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Sink or Swim

The GOP’s Dickensian fix for health care.

When you consider the differences between Democrats and Republicans on health care, you probably think in terms of scale. Democrats want to enact a big reform, while Republicans favor incremental progress. House Minority Whip Eric Cantor coos, “We want to take a much more commonsense, modest, incremental approach, trying to address the first issue first, which is cost, and then go on to try to deal with some of the things that the president and Speaker Pelosi want to do.” Within a recent six-month span, Republicans on the Senate floor used the phrase “step-by-step” to describe their approach to health care an astonishing 173 times.

(Click here to read Jonathan McWhorter on Malcolm X and nine other people he'd like to erase from black history.)

The reality is quite different. What separates the two parties is not how far to go, but in which direction to go. The divide is simple. Democrats propose to shift resources from the rich and the healthy to the poor and the sick. Republicans want to do just the opposite. Republican health care plans reflect the party’s increasingly widespread belief that good health, like other forms of prosperity, is a matter of personal responsibility. Democratic plans to help the sick at the expense of the healthy therefore amount to socialism.

Health insurance, if you think about it, is a redistribution scheme. It transfers money from the winners (people who don’t need much medical care) to the losers (people who do). It differs from other redistribution schemes because, unlike programs that redistribute from rich to poor, the winners and losers can’t be sure in advance which category they’ll be in. That’s why people enter into it voluntarily--today I might be healthy, tomorrow I may contract some horrible disease.

The problem with this system is that, while you can’t be certain who will win and who will lose in the medical lottery of life, you can make some educated guesses. The health insurance industry is good at making those guesses, and getting better all the time. The business of insurance is to keep expensive customers out and cheap customers in.

Left to their own devices, millions of Americans could not afford to buy health insurance, because their expected medical costs are too high--they’re the losers of the medical lottery--or their incomes are too low. Obviously, many Americans are left to their own devices, with horrifying results. But many more are not, because they’re lucky enough to get insurance through their job. In an office insurance pool, everybody pays the same rate, meaning the healthy subsidize the sick.

The Democrats’ health care plan aims to create pools for people outside of the employer market, joining healthier individuals together with the sick, so that the former effectively subsidize the latter. The common element of all the Republican plans is to do the opposite-to separate the healthy from the sick.

Republicans have long championed Health Savings Accounts, which give individuals who buy insurance a tax deduction for money they set aside for a high-deductible plan. Since tax deductions are worth more to people in higher tax brackets, and since high-deductible plans appeal more to those with lower medical expenses, the plans attract the rich and healthy, leaving the poor and sick behind.

The thrust of the GOP ideas currently on offer is to reduce health insurance regulation. Republicans would create financial incentives that, according to the Congressional Budget Office (CBO), would encourage states to cut regulation; they would also let businesses and individuals buy insurance from other states. (Health insurance is regulated by state governments.) As a result, health insurance regulation would sink to the level of whichever state offered the laxest regulations. If it worked like the credit card industry, governors would be competing to undercut each other’s regulations in order to lure insurers to their states.

Some state regulations are meant to protect all consumers, by requiring licensing of doctors, a fair appeals process for claims, and so on. But many are specifically aimed at helping sick people. Some regulations require that certain procedures must be covered--cancer screenings, diabetes treatment, and so on. Others limit the degree to which insurers can charge higher rates to small businesses or individuals that have higher health risks. Reducing these regulations would reduce costs for the healthy, but raise them for the sick. The GOP’s solution for those with preexisting conditions is to shunt them into state high-risk pools, which (as my colleague Jonathan Cohn has explained) work very poorly and which the Republicans would deny adequate funds.

Republicans boast that the CBO says their plan would reduce insurance premiums. This is true. The CBO predicted this would happen because the GOP plan would reduce premiums for healthy people, bringing more of them into the insurance pool, and raise premiums for sicker people, driving more of them out.

Why would Republicans favor a result like this? The better question might be, why wouldn’t they? The modern Republican domestic agenda is, above all, an attack on redistribution, a crusade to free society’s winners from shouldering the burdens of its losers.

The core of this philosophical divide was on display in last week’s health care summit. Senator Tom Harkin, a traditional liberal, denounced policies that “allow segregation in America on the basis of your health.” Harkin’s point was that the only way to protect the sick is to pool them with the healthy. Conservatives seized upon Harkin’s remark. “Having people pay their own way,” mocked an incredulous Jeffrey Anderson, a former health care speechwriter in the Bush administration, “is apparently an injustice akin to segregating them by race or creed.”

“Pay their own way”--that gets to the heart of the party’s new vision of health as a consequence of personal morality. “I think a national health care act substitutes for a lack of personal responsibility,” complained Republican Representative Steve King last August. Newt Gingrich gloats that Americans have moved “away from the idea of government-run health care and toward more personal responsibility.”

Liberals have reacted with astonishment to conservative accusations of socialism against Obama, whose plan relies mostly on private insurance and closely resembles proposals put forward by Senate Republicans in 1993 and Mitt Romney in 2005. It is, however, socialistic in the broad sense of spreading the risk of medical misfortune. This is a goal that Republicans increasingly abhor.

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