After vetoing a proposed expansion of the State Children’s Health Insurance Program (or “S-Chip”), George Bush once again sought to frame the ideological context. “Congress’s S-Chip plan is an incremental step toward their goal of government-run health care for every American,” he said in his weekly radio address. “Government-run health care would deprive Americans of the choice and competition that comes from the private market.”

Democrats insist that Bush is shortchanging millions of uninsured children who would benefit from raising the ceiling for S-Chip qualification to include households earning up to 300 percent of the poverty line. (Senate Majority Leader Harry Reid denounced the president’s “heartless veto.”) As Republicans see it, the Democratic scheme to enlarge S-Chip would merely be the camel’s nose under the tent of “socialized medicine.” They point out that thousands of children currently eligible for S-Chip coverage are not enrolled, and that many other kids would lose their private insurance coverage under the legislation Bush vetoed.

Whether or not a compromise bill emerges, the S-Chip spat presages a much broader debate over health insurance that will gain steam during the 2008 presidential campaign. “When it comes to health care,” The New York Times noted in a recent editorial, “voters will find stark differences in philosophy and commitment between Democrats and Republicans.”

For now, Democrats appear to have the momentum. Bush’s veto went against public opinion. Polling indicates that most Americans are concerned about spiraling health care costs, and that most trust the Democrats far more than the Republicans to fix the system. In a February 2007 New York Times/CBS News poll, 70 percent of respondents said it was a “very serious” problem that many Americans lack health insurance. To remedy this, 64 percent agreed that “the federal government should guarantee health insurance for all Americans.”

That same poll showed the decreasing saliency of the tax issue. Respondents were given four domestic policy choices and asked which one “is most important for the president and Congress to concentrate on right now.” A majority (55 percent) said “making health insurance available to all Americans,” while only 11 percent said “reducing taxes.” The other options were “strengthening immigration laws” (19 percent) and “promoting traditional values” (13 percent).

Just as many Republicans hoped that partially privatizing Social Security would swell the ranks of GOP voters, many Democrats view universal health care as both good policy and good politics.

When Ronald Reagan took office in 1981, the top marginal income tax rate was 70 percent. Today, thanks to Republican policies, Americans feel less threatened by confiscatory taxation. But while taxes have dropped, health care costs have skyrocketed, prompting a wave of middle-class anxiety. So far, Democrats have proved much better than Republicans at responding to this anxiety.

There are several related trends at play. Because of the U.S. tax code, Americans generally rely on their employers to provide health insurance. At the same time, with the increasing fluidity of the U.S. job market, Americans may work for several different employers before retiring. But in an employer-based system, switching jobs often means temporarily losing insurance coverage. This heightens concerns over economic security, the same concerns Democrats campaigned on in 2006.

Each of the top three Democratic presidential candidates—Hillary Clinton, Barack Obama, and John Edwards—has laid out a different plan to achieve “universal” coverage. But all three plans would expand Washington’s role in managing and regulating American health care. Just as many Republicans hoped that partially privatizing Social Security would eventually swell the ranks of GOP voters, many Democrats seem to view universal health care as not only good policy but also good politics.

Predictably, Republicans have raised the specter of “HillaryCare.” Rudy Giuliani has attacked the leading Democratic proposals as “European” and “socialist.” But Republicans also seem to recognize that going negative won’t be enough. The party must also overcome a severe credibility deficit. Slowly but surely, Republicans are beginning to coalesce around a few significant market-based reforms. Those reforms include expanding portable, tax-free health savings accounts; establishing tax credits or tax deductions for individuals who buy their own private health insurance; permitting Americans to buy private insurance from out-of-state companies; letting small businesses pool their insurance risk; and curbing medical malpractice lawsuits.

Republicans are coalescing around a few market-based reforms, including portable, tax-free health savings accounts and tax credits or deductions for private health insurance.

Right now, however, the Democratic-led Congress is moving away from consumer-driven health care and toward greater management and regulation by the federal government. The chief roadblock is President Bush. Indeed, despite all the talk of Bush as a “big-government conservative,” and despite the massive new prescription drug entitlement he signed in 2003, it’s worth recalling his speech to the 2004 Republican National Convention in New York, which distilled the essence of free-market health care reform.

“We must allow small firms to join together to purchase insurance at the discounts available to big companies,” Bush told the crowd at Madison Square Garden. “We will offer a tax credit to encourage small businesses and their employees to set up health savings accounts, and provide direct help for low-income Americans to purchase them. These accounts give workers the security of insurance against major illness, the opportunity to save tax-free for routine health expenses, and the freedom of knowing you can take your account with you whenever you change jobs.”

Rudy Giuliani and Mitt Romney have been echoing that message on the campaign trail. And all four GOP presidential frontrunners—Giuliani, Romney, John McCain, and Fred Thompson—supported Bush’s veto of the S-Chip bill. With that veto, writes liberal journalist Timothy Noah, Bush “fired the first shot” in a watershed battle over how to revamp American health care. But Noah reckons that, contrary to what Bush may have hoped, “The likely result will be to help mobilize support for further government intervention in the health care market.” At least that’s what Democrats hope.

Duncan Currie is managing editor of THE AMERICAN.