The Truth About the Health Care Compact: A Conservative Assessment

On October 7, 2011, The American Spectator published a commentary that spoke favorably about the Health Care Compact. That article mistakenly drew similarities between the real, market-based, health care reform ideas of Rep. Paul Ryan (R-WI) and the HCC – suggesting both would "induce market forces." The truth is that the Health Care Compact will do no such thing. In fact, the Compact looks far more similar to ObamaCare than it does free-market, patient-centered health care reform. This article will compare the similarities between the Compact and Obamacare.

The Compact: Not Patient-Centered Health Care Reform

Any policy proposal that promises to reform America's health care system must, necessarily, contain changes policy changes that affect health care. But the Compact's authors consistently argue that the Health Care Compact does not endorse any specific policy path; instead, they argue the HCC simply enhances state government power as a substitute for federal government power. The advocates of the Compact have regularly stated that the Compact is about "governance reform," not health care policy reform. Consequently, there is no way anyone could truthfully suggest that the HCC alone will result in free-market, patient-centered health care reform.

The Compact: An Avenue Towards Socialism

The leaders of the HCC movement, Leo Linbeck III and Eric O'Keefe, have written that the Compact will allow "states [to] chose a single-payer system." Like ObamaCare, the Health Care Compact takes America down the slippery slope of socialism. The only difference is that the Compact does so on a state basis while ObamaCare does so on a federal basis.

This is not just a mere hypothetical given that Vermont is currently pursuing a Health Care Compact model in order to institute a single-payer system, which will cause patient and consumer choices to disappear in the state. Rather than looking askance at this type of application of the Health Care Compact, the HCC advocates are now championing the Vermont model. In fact, the Health Care Compact Alliance (the groups pushing the HCC) has devoted thousands of dollars and months of staff time in Vermont to advance the cause of a single-payer, socialized system.

In 1961, Ronald Reagan warned America about the direction socialized medicine would take us. He correctly pointed out that it would rob individuals of freedom. Patients would lose out on "privacy, the care that is given to a person, the right to chose a doctor, the right to go from one doctor to the other. " Doctors would lose out as well as government would eventually go so far as to dictate where doctors could live and work as the government sought to allocate access to care.

Earlier this year, I wrote the following about socialized medicine:

"make no mistake about it, at its core, a single-payer system is at odds with individual liberty as embodied in the Constitution. This form of healthcare places government power ahead of individual liberty, allowing government, not free people or free markets, to determine the value of a physician's work through price controls. A single-payer system will enslave doctors, denying them the ability to be fairly compensated for their education, training and expertise. As a single-payer system takes root, it will lead to doctor shortages (price controls inevitably do), rationing of care, and the government deciding the relative worth of individuals in need of medical care - all of these will deny each American access to proper medical care."

Acceptance of a single-payer system under the Compact is acceptance of all of socialized medicine's consequences. While the leaders of the HCC movement may accept those consequences in their effort to advance the Compact, freedom-loving people should not.

The Compact: Advancing Government (Not Individual) Control Over Health Care

Make no mistake about it; the HCC will not advance individual liberty. Nothing that advances or accepts socialism could ever be said to do so. Instead, the Compact advances the notion of government control over health care. The HCC simply changes one form of government control over the American health care system (federal control) in favor of another (state control).

Nowhere in the operation of the Compact does the HCC provide individual patients with greater control over their health care decisions or their health care dollars. The Compact also fails to protect the sanctity of the doctor-patient relationship. The Compact, like ObamaCare, defers to a later date all of the necessary health care policy decisions that patients care about. This unknown is what frightens and angers people about ObamaCare and should govern voters' reaction to the Compact as well.

The Compact Will Not Fix the Tax Problems Associated With Health Care

The American Spectator article stated that Paul Ryan, "made it clear that the biggest immediate problem with ObamaCare is that it does not impact the tax code," and that Ryan sought to change the tax code to extend a tax credit to individuals to buy insurance in order to rein in health care inflation, lower premiums, and reduce the denial of coverage for pre-existing conditions.

How does the Compact fit in with Ryan's idea to change the tax code in order to effect good policy? The short answer is that it doesn't. The text of the HCC purports to give states control over "federal laws, rules, regulations and orders regarding Health Care." [Emphasis added]. There is no express or implied mention of federal tax policy in the Compact.

If Congress were to adopt the HCC, Congress would never give states the power and control to rewrite the federal tax code. Doing so would allow states to establish different federal tax rates and deductions so that federal tax law would apply differently to citizens of different states. States could abuse this power and even deprive the federal government of the ability to raise revenue necessary for the federal government to finance and fulfill its constitutional role – such as providing for the national defense.

As a result, the Compact will have no impact in areas where tax and health care policy intersect. What does this mean for health care reform? The Compact will never correct what Paul Ryan suggests is "the biggest immediate problem with ObamaCare." It will not change the tax code to provide individuals with a tax deduction or credit for buying their own health care. It will not result in the repeal of the individual mandate (the individual mandate is codified, administered, and enforced as part of the tax code). The HCC will also not repeal many of the onerous, job-killing tax hikes contained in ObamaCare.

The Compact: A Burden on State Budgets

Advocates of the Health Care Compact have stated that if every state were to adopt the Compact, the federal government would reduce health care spending by $3 trillion over the next decade. This is only true because of the total inadequacy of the Compact's funding formula. This formula fails to take into account certain demographic shifts, such as the aging of the baby boom generation, and adjusts state funding annually based on general inflation instead of the more realistic and appropriate measure of health care inflation.

Accordingly, the HCC will fail to provide states with the necessary financial resources to meet the current level of demand for health care services in a Compact state (to say nothing of the anticipated increase in demand). The Compact's funding is so inadequate that it will shift $3 trillion in budgetary liability on to the backs of the states. Forcing the states to make the difficult choice of raising taxes or cutting benefits, choices the federal government has been unable or unwilling to make for decades.

How great is this funding shortfall? Among the four states that have adopted the compact, Georgia, Missouri, Oklahoma and Texas, each state will experience a dramatic decrease in federal health care dollars under the Compact compared to current law. Under the Compact, the federal government would provide $72 billion fewer healthcare dollars to Georgia from 2012 to 2021; $62.4 billion less to Missouri; $34.6 billion to Oklahoma; and $201.9 billion to Texas. Given that Governor Rick Perry signed the HCC into law in Texas earlier this summer, the Texas figure will certainly have national implications in the Republican Presidential Primary.

The Compact: Taxpayer Funded Abortions & Free HealthCare for Illegal Aliens

Over the past several decades, conservatives have fought hard to enact the Hyde Amendment to ensure federal tax dollars are not used to pay for abortions and to enact Welfare Reform to ensure illegal aliens cannot enroll in the regular Medicaid program and become a burden to taxpayers. Unfortunately, the Compact gives states the authority to roll back these conservative policies. The HCC will give states the power to ignore the Hyde Amendment, which will lead to taxpayer-funded abortions in certain states. The HCC will also allow states to ignore the federal Welfare Reform Act of 1996 in order that those states can provide free, or taxpayer subsidized, health care to illegal aliens.

Conclusion:

The American people opposed the enactment of ObamaCare in 2009 and 2010 out of principle. Many people opposed ObamaCare because it would advance socialism or government control of health care. Others opposed ObamaCare because it would interfere with the doctor-patient relationship. Still others opposed ObamaCare because it would lead to taxpayer-funded abortions and health benefits for illegal aliens. While the reasons for the opposition to ObamaCare varied, the inescapable conclusion was the ObamaCare was bad for America and inconsistent with our national values.

When one compares how the Compact compares to ObamaCare, as the scorecard below does, one cannot help but see the similarity in policy outcomes between the Health Care Compact and ObamaCare. When one looks closely and considers the full impact of the Compact, one cannot help but conclude that the Health Care Compact is bad policy and that conservatives should oppose the effort to adopt the Compact in the states.

ObamaCare/Health Care Compact Scorecard

Conservatives Should Oppose Both

Christopher M. Jaarda is the Editor-in-Chief of Prescription for Disaster, a blog operated by the American Healthcare Education Coalition (AHEC) dedicated to educating grassroots conservatives about the negative consequences of ObamaCare. Mr. Jaarda is a conservative who has formerly worked as a counsel for the U.S. Senate Republican Policy Committee, as the Director of Government Relations for the Federation for American Immigration Reform (FAIR) and a former staffer with American Majority. He is also a Contributing Editor of A Line of Sight, a conservative policy blog.