A bipartisan consensus is gradually developing on key elements for improving the U.S. health care system — but a vast gap still exists between Democrats and Republicans on the role of government. [IMGCAP(1)]

The agreements shouldn’t be discounted. Even the Bush administration has come around to the idea that all Americans need to have health insurance.

Moreover, both Republicans and Democrats advocate computerizing medical records to reduce errors and cut costs. They also agree that disease prevention and chronic care management deserve greater emphasis and payment incentives.

But unless some miracle occurs, it’s likely to take a full-scale presidential debate about health care to resolve the issue of the government’s role.

The miracle would involve a decision by Congress and the Bush administration to adopt a plan for universal coverage before the presidential election gets fully under way. It’s not likely.

The ideological differences between Democrats and Republicans were spelled out last month by Health and Human Services Secretary Mike Leavitt in a speech at the American Enterprise Institute.

Leavitt didn’t explicitly draw partisan lines, but it was clear he meant that Republicans believe government should act as the “organizer” of health coverage while Democrats think it should be the “proprietor.”

“There are two very divergent points of view,” he said. If government is the “proprietor,” it will “define the benefits, set the prices, bear the risk.” If it’s the “organizer,” government will “set the rules, remedy the inequities and subsidize the needy.”

He said the differences — and results — are dramatically evident in approaches to Medicare and in the upcoming debate over who should be covered by the State Children’s Health Insurance Program, which is due to be reauthorized this year.

Medicare Part A, covering hospital stays for seniors, and Part B, covering doctor visits, are programs under which Congress establishes the benefits, regulates prices and attempts to contain costs by enforcing a budget.

Government is the “proprietor,” Leavitt said, and the programs will either go bankrupt or eat up the federal budget. Medicare Part D, the new prescription drug program, is coming in at less than estimated costs and may be contributing to a reduction in hospital stays by seniors.

The difference, he said, is that “instead of using compulsion, the Republican Congress and the president said we’re going to use markets. Instead of having one-size-fits-all, we’ll have the market allow prices to be established and allow competition and innovation.

“And, today we stand with 92 percent of all those who were eligible having a plan. The better news is that 80 percent in virtually every estimation are happy with their plan because they can choose a plan that fits them.”

He didn’t say so, but it’s a fact that Democrats have been railing against Part D, calling it a sellout to drug and insurance companies and saying it’s too complicated for seniors to navigate, and they have tried to get the government to “negotiate” drug prices much as it sets prices for hospital and doctor services in Parts A and B.

Leavitt said the “organizer” versus “proprietor” battle will be replayed in the SCHIP reauthorization fight and again, perhaps, in the debate over universal health coverage for all Americans.

“SCHIP was meant to be for low-income children who were not eligible for Medicaid, those [in families] that are earning less than twice the federal poverty level,” or $41,300 for a family of four, he said.

“There are some that would raise it to 400 percent or $82,600,” Leavitt said. “What that would mean is that 71 percent of American children would be on public assistance. There are those who would expand it to cover adults.”

He was referring to Sen. Hillary Rodham Clinton (D-N.Y.) and Rep. John Dingell (D-Mich.), who are sponsoring a bill to dramatically expand SCHIP to cover pregnant women and parents. The Wall Street Journal’s editorial page attacked the plan as a step toward creating a government-run health care system “on the installment plan.”

It’s worth noting that in most states, SCHIP is run through private insurance plans, but extending it to people making $80,000 and to adults does seem a reach when 8 million poor children still don’t have coverage.

Leavitt declared — surprisingly, to me — that “our objective ought to be for every American to have access to basic health insurance at an affordable price. The solution to this dilemma is not to have incrementally put one more car on the train of government-funded, government-run health care. The solution is for every American to have basic, affordable insurance.”

This is a goal President Bush should be trumpeting, but he’s not. Instead, he’s proposed a useful idea of offering every family a $15,000 tax deduction to purchase private insurance and has authorized Leavitt to work with states to develop their own universal coverage plans.

Leavitt argued at the AEI that the best way to proceed would be for this Congress to assist the states much as President Bill Clinton and a GOP Congress did in 1995 and 1996 with welfare reform, achieving a dramatic success on a bipartisan basis.

However, a top White House aide told me that Bush “lacks passion for health care.” That being so, incremental progress toward health reform is, unfortunately, probably the best we can hope for until after a vigorous 2008 debate.