Heritage and the Individual Mandate

The Right Prescription
Heritage and the Individual Mandate
By Peter Ferrara on 12.21.11 @ 6:08AM

A political and policy memoir of battles lost -- and won.

I have kept the true story of the Heritage Foundation and the individual health insurance mandate under wraps for almost 20 years now, because up until now it has been too costly to tell it. But now it is too costly not to tell it.

This is not an attack on Heritage, which has long since mended its ways. But the story is now centrally relevant to the Republican presidential primaries.

In 1993, I was a refugee from the failed George H.W. Bush Administration, where I had served as Associate Deputy Attorney General of the United States, after my service in the White House Office of Policy Development, where I had worked for President Reagan. I was the Heritage Foundation John M. Olin Distinguished Fellow in Political Economy.

There I discovered the wonders of the Heritage health plan, devised to stop the Hillary health plan. Except that it followed the outlines of the Hillary plan far too closely. Worse, where it differed, it was destined to fail politically.

For example, the Hillary plan was based on an employer mandate, requiring employers to buy the health insurance plan for their workers the government specified they must buy. The Heritage plan was based on an individual mandate, requiring each worker to buy the health insurance plan the government specified they must buy. So the issue was framed as who should have to buy the health insurance, the employer as the Hillary plan required, or the worker, as the Heritage plan required. Not a winning issue for the Heritage plan.

Another key difference was that the health insurance plan Hillary would require the employer to buy would be a broad generous plan covering everything. But the health insurance plan Heritage would require the worker to buy would be a cheap bare bones basic plan. So the issue was framed as which do you want: broad, generous health coverage paid for by the employer, or cheap, bare bones coverage paid for by the worker? It seemed more like the Heritage plan was designed to fail politically.


Socialized Medicine

But that would be the best possible outcome. For if it passed, the individual mandate would inevitably lead to full blown socialized medicine. As I tried to explain to then Heritage Director of Domestic Policy Stuart Butler, once the government enacts an individual mandate for health insurance, then it must specify exactly what health insurance, with what benefits and coverage, would satisfy the mandate. Once the government enters that political minefield, then politics would inevitably force it to specify a broad, extremely expensive plan that covers everyone and everything.

What and who could you leave out? Not mental health benefits, drug and alcohol rehab, any uninsured no matter how sick and costly once he or she first showed up, not any possible service or treatment, each with its own little politically intractable platoon of the afflicted expecting to benefit, and service providers expecting to be paid to serve them.

The result would consequently inevitably be a mandate requiring purchase of the most expensive health insurance possible, as we will now see from Obamacare. That would inevitably lead to outcries from those mandated to purchase the monster for government help with the expense. We see that in Obamacare, too, with an enormously expensive new entitlement program providing subsidies for families earning close to $100,000 a year, and soon more than that under an automatic index.

The explosive cost to the government of that assistance would require the government to get involved in directly controlling health care, in order to try to control costs. That would result ultimately in government imposed health care rationing, with bureaucrats ultimately deciding who gets what health care and when. Hence we see in Obamacare the Independent Payment Advisory Board, the entering wedge of the death panel, eventually effectively supervising not just Medicare, but the entire health care system. And we see already under Obamacare government bureaucracies getting with the program, raising questions for the first time about tests for breast and prostate cancer, seeming to say that at a certain age if you have those life threatening illnesses, the government doesn't want to know about it, or you to know about it either. And for the first time the FDA is considering whether to approve therapies for life threatening illnesses considering what they cost.

I had been close friends up until then with Stuart Butler, even double dating a couple of times with our girlfriends and then wives. Before he became Director of Domestic Policy, Heritage had offered the job to then another friend of mine, Tony Pellechio. But I wanted Stuart to get it, because I thought Stuart was more hard core. So I talked Tony out of taking the job when he came to me to ask what I thought he should do. Sure enough, Stuart was next in line. Stuart does not know about this history almost 30 years ago to this day.

Stuart had no response to my objections to the individual mandate. But he was passionately devoted to the brilliance of the Heritage health plan. I told him it was so close to the Hillary plan, and so poorly framed as an alternative, that I predicted that President Clinton would come to point to it as the GOP alternative plan, and seek to get the Hillary plan passed as a compromise just ironing out the differences (employer pays or worker pays, generous health insurance or cheap health insurance).

Sure enough, a year later, as the Hillary plan was about to go down to defeat, President Clinton arose to point to the Heritage plan as the true GOP alternative, and offer to pass health reform by just ironing out the differences. Fortunately by then, I had already killed the Heritage health plan.


The Conservative Revolt

I fled Heritage near the end of 1993 to join John Goodman at the National Center for Policy Analysis (NCPA). Together, Goodman and I became the leaders ringing the alarm bells for the conservative movement about the Heritage plan, and the dangers of the individual mandate, as described above. My assignment at NCPA was to kill the Heritage health plan.

Heritage had convinced then stalwart conservative Senator Don Nickles from Oklahoma to introduce the Heritage plan. I went through that long bill line by line and wrote up a summary section by section of everything that was wrong about the bill from the conservative perspective. I then got 37 major conservative leaders to sign on to the petition. It was the only document in history to be signed by both Phyllis Schlafly and Ed Crane. It was signed by Grover Norquist and Paul Weyrich. It was a who's who of the leadership of the conservative movement at the time.

I then hand carried the document to the health policy staff of Sen. Nickles. When Nickles saw the document, he abruptly withdrew the bill. He thought in introducing the Heritage plan he was providing leadership for the conservative movement. My document/petition convinced him that was wrong.

To this day, my relationship with Stuart Butler and Heritage has never recovered. Before then, I wrote regularly for Heritage, contributing numerous Backgrounders, and writing whole chapters of Mandate for Leadership I and II. Since then, I am lucky if anyone from Heritage even talks to me, least of all Stuart Butler.

I received rewards for my work in killing the Heritage health plan from the American Conservative Union and Eagle Forum. I now have the reward now of the whole conservative movement agreeing that I was right all along.

About the Author
Peter Ferrara is Senior Fellow at the Carleson Center for Public Policy, Director of Entitlement and Budget Policy for the Heartland Institute, and General Counsel of the American Civil Rights Union. He served in the White House Office of Policy Development under President Reagan, and as Associate Deputy Attorney General of the United States under the first President Bush. He is the author of America's Ticking Bankruptcy Bomb, now available from HarperCollins.
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