The Pocketbook Issue
By Sebastian Mallaby
Monday, July 26, 2004; Page A11
According to the Democratic convention Web site, today's theme is "The Kerry-Edwards Plan for America's Future." The speaker list features people not known for plans (David Alston, John Kerry's Swift boat crewmate), people not known for ties to Kerry-Edwards (Al Gore, a Howard Dean supporter) and people, well, not known (how many of you can say which state Stephanie Tubbs Jones comes from?). The Bush Team, meanwhile, has served up so much pablum that even political strategists are sick of it. GOP pollster Bill McInturff recently lectured the Republican Governors Association that bland assertions of economic recovery won't win over the voters. Americans want candidates who actually have policies.
If so, what should the Democrats talk about? Kerry and his party could start by devoting a lot more attention to the issue that, measured in dollars, is already the candidate's biggest proposal: health care. Opinion surveys suggest that a majority of Americans feel so strongly about this subject that they'd be willing to roll back all the Bush tax cuts to insure every American, and that two out of five have trouble paying their own health bills. Addressing this anxiety should be a political no-brainer.
Moreover, health is a Bush weak spot. Nearly 44 million Americans lack health insurance, and the rest have suffered steeply rising costs. President Bush's attempt to inoculate himself by signing the Medicare prescription drug law has failed: Fairly or not, the measure is not popular. Meanwhile, Kerry can boast that, according to the leading independent analysis of the candidates' health proposals, by Emory University's Kenneth Thorpe, his underdiscussed plan would reduce the number of uninsured Americans by 27 million, whereas Bush's proposals would reduce the number by just over 2 million, albeit at one-seventh of the cost.
But health ought to appeal to the Democrats for bigger reasons. Like Bush's tax plan in 2000, Kerry's health plan is at once a populist pocketbook issue and a way of talking about national competitiveness. Indeed, if you compare America to its leading rivals, it's easier to argue that future prosperity is threatened by the nation's dysfunctional health system than by excessive taxes.
The United States manages to spend nearly 15 percent of GDP on health, way more than the average in advanced economies, which stands around 9 percent. America's extra spending does not buy better health: In the global life expectancy tables, the United States ranks 48th. That poor performance partly reflects factors outside the health system's control (a higher poverty rate, obesity and so on). But the hard truth is that much of the premium Americans pay for their health care -- 6 percent of GDP, or a bit over $600 billion a year -- appears to be wasted.
If that waste is shocking now, imagine the future. Technology is forever creating new drugs and medical procedures. In principle, these could save money: A high-tech operation might reduce recovery time spent in expensive hospitals, for example. But the American medical system, in which doctors decide which new treatments are necessary while also profiting from them, makes it overwhelmingly likely that technology will drive costs up. As a result, health economists contemplate a future in which 30 percent of GDP may be consumed by health care -- a doubling that might also double the amount wasted to 12 percent of the economy.
Dysfunction on this scale ought to alarm Americans. Any who doubt that the perversity of a single sector can paralyze an economy should recall Japan, where wasteful banks (coupled with a lack of political will to fix them) derailed an industrial express train. Whether that happens in America will depend partly on the share of the soaring health bill that's paid by firms, whose costs could be driven so high that competitiveness would suffer. Already Ford Motor Co. spends $3.2 billion a year on health premiums, and General Motors Corp. spends more on health than on steel. But even if rising health costs are passed on to individuals, via co-pays and taxes, the future is bleak. The middle-class squeeze lamented by Kerry will grow far worse than now imagined.
The candidate who speaks persuasively about these issues will appear socially caring and economically responsible. He will achieve that, moreover, without triggering the fiscal disaster caused by the Bush tax cuts. The Bush administration, paradoxically, is waking up to this opportunity. Last week Vice President Cheney gave a speech on medical malpractice lawsuits, which are one factor driving up health costs, and Bush's health secretary, Tommy Thompson, staged a conference on computerizing the health system, which could save billions of dollars.
Kerry need not cede this territory. He could show political courage (and authority over his ex-trial-lawyer running mate) by embracing malpractice reform, and he already has some bold proposals on computerizing medical records, containing pharmaceutical costs and managing chronic diseases cost-effectively. But these ideas languish in his advisers' files. If Kerry wants to provide Americans with a positive reason to vote for him -- if he wants to be more than just the anti-Bush -- he should get beyond the gauzy stuff of "values" and biography and tell people what he'd do with the office that he's seeking.
© 2004 The Washington Post Company