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The politics of Healthcare need reform

Excerpts from: 'We Are the Initiators'   WSJ, Strassel Interview, Sept 28, 2009

The Indiana governor on how to be an activist—and also a popular—Republican conservative.

"We have, I think, tried to face a Republican reality, which is the stereotype that Republicans are disconnected from the lives of average people. It's unfair. It's untrue. A Democrat can be a blue-blood billionaire who wouldn't recognize a working family if his limousine ran over one, but still, they benefit from the presumption that their hearts are in the right place, and we bear the opposite burden," he says.

In 2006, Mr. Daniels gave all state employees the option of switching to health plans with health-savings accounts. A year later, he signed bipartisan legislation creating the Healthy Indiana Plan, which puts those same HSAs at the center of a plan covering 130,000 uninsured. Participants contribute to their account based on income; the state picks up the rest, up to $1,100 per adult, after which private insurance kicks in.

"It's subsidized, yes," says Mr. Daniels, but it's "designed to make sure everybody, with a few exceptions, has skin in the game." It also "doesn't expose taxpayers to the catastrophe in Tennessee or Massachusetts of an entitlement program." More than half of the state's employees have switched to the HSA plan, and Healthy Indiana is fully subscribed.

All this, says Mr. Daniels, serves as a necessary "foundation" for the state to attract jobs and fulfill that goal of raising Hoosier income. "Spend as little as you can consistent with necessary public service, leave the rest in private hands, and you get more jobs in the end." Indiana, with its business-friendly tax environment, has attracted $8 billion in foreign investment in the past two years.

The governor paid for his health plan with a cigarette-tax hike that offended some purists, though Mr. Daniels is unrepentant: "I'm from the Reagan school. You want less of something, tax it more."

He muses about whether the financial crisis has prepared the nation for a candidate willing to run on a "grown-up" discussion about the coming entitlement bomb. "We all know that it's been a given in our politics that nobody wins elections railing about deficits. And maybe those things are as true as they've ever been," he says. "But maybe there is a different dynamic. When people start saving at 6%. When there's been a learning moment about spending too much and borrowing too much and people see Washington making that mistake . . . maybe it could be that a majority could be assembled for a fundamental restructuring."