October 8, 1998

October 8, 1998 | Commentary on Health Care

Unintended Consequences

Washington wants to get tough with HMOs and other managed health-care plans that have been doing what the politicians asked them to do: clamp down on costs.

This has triggered complaints, because the only sure way to control medical costs is to reduce services. So now the politicians-in the name of "patient protection"-are trying to fix this new "problem" with legislation that will probably trigger still another problem.

Welcome to the world of Washington policy making, where the real master of the universe is the law of unintended consequences.

The law of unintended consequences resembles the law of physical science that says "for every action there is an equal and opposite reaction." Despite their inability to fix much of anything over the years, our politicians still seem blissfully unaware of this phenomenon. Two recent studies drive the point home brilliantly.

The first, by the Virginia-based Galen Institute, deals with that 1990s bugaboo: health care. After Hillary Rodham Clinton's plan for nationalizing America's health-care system collapsed several years back, health-care advocates (always beware of advocates) began wringing their hands about the "plight" of the uninsured. With Congress still spooked by the recent health-care fiasco, the fight moved to the states, more than a dozen of which adopted tough new regulations designed to increase "access" to health insurance. There's only one problem: The new regulations appear to have had the opposite effect, according to the Galen Institute's Grace-Marie Arnett and Melinda Schriver.

The Galen Institute researchers used 1990 as their base year. During the next four years, as health care was becoming the highest-profile domestic policy issue on the national agenda, 16 states adopted far-reaching regulations designed to reduce the number of uninsured in their states. But by 1996, after the regulations were implemented and had a chance to perform their bureaucratic magic, the number of uninsured people in these 16 states was increasing eight times faster than in the other 34 states-a good warning to Congress as it contemplates taking a whack at HMOs.

The second study was published by the California-based Pacific Research Institute (PRI) as part of its new Project on Children. The PRI study, by Naomi Lopez, looked at a broader issue: "The State of Children" in America 35 years after the beginning of Lyndon Johnson's War on Poverty.

The PRI study examines 150 federal programs (cost: more than $50 billion annually) specifically designed to help children, from the Department of Labor's $997 million Job Training Partnership Act program for "disadvantaged" youth to the Department of Education's five bilingual education programs costing $142.6 million a year. The study excluded programs intended to assist adults as well as children, such as Food Stamps.

The disturbing conclusion of the PRI study: that the heavy-handed intervention of the federal government in family and community has "done little more than encroach on the lives of children and their families" and in some cases has made it more difficult to find real, lasting solutions to problems.

The law of unintended consequences manifests itself in virtually every action government takes. When government mandates an increase in the minimum wage, it reduces the number of low-paying jobs. When it increases the number of regulatory hoops a company has to jump through to bring new life-saving drugs to market, it reduces the number of new drugs reaching your hospital and pharmacy. And when it increases spending on bilingual education, it discourages kids from mastering English.

This is not rocket science, my friends, but unfortunately it's the way Washington works.

Edwin J. Feulner is president of The Heritage Foundation (www.heritage.org), a Washington-based public policy research institute.

About the Author

Edwin J. Feulner, Ph.D. Founder, Chairman of the Asian Studies Center, and Chung Ju-yung Fellow
Founder's Office