Lobbyists, we hear this presidential season, embody all that's
wrong with Washington.
"For seven long years," Hillary Clinton tells us, "we've had a
government of, by and for the corporate special interests. They
have been heard first, they have been heard loudest, and they have
drowned out everyone else."
Adds Barack Obama: "The problem we face in America today is not
the lack of good ideas. It's that Washington has become a place
where good ideas go to die because lobbyists crush them with their
money and their influence."
And the entire rationale for John McCain's campaign is that he,
more than anyone, stands up to lobbyists and follows his own
unyielding inner moral compass, regardless of the political
consequences.
Small wonder that journalists have been scrutinizing the
candidate's staff members and supporters for connections to special
interests.
A better approach would be to look at each candidate's policy
proposals through the prism of lobbying. Specifically, how would a
candidate's vision on a pressing national issue, if enacted, affect
the level of special-interest pleading on Capitol Hill and in the
long bureaucratic byways in the executive-branch agencies?
The current political environment highlights one of the unclaimed
virtues for the small-government agenda: The less a government
does, the fewer reasons there are for individuals, businesses,
universities, and state and local governments to petition their
government for special favors. When government is small,
congressional barons don't hold the fate of entire industries in
their well-greased palms. Federal bureaucrats don't wield unbridled
regulatory power to break CEOs. Big decisions are made by private
actors in private settings, and obey the will of the
marketplace.
Big and intrusive governments set an entirely different set of
forces in motion. The endless array of subsidies it dispenses and
the regulatory schemes it fosters give birth to rent seeking. Rent
seekers form associations to protect their interests. They create
political action committees and hire lobbyists. They write checks
to the powerful committee chairmen. They become the very Washington
insiders the presidential candidates ritualistically
denounce.
Take health care. Bruce Vladeck, a former administrator of the
gargantuan Medicare ($460 billion) and Medicaid ($360 billion)
programs, once characterized the special-interest lobbying that
these programs have spawned as the "Medicare-Industrial Complex."
Under these regulatory dinosaurs, lawmakers actually decide which
medical procedures, devices, and providers Medicare will cover, and
how much it will pay for them.
"You might look at Congress as the board of directors of the
largest health insurer in the world," says Stuart Guterman, a
Medicare expert at the Commonwealth Fund.
Medicare has become the largest single source of income for
hospitals, physicians, and medical equipment suppliers, among
others. Its relentless lobbying of Congress transformed Medicare
"from [a program] that provides a legal entitlement to
beneficiaries to one that provides a de facto political entitlement
to providers." And a wasteful one at that: "There are plenty of
$400 toilet seats in the Medicare program," Vladeck acknowledges,
"because providers are major sources of employment, political
activity, and campaign contributions in every congressional
district in the nation."
Indeed, in 2007 the pharmaceutical industry spent $165.7 million
lobbying Congress on Medicare and other health issues. Add $69.8
million spent by hospitals and nursing homes, $47.2 million by
health professionals such as physicians and nurses, and another
$39.2 million by the HMOs, and you get a sense of how big the
Health Industrial Complex is.
Vladeck implored lawmakers to identify "some mechanism . . . to
de-link Medicare policy from the political process." How would the
leading presidential candidates do that?
Sen. Obama requires employers to offer plans with "meaningful"
coverage, or face penalties. For the uninsured, he proposes a
program that would sell only "approved" plans. By "approved," he
means plans that adhere to a rigid set of coverage mandates,
including: who could buy coverage (essentially everyone); how much
a plan could charge (only "fair and stable" premiums, and no
"unjustified" premium hikes); and how much a plan would have to pay
in benefits (a "reasonable share" of premium income). Clinton, too,
imposes strict limits on premiums, but she also requires plans to
cover preventive services, chronic disease management, mental
health services, and your next root canal. And, of course, because
she mandates coverage for all, if you don't like it, the IRS will
garnish your wages.
Not much de-linking of health care policy and the political
process here. Because virtually every element of these plans places
decision-making authority in the hands of lawmakers or bureaucrats,
we can expect an explosion in the level of Washington-based
lobbying on health issues of all kinds. The wages of every health
provider and the revenues accruing to every hospital or other
health facility in America will depend on how well they work the
Washington system. That means more lobbyists - lots of them.
McCain, in sharp contrast, shifts the action to individuals
through a dramatic reshuffling of the tax code. Individuals, rather
than employers, would own the tax benefit (a refundable tax credit
of $2,500 for individuals, $5,000 for families). Thanks to McCain's
embrace of Rep. John Shadegg's (R-Ariz.) health federalism
initiative, they would get to choose their own plan from any plan
offered in the 50 states, provided it meets state standards.
Residents in states that require plans to comply with dozens of
expensive health mandates could opt for more affordable plans
offered in states with less burdensome regulatory environments.
Washington would get out of the business of regulating health
coverage, and states would actually compete for your
patronage.
The inevitable competition among states for your business would
constrain the tendency of lawmakers to succumb to special-interest
pleading. Under the McCain approach, if lawmakers succumb,
customers would simply flee to more affordable plans in less
regulated states.
The model for McCain's transformative proposal, ironically, is the
Federal Employee Health Benefits Plan (FEHBP), where millions of
federal employees choose from among dozens of competing health
plans in the lightest regulatory health environment on the planet.
And, guess what? Premiums are affordable, customers are happy, and
the FEHBP is the least lobbied federal health program in
America.
So, which of these plans do you suppose Washington's lobbyists
secretly favor?
Michael Franc is Vice President of Government Relations for The Heritage Foundation.
First appeared in National Review Online