The Health Care Disaster and the Miseries of Blue

BY:  Walter Russell Mead (my fave Prog writer)

After oral arguments before the Supreme Court this week, the odds that the Court will strike the individual mandate rose sharply; Intrade markets after the hearings showed bettors thought there was a 62 percent chance that the mandate will fall.

I can’t tell you whether the law is unconstitutional; I can’t even tell you whether the Supreme Court will uphold it — or, if the mandate goes, what else might stay.

But the health care law’s troubles shed some further light on the crisis of American progressivism and the blue social model it has built. Those who believe in the blue model and want to extend it have lost their touch; the dream machines of the blue social engineers don’t sail serenely across the azure sky anymore. Think of the various carbon exchanges and environmental planetary schemes; think of high speed rail proposals like California’s $100 billion train to bankruptcy; think of Obamacare. These days the experts, “social entrepreneurs” and smart young blue twenty somethings fresh out of the Ivy League whomp up social programs with as much verve and dedication as their New Deal and Great Society predecessors, but the new Dreamliners don’t take off. At most they roll around the runway, emitting clouds of noxious smoke; wings fall off, windows pop out, turbines misfire and the tires go flat.

Obamacare was supposed to be the capstone in the arch of a new progressive era. The Dems were going to show us all that government really does work. Smart government by smart people, using modern methods and the latest up to the minute research from carefully peer reviewed articles in well regarded social science journals can solve big social problems. Obamacare was going to be such a big hit that even the bitter clingers would have to put down their guns and their Bibles long enough to thank the Democrats for this wonderful new benefaction.

But even if the Supreme Court doesn’t pull the trigger and kill the law in June, the darn thing won’t fly. The public hates it, and the longer it’s on the books the less popular it gets. This isn’t like Social Security, a program the public fell in love with early on and still cherishes today. It isn’t like Head Start, which remains dearly beloved even though there doesn’t seem to be much evidence that it helps anybody other than the people it employs. Obamacare is only marginally more popular than the Afghan War; already its estimated cost has doubled and we all know these numbers are likely to continue to increase. Obamacare so far is a political flop and shows ominous early signs of being a policy misfire as well. The benefits don’t seem to measure up to the hype, more people are going to lose their existing insurance, premiums are going up and the impact on the deficit is going to be worse.

This is a horrible piece of legislation — as misbegotten and useless to its friends as it is menacing to its enemies. The question is: why? Why did the blues write such a bad law?  Why, given a once in a lifetime chance to pass a program that Dems have longed to achieve ever since the New Deal, did they craft a sloppy mess that nobody understands and few admire, and then leave their law so unnecessarily vulnerable to constitutional challenge?

The answers tell us much about why blue progressive thinking is losing its hold on the body politic — and why blue methods generally aren’t working as well as they used to.

First, there is the question of complexity. The health care system has become incredibly complicated. It is huge — roughly one sixth of the national economy. It is like a tropical rain forest: an ecosystem that is so complicated that nobody understands the complicated interrelationships of its web of life. Tweak something here, and something completely unexplained happens over here. You can’t regulate something this complicated effectively by a government bureaucracy any more than you can regulate a rain forest by decree: telling the thousands of species of butterflies when to mate, the army ants where to march, the sloths which trees to prune, the jaguars what to kill and when, repressing the anacondas just a touch while encouraging the otters.

Blue regulation works best in simple systems. Social Security doesn’t have a lot of whistles and bells. Retirement, retirement age, actuarial projects, payroll tax deductions: these are relatively simple things. (Even so, we’ve gotten it badly wrong, but Social Security is far from our most serious budgetary problem.) Social Security could be run by accountants with adding machines; there is no rocket science involved.

Not so the government’s brave ventures into health care. People who’ve devoted their lives to the study of our health care system (really, system of systems or just systemic chaos) don’t understand everything about it or how it all works. Tweak a Medicare reimbursement formula, and suddenly nurses are getting a windfall in Chicago while GP practices are shutting down across Kansas. As the numbers grow, and the complexity of the system increases, the opportunities and incentives for fraud balloon — again, often in ways that those trying to ‘fix’ the system don’t understand or predict.

Then comes the second problem: the throngs of cooks that spoil the broth of progressive legislation these days.  As the system to be regulated becomes larger and more money flows through it, the ‘legislative space’ is suddenly populated with very effective and sophisticated lobbies. Everybody from the AARP to the NOW, the NCAA, the NAACP and the Catholic Church wants a bite at this apple. Community hospitals, teaching hospitals, outpatient clinics, drug manufacturers, chiropractors and osteopaths, firms selling catheters on television infomercials, psychologists, rehab clinics, pregnancy test manufacturers, doctors’ associations, staff unions: there is no end to the number of groups who want to tweak health legislation on this or that issue.

There is no way that a “pure” policy proposal can emerge from this feeding frenzy unscathed. No law that Congress passes affecting this many interests in this many ways will be less than a thousand pages long, and the bulk of those pages will be filled with carve outs, exemptions, special provisions and good old fashioned train robberies.

It is a perverse but very real fact of life that the more complex and rich the system to be regulated, the less the “experts” and the goo-goos have the political power to impose their vision on the regulatory process. The more carefully crafted a law needs to be, the more it is going to be full of lobby lollipops and sweetheart deals. A legislative body trying to write a health care law for a country like ours is like a neurosurgeon operating, drunk, with one hand holding a chainsaw and the other in a boxing glove.

The third problem that makes it hard for blue methods to work well in health care has to do with the state of the system. Government regulation and centralized organization work best when an industry is in a steady state. Utility companies in the 1950s for example were using tried and true technologies. Their costs were predictable, their business model didn’t change much, and, for all its flaws the system seemed to work pretty well.  Government could regulate rates and access and while there may have been costs and inefficiencies that resulted from the regulation, on the whole it was relatively easy to develop and apply a reasonable set of regulations and policies. With no concerns about global warming, air pollution or shortages of hydrocarbons, there was little sense that the industry needed to change. We had the grid and the generating system we figured that we needed; all we had to do was maintain what we had and grow it a few percent every year to take care of population and economic growth. That is the kind of situation that blue model thinking can manage fairly well: Fairly simple, not too many complicated interlocking feedback mechanisms, no driving need for discontinuous and disruptive change, no existential threats or challenges requiring flexibility or systemic change.

Health care doesn’t fit that mold. We don’t actually have a working, sustainable system: what we are doing now is on course to bankrupt us sooner or later as the population ages, new technologies force rapid change, and, for various hard to decipher reasons, costs internal to the system keep rising faster than the rate of inflation.

We don’t need to administer an existing system smoothly into the future. We need to reform, reinvent and renew our health care system. We need drastic innovation that can use the power of IT to make the health care system much more productive: able to deliver better outcomes at lower costs.

This calls for the opposite of a steady state regulatory model. It calls for the opposite of greater central control and greater standardization of methods and procedures. Obamacare, despite well intentioned cost control efforts and some genuinely positive steps toward the use of electronic patient data and other promising approaches that could make the system more efficient, will have the effect of locking in existing practices. And once the system is politicized, the lobby groups (unions, hospital companies, insurance companies, professional groups and many others) will make reform and adjustments impossibly hard. The system will stagnate and freeze, making real innovation harder at just the time we need it most.

These problems all loom large in the health care reform effort, but they rear their heads almost anytime people today seek to address pressing social problems with progressive era methods. All our systems are growing more complex as time goes by, and therefore harder to regulate effectively. Lobbyists and pressure groups play an increasing role in the political process as government’s role grows and as more companies and other groups feel the need to influence Washington to protect their interests. And the IT revolution is pushing us to restructure and reform the learned professions and the intellectual guilds in the face of rising costs and low productivity.

Obamacare reveals the mismatch between the progressive imagination and both the needs and opportunities of our time. It is a 20th century solution for a 21st century society.

The question before the country isn’t whether the law will stand. It is headed for failure; the question is whether the Supreme Court will kill it quickly and at a relatively low cost, or will it impose huge costs and inefficiencies across the country as its contradictions and inadequacies are successively revealed.

I opposed the law when it was passed on the grounds that it represented another rip off of the country’s young people to lower costs for the Boomers and the middle aged. Young men (increasingly the most vulnerable people in a society that cares little or nothing about most of their issues) especially are going to be forced to pay too much for insurance they don’t need.  It is their artificially inflated premiums that will provide the money that lets the social engineers of Obamacare play their complex games with the health care system.

Supporters of the program rise to argue that when the young men grow older they will need more care and then they will benefit from cheaper premiums as they in turn are subsidized by the next wave of suckers, excuse me, young people. But Obamacare isn’t fiscally balanced or sustainable; its true costs were disguised by accounting tricks like postponing some of its impacts while collecting its revenues so that the first ten years of the program looked good on Congressional Budget Office scoring sheets.

Cheap tricks might work to befuddle lazy reporters (or allow the ideologically committed to collude in the deception of readers for the greater good), but they won’t pay the bills or stop the inexorable rise in health costs. By the time today’s young people are ready to collect, without the kind of innovation that Obamacare is likely to prevent rather than encourage, the system will have to be curtailed out of financial necessity. The care they get will likely be less generous than the care the first generation in the system gets; this is wrong both from a moral and a policy standpoint.

Our health care policy today needs to begin from the understanding that the system we have today simply cannot serve us ten, twenty or thirty years into the future. In the real world it is impossible to avoid a significant government presence in the health care sector; from veterans’ care to pediatric care to the care of the poor, there are too many reasons why government at some level must ensure care to build a purely private health system.

But our approach to health care must be to create possibilities and incentives for innovation and change, rather than to keep the current system alive by pumping ever growing volumes of money into it. Developing a highly efficient health care system is more important to the country’s future prosperity than all the high speed trains and “green jobs” boondoggles ever dreamed up. It matters more than almost anything else we do. The federal government should be encouraging states to try different approaches rather than nudging them toward standard models. It should be looking to give consumers more power over (and more responsibility for) their own choices in health care. Health care reform must try to do a very short list of things very well; the longer these laws get and the more issues they try to take on, the more lobbyists and special interests are able to twist those laws toward their own limited ends.

Obamacare is not all bad, but it is not close to being an answer to this country’s present and future health care issues. If the Supreme Court finds the law unconstitutional and sends the whole thing back to the Congress to have another try, it will do us all a favor.

[Image courtesy Shutterstock]