The idea for this essay came to me while watching the war with Iran unfold and wondering what Colin Powell’s doctrine would say about it. By my reading, the war arguably passes only Powell’s first test: Iran poses a serious national-security threat. It is much harder to answer yes to his questions about a clear and attainable objective, exhausted alternatives, acceptable costs and risks, an exit strategy, public support, or the likely consequences.
That led me to a different question. If Powell’s guideposts provide a useful discipline before undertaking a drastic change in foreign policy, could a similar set of guideposts help us evaluate drastic changes in domestic economic policy?
Admittedly, naming the result the Bernstein Doctrine takes considerable chutzpah: Colin Powell was a four-star general and Chairman of the Joint Chiefs of Staff; I am an economist with a keyboard.
But here we go.
The Powell Doctrine is often presented as eight questions that policymakers should force themselves to answer before undertaking something as consequential and difficult to reverse as war:
The Eight Guideposts of the Powell Doctrine:
1. Is a vital national security interest threatened?
2. Do we have a clear and attainable objective?
3. Have the risks and costs been fully and frankly analyzed?
4. Have all reasonable nonmilitary alternatives been exhausted?
5. Is there a plausible exit strategy that avoids an open-ended commitment?
6. Have the likely consequences of military action been fully considered?
7. Does the action have the support of the American people?
8. Is there broad international support?
Powell explicitly warned against treating these questions as an inflexible checklist. Every crisis is different, and policymakers inevitably must exercise judgment. Powell’s questions were designed to be guideposts -- a disciplined way of forcing decision-makers to confront objectives, costs, alternatives, unintended consequences, public support, and the path out before taking an enormously consequential step.
The goal of the Bernstein Doctrine is to create a similar framework for major domestic economic reforms. Bernstein proposes five guideposts designed to determine whether a major proposed upheaval of an existing domestic economic program or system is justified, feasible, sustainable, and economically efficient.
The Five Guideposts of the Bernstein Doctrine for Domestic Economic Reform:
1. Are the problems serious enough to justify major reform?
2. Can the reform avoid substantial harm to major groups?
3. Is there a feasible transition to the new system?
4. Is the reform economically and politically sustainable?
5. Is there a more efficient way to achieve the objective?
The remainder of the essay applies these guideposts to health-care reform. Health care provides a useful test because there is broad agreement that the existing system has serious problems, but much less agreement about how radically it should be changed. I consider two very different approaches: Medicare for All, which would fundamentally restructure the existing system, and a more incremental package of reforms designed to improve it.
Do the five guideposts of the Bernstein Doctrine provide adequate justification for the adoption of Medicare for All as described here?
Guidepost 1: Is Reform Justified?
Answer Yes. The current U.S. health-care system has serious problems involving coverage, portability, affordability, and access that justify substantial reform.
Guidepost 2: Is Major Harm Avoided?
Answer No. Medicare for All would create substantial economic losses for important groups, including some providers, insurers, employees, and households satisfied with existing coverage.
Guidepost 3: Is the Transition Path Feasible?
Answer No. Replacing the existing employer-sponsored, private, Medicare, Medicaid, and CHIP systems within a short transition period would create substantial risks of economic and health-care disruption.
Guidepost 4: Is the Program Sustainable in the Long Term?
Answer Maybe, but probably no. A universal federal system could be financially sustainable, but its dependence on future congressional funding, provider-payment decisions, and changing political control creates significant long-run risks.
Guidepost 5: Is the Program Economically Efficient?
Answer No. Many of Medicare for All’s objectives can likely be achieved through less costly and less disruptive reforms that preserve useful parts of the existing system.
The transition problem also reinforces the sustainability problem. The United States is not starting with a blank sheet of paper. It has a massive private health-insurance industry, an employer-sponsored coverage system, and provider networks built around existing payment arrangements. Medicare for All would largely dismantle that structure and replace it with a system whose financing and provider payments would depend heavily on future federal budget decisions. Whatever the merits of the proposed destination, the path from here to there is unusually difficult—and the resulting system could remain vulnerable to recurring political and fiscal conflict.
Do the five guideposts of the Bernstein Doctrine provide adequate justification for the adoption of Bernstein’s durable path forward on health care involving subsidized reinsurance, portable health coverage with employer subsidies, modernized savings accounts and a more efficient expanded role for Medicaid?
Guidepost 1: Is Reform Justified?
Answer Yes. The current U.S. health-care system has serious problems involving affordability, portability, coverage gaps, and inefficient public subsidies that justify substantial reform.
Guidepost 2: Is Major Harm Avoided?
Answer Yes. The reforms build on existing insurance arrangements rather than eliminating them, allowing substantial improvements while avoiding large losses for providers, insurers, employers, or households with coverage they wish to retain.
Guidepost 3: Is the Transition Path Feasible?
Answer Yes. Subsidized reinsurance, portable employer-supported coverage, modernized savings accounts, and expanded use of Medicaid can be introduced incrementally without dismantling the existing health-care financing system.
Guidepost 4: Is the Program Sustainable in the Long-term?
Answer Yes. The reforms retain a mixed public-private system, limit fiscal exposure, and can be adjusted over time as economic, budgetary, and political conditions change.
Guidepost 5: Is the Program Economically Efficient?
Answer Yes. The package seeks many of the principal objectives of more sweeping health-care reforms—broader coverage, greater portability, improved affordability, and greater security—at substantially lower economic and transition costs.
The durable-path approach begins from the premise that successful reform should work with the institutions that already exist whenever doing so is economically sensible. Private insurers, employers, Medicaid, and individual coverage would continue to play important roles while federal policy addresses catastrophic costs, portability, savings, and coverage gaps. That makes the transition substantially easier and improves long-run sustainability because the reform does not require the federal government to replace and continuously finance nearly the entire existing health-insurance system.
Conclusion
The Bernstein Doctrine provides a framework for determining whether a major domestic policy reform is justified and whether the proposed change is feasible, sustainable, and economically efficient. A successful reform need not be Pareto improving—that is, it may make some people worse off. Modest losses to one group may be acceptable when the overall gains are substantial, but large losses imposed on identifiable groups are much more difficult to justify.
Economic efficiency deserves particular emphasis. Governments face many competing problems and necessarily limited fiscal resources. A reform that achieves nearly the same objective at substantially lower economic and fiscal cost should generally be preferred because the resources saved remain available for other priorities.
Applied to health care, the doctrine points in two different directions. Medicare for All addresses genuine problems but fails important tests of transition, sustainability, and economic efficiency. A more durable path—one that preserves useful parts of the existing system while reforming those that do not work—offers a more viable, sustainable, and economically efficient route to substantially better health-care outcomes.
Author’s Note
In A Durable Path Forward on American Health Care, I propose four reforms: subsidized catastrophic reinsurance, portable employee-owned coverage with employer support, modernized health savings arrangements, and a more efficient expanded role for Medicaid. The goal is to achieve broader coverage, greater portability, improved affordability, and greater security without the disruption and transition risks of Medicare for All.
Readers interested in the full proposal can find A Durable Path Forward on American Health Care here.