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20 March 2013

Plan B for Obamacare

Obama and Pelosi: We’ve found out what’s in Obamacare, alas.

Obama and Pelosi: We’ve found out what’s in Obamacare, alas.

By Matthew Continetti 

"With Obama-care entrenched, Democrats feel free to gripe,” read the headline in Politico. And gripe is the word. Senator Maria Cantwell of Washington gripes that the administration won’t subsidize Americans “just above the poverty level.” Senator Bill Nelson of Florida gripes that the administration “negotiated away” funding for insurance co-ops. Senator Ben Cardin of Maryland gripes that Obama-care doesn’t address the national crisis in pediatric dentistry.

Some Democrats are doing more than gripe, though. They are trying to change the law. Politico says that senators Amy Klobuchar and Al Franken of Minnesota, Bob Casey of Pennsylvania, and Joe Donnelly of Indiana have joined forces with Republicans to sponsor the repeal of Obama-care’s medical device tax. In the House, 24 Democrats have cosponsored a similar bill. And 10 House Democrats have joined another Republican bill that would repeal Obama-care’s Independent Payment Advisory Board.

This comes after 76 Democratic representatives and 41 Democratic senators voted in 2011 to repeal Obama-care’s onerous 1099 reporting requirements (a repeal President Obama signed into law). And after 172 Democratic representatives and all but three Democratic senators, as part of January’s deal to avert the fiscal cliff, voted to repeal Obama-care’s long-term insurance program, the so-called CLASS Act. Invented by Ted Kennedy, the CLASS Act was an unworkable and costly Ponzi scheme. Which, come to think of it, is a pretty fair description of Obama-care. Just don’t expect the law as a whole to suffer the same fate—at least as long as Obama is president.

Still, Democrats are becoming disillusioned at the law’s failure to achieve its ideal of quality health care for every American that doesn’t add to the deficit, reduces medical spending, and promises employees the right to stay on the company plan.

And so they’re trying to clean up the mess they’ve made.

For decades, critics of the American health care system have identified two major flaws in its design. First, there is the problem of universality. Not everyone has health insurance. This creates a “free rider” issue: Americans without health insurance end up in emergency rooms, and the rest of us pick up the tab. It also offends our sense of equity and compassion.

Second, there is the problem of affordability. The amount of money America spends on health insurance far exceeds the amount spent by other postindustrial nations. Americans pay through their noses for health care. One 2009 study, by President Obama’s Council of Economic Advisers, suggested that increases in employer health premiums have crowded out wage growth, leaving us poorer. Meanwhile, government spending on Medicare and Medicaid is behind our exploding long-term debt.

The Affordable Care Act was sold as a way to solve both problems. What it really does, though, is extend, sloppily and expensively, a right to health insurance to all. It’s a law that deals with the universality problem, not the spending problem. The cost-cutting measures it does contain are mainly experiments that will take years to evaluate. Yes, the rate of growth in health care costs has remained stable for the last three years. But that is more likely the result of the recession, and of experiments in private networks, which began before Obama-care. Most of Obama-care has yet to take effect. The problem of rising health costs remains.

And liberals are noticing. In January, David Goldhill, a Democratic business executive, published a book-length treatment of American health care that concludes, “Nothing in the [Affordable Care Act] changes the fundamental incentives that have so warped our health care system.” In late February, CNN pundit and Democratic strategist Donna Brazile tweeted: “Just got off the phone with my health care provider asking them to explain why my premium jumped up. No good answer!” Later that month, journalist Steven Brill published an article in Time magazine investigating the high price of health care and criticizing the Affordable Care Act.

Expect the grumbling to become more pronounced as the administration struggles to implement Obama-care. The 2014 deadline for the individual mandate and state- and federal-based health insurance exchanges is looming, and there is no guarantee the government will meet it. We may be better off if it doesn’t. What might happen, for instance, if universal coverage is not achieved despite the mandate? What might happen if employers slough employees off to the exchanges? If costs rise as demand increases? Imagine what Donna Brazile will be tweeting then. 

Unless conservatives and Republicans offer their own solutions to the twin problems of universality and affordability—solutions that begin a long process of introducing real price discovery and consumer choice into health care—liberals and Democrats will use Obama-care’s flaws as the basis for additional government intervention. They will double down on the flawed insurance model. Their inability to realize unrealizable ideals through politics will provoke .  .  . well, more politics. Liberal griping will give way to liberal law-making. You’ve been warned.

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