclined to give him credit for his public sector reforms while questioning his judgement over Iraq. But New Labour's widely approved `patient-centred' reforms are a real threat to the quality of healthcare in Britain.

When, a week earlier, Blair visited the offices of the King's Fund, New Labour's favourite health policy think tank, to give a speech commemorating a decade of National Health Service reforms, he received a generally positive response from the assembled ranks of health experts and professionals (1). King's Fund chief executive Niall Dickson set the tone in his congratulations to the prime minister on the eve of his departure for providing `unprecedented levels of funding' and `significant improvements in key areas'. Though there were some reservations about disruptive reorganisations, there was general agreement that New Labour reforms have succeeded in their key objective of making the NHS more responsive to patients. While the soundbites about `patient-centred' healthcare may appear merely banal, they reflect the corrosive cynicism of New Labour that is Tony Blair's true legacy to the NHS.

Speaking to the King's Fund conference immediately before the prime minister, David Pink, chief executive of the Long Term Medical Conditions Alliance, a consortium of more than 100 patient organisations, welcomed the government's commitment to a `patient-centred' NHS. As Pink acknowledged, the very presence on such a distinguished platform of somebody speaking from the perspective of patients was a potent symbol of the transformation of health policy under Blair. He enthusiastically endorsed a number of initiatives that, while purporting to advance patient interests, reveal the destructive consequences of the government's attempts to reform healthcare according to the rhetoric of choice and empowerment.

While many commentators have criticised the Quality and Outcomes Framework (QOF) as a crude target-driven payment-by-results system imposed on general practice, Pink welcomed `a major national programme that has turned the NHS's attention to helping people monitor and maintain their own health'. In practice, QOF operates as a financial lever to shift medical practice away from the diagnosis and treatment of disease towards intrusive and moralising interventions in patients' personal lives, justified by the dogma that this improves health and prevents disease. Far from benefiting those with chronic conditions, this shift is depriving them of continuity of care while doctors' energies are consumed with medicalising the worried well. The provision of an incentive bonus to GPs for recording patients' preferences about where they would like to die - a choice over which neither patient nor doctor is in practice able to exert much influence - aptly symbolises QOF's contribution to patient empowerment (2).

Another New Labour health initiative approved by David Pink is the Expert Patient Programme, a series of formal training sessions through which people learn to manage their own chronic illnesses. (As, according to the Long Term Medical Conditions Alliance, there are some 17million people with such conditions in Britain, at least one in four of the population is deemed eligible for this programme - though only 23,000 have so far participated.) For Pink, `the great significance of this programme is that it is an acknowledgement of the vital role that patients and their families have in improving their own health' - and he welcomed the support of the British Medical Association for the programme.

Though the Expert Patient Programme (EPP) has a commonsensical appeal, it is imbued with bad faith: it offers an illusory empowerment to patients with chronic illness and an illusory relief from the burden of caring for patients with chronic illness to doctors (3). If the EPP was widely taken up, it would affirm an identity as sufferer from chronic illness for a growing proportion of the population while imposing an increasing burden of responsibility for their own care on those with chronic disease. While patronising patients, EPP implicitly degrades doctors, devaluing medical science and professional expertise. Who benefits? Not patients, not doctors, not society; perhaps a few politicians and health policy bureaucrats.

David Pink is also a staunch advocate of `patient and public involvement' in the NHS, another of the favoured slogans of New Labour. Given the `democratic deficit' resulting from the decline in popular participation in political parties, local councils and elections, the government has sought to increase public involvement in many areas of public life, from the arts to schools to hospitals. Such initiatives inevitably have an artificial and bureaucratic character, particularly in the sphere of healthcare, which people - at least in the past - sought to avoid when they were well and to keep to a minimum when they were sick.

New Labour's promotion of `patient and public involvement' has led to the cultivation of the professional patient (together with the professional carer) who purports to express the interests of patients (and carers) in general. Of course, members of the public who are able and willing to assume these roles are inevitably unrepresentative of patients and carers in general - and, unlike local councillors and MPs, are not subject even to the episodic recall of the ballot box and hence are under no obligation or even pressure to reflect the interests of those they purport to represent.

In his enthusiasm for `patient and public involvement' David Pink personifies the defects of these initiatives. While he speaks on behalf of people with chronic illnesses to top politicians and policymakers, he was not elected by people with chronic illnesses and he is in no way answerable or accountable to them. Indeed, as the chief executive of a meta-quango, which strictly represents a number of organisations (also unrepresentative and unaccountable) rather than individuals with chronic illnesses, he is as remote from such individuals as any politician (and vastly more remote than the average GP). In fact, what emerges is that his status at the King's Fund assembly of health policymakers is conferred by government endorsement of his position rather than by any democratic mandate.

It is thus perhaps not surprising to find that, of all the assembled dignitaries, he provides the perfect warm-up man for Tony Blair on his tenth anniversary celebrations.

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For greatest efficiency, lowest cost and maximum choice, ALL hospitals and health insurance schemes should be privately owned and run -- with government-paid vouchers for the very poor and minimal regulation. Both Australia and Sweden have large private sector health systems with government reimbursement for privately-provided services so can a purely private system with some level of government reimbursement or insurance for the poor be so hard to do?

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