Commentary

Bush, Kerry Ignore What’s Ailing Health Care: Red Tape

When it comes to differences between presidential candidates George W. Bush and John F. Kerry, it’s difficult to find an area where the two are farther apart than health care reform.

Kerry accuses President Bush of doing too little to reduce the number of Americans who lack health insurance. Bush accuses Kerry of doing too much, claiming that in the name of expanding coverage, Kerry would impose a government-run health care system on all Americans, where a government bureaucrat would be making your health care decisions rather than you and your doctor.

Even if partisans disagree about what government should do to expand health coverage, we should at least be able to agree that government should stop doing things that make health care unnecessarily expensive.

One prime example is the many outmoded and questionable federal regulations that riddle our health care system. On Oct. 4, the Cato Institute released a study by Duke University professor Chris Conover that demonstrates that the costs of health care regulation outweigh the benefits by 2-1.

After studying 47 different types of health care regulations, Conover estimates those regulations cost Americans $169.1 billion on net in 2002 alone. The total costs are actually $339.1 billion, but the regulations provide about $170.1 billion in benefits.

For the typical American, this translates into a hidden tax of more than $1,500 per household per year. And because that cost is built into medical prices, it makes health coverage unaffordable for about 7.5 million people.

So how do the candidates address this issue? Bush has made a gesture toward deregulation, but neither has a serious plan for reducing this enormous barrier to medical care.

Conover estimates the single greatest regulatory cost is the medical liability system, which imposes a net cost of $80.6 billion annually. (That’s after subtracting the benefits of compensating injured patients and preventing medical errors.) A reasonable way to curb those unnecessary costs would be to let patients and doctors negotiate a mutually acceptable level of negligence protection prior to treatment.

Instead of adopting that sensible reform, Bush would have Congress impose damage caps and other substantive rules of tort law on the states, despite its having no constitutional authority to do so. It is doubtful that Kerry or his running mate — former personal injury lawyer Sen. John Edwards — would support anything that allows patients to reveal how much they value the services of the trial bar.

The next greatest regulatory cost, according to Conover, is imposed by the Food and Drug Administration, which regulates medicines and medical devices. The FDA has long been criticized for delays in approving new medicines and for preventing patients from trying new therapies. Conover estimates those delays impose a net annual cost of $41.8 billion.

A sensible way to cut down on unnecessary delays would be to let independent private agencies certify the effectiveness of new medicines, just as they now certify effectiveness for new uses of existing medicines. Yet neither Bush nor Kerry has issued a proposal that would reduce the lives lost to the FDA’s delays or reduce the costs the FDA builds into the prices of prescription drugs.

Nor has either candidate proposed serious efforts to deregulate hospitals and other health facilities (net cost: $25.1 billion) or doctors and other health professionals (net cost: $7.1 billion).

To his credit, Bush has proposed allowing consumers to avoid expensive health insurance regulations by purchasing coverage from out-of-state insurers. In essence, this means your average Minnesotan would not have to purchase coverage for hairpieces (yes, hairpieces) or the 59 other types of coverage required by Minnesota law. Instead, he could purchase coverage from whatever state imposes regulatory costs that are more to his liking. If applied to all types of health insurance regulation, Bush’s proposal could go a long way toward eliminating the net cost of such health insurance regulation ($14.4 billion).

There’s more than just affordable coverage on the line here. Conover notes the more money people have, the better able they are to purchase greater health and safety. He estimates that by depriving Americans of $169 billion annually, health care regulations lead to 22,205 unnecessary deaths each year. The Institutes of Medicine estimate 18,000 Americans die each year from a lack of health insurance, making over-regulation a bigger problem than the uninsured.

It would be nice if our politicians saw it that way.

Michael F. Cannon is director of health policy studies at the Cato Institute.