Chris Satullo | Faulty diagnosis leads to policy quackery

Congressional Republicans have basically just one idea in their head.

It is this: Government should always do less and get smaller. Markets should always do more and gain power.

It's their one big idea. And it's wrong, particularly in how they apply it.

They've been wrong on all this for a long time. Wrong in Iraq. Wrong for the environment. Wrong for the hurricane-ravaged Gulf Coast. But that seems only to ratchet up the fervor with which they cling to their notions.

They consistently confuse CAT scans and toaster ovens - in other words, public vs. private goods. And they wrongly equate free markets with the self-interest of the big corporations that bankroll their campaigns and life-styles.

Without question, truly free markets are efficient; they build wealth and foster innovation. When markets function well to promote private goods, pols shouldn't meddle.

Public goods are different. What is a public good? A good in which society has a vivid stake beyond the benefits that flow to individuals, a good that is vital to the smooth and just functioning of the commonwealth. Such goods can't be left to the vagaries of markets, which amorally pick winners and losers. A public good, in a sense, is one where everyone needs to be a winner. Public goods include things such as education, clean air and health care.

These things are not the same as toaster ovens. Public policy that pretends they are is doomed to fail.

The wrong-headed view has been on display in recent weeks as Congress debated whether to extend and expand the successful SCHIP program, which subsidizes health insurance for the children of the working poor.

SCHIP is needed because, right now, the health-care market somehow doesn't manage to provide any coverage to 47 million Americans, 5.4 million of them children.

That, folks, is market failure.

In response, both chambers of Congress last week approved expansions of the program, which would hike tobacco taxes to cover at least an additional 3 million uninsured children on top of the 6.7 million already helped. President Bush, who misplaced his veto pen for many GOP-led, deficit-riddled years, suddenly has found it. Even a tax on cancer sticks to help children grow up healthier is more than the Taxophobe-in-Chief can stomach. The bill, he harrumphed, equals "socialized medicine."

GOP honchos in Congress echoed the same mindless slogan, wishing hard that it were 1994, when such clichés sounded fresher.

"A bad bill for a bad time," Rep. Dennis Hastert (R., Ill.) said. Why? "It's government-paid health care." Oh.

"Here comes HillaryCare," the GOP spinners shouted, as though that prospect should scare Americans as much as al-Qaeda's setting up shop in Wichita.

The Clinton health plan of the '90s was a political fiasco, done in by arrogant secrecy and excess complexity. But, conceptually, it was closer to the proper mix of government and markets in health care than what ensued after its demise.

Tell me, what direction has health care taken since Harry and Louise killed the Clinton plan? You don't have to be Michael Moore to see that it has only grown more chaotic, costly and capricious. In response, the ruling GOP has stifled most promising new ideas with cries of "socialized medicine." And Democrats, spooked by the Clintons' fiasco, have had a taste only for tinkering.

The result? The United States now spends twice as much per capita on health care as the median for developed nations, but gets results only at or below the median. Our system is so screwed up that one in five adults has no coverage, while we spend untold billions on bureaucracy to deny care to those who do.

Nothing efficient or effective about that.

These are the mistakes you make when you mistake a public good for a private one. Health care is a classic public good that should be supported by a social compact: The healthy should pay into the system to underwrite care for those who need it now, both as a matter of civic morality and self-interest. They need to support the system now so that it'll be there come the inevitable day when they'll need it.

But conservatives' market-besotted health-care ideas, such as medical savings accounts, seek to explode that compact. Crazy. The Democratic approach to health care also has many flaws, chiefly its addiction to the never-wise and now collapsing idea of workplace coverage.

What's needed is a brave new strategy, tied neither to Democratic/union nostalgia for workplace coverage nor to Republican market theology.

The goal shouldn't be for government to supplant the private health-care market, but to tame it. States have tried, but only the feds can really do what's needed: Organize the market rationally so it covers all at a basic level, wastes less, and offers consumers intelligible, workable choices.