The Health of America, Part 15

Last year, candidate Obama stumped for healthcare reform, and popular support for expanding health insurance coverage seemed unstoppable.

President Obama still supports "assur[ing] high-quality, affordable health care for all Americans." And, last week, one reform measure was approved by one House committee, and another by a Senate committee. Yet, the shape of the policy debate has shifted dramatically since January. Specifically, progressives and the President now emphasize slowing the increase in healthcare costs. Indeed, the left insisted reform would save money.

I applaud the shift. The supposed "uninsured problem" is overstated (and distorts the debate). Further, Federal entitlement spending, particularly Medicare, is out of control.

Still, the change of tactics puzzled me: I expected the left to keep claiming healthcare is a moral imperative and fundamental "right". By contrast, to date, the Administration hasn't been able to document significant health-spending savings (outside the overly-rosy scenarios). It's enough to make some lefty journalists wistful for war.

Events last week may force healthcare reform again to abandon economics. First, even the Washington Post ridiculed the Democrats' proposal to fund healthcare legislation through a surtax on the rich. That would have the effect of reverting to pre-Reagan marginal tax rates--over 50% in 39 states, said the Tax Foundation. Even higher than France! So much for economic incentives.

But the bigger blow came from CBO Director Douglas Elmendorf, who said the pending draft House and Senate bills "would be much more likely to worsen the long-run budget outlook than to improve it." Specifically Elmendorf testified:

• "In the legislation that has been reported, we do not see the sort of fundamental changes that would be necessary to reduce the trajectory of health spending by a significant amount. And on the contrary the legislation significantly expands the federal responsibility for health care costs."



• "The creation of new subsidies for health insurance, which is a critical part of expanding health insurance coverage in our judgment, would by itself increase the federal responsibility for health care. That raises federal spending on health care, it raises the amount of activity that is growing at this unsustainable rate."



• "The changes we have looked at so far do not represent the sort of fundamental change on the order of magnitude that would be necessary to offset the direct increase in federal health costs included in the insurance coverage proposals."

So much for deficit reduction.

Time magazine called the statements "a big setback" and "devastating." As a minimum, the CBO testimony will delay the debate, perhaps into the fall.

Conclusion: Cost-benefit analysis is conservative turf. And several right-of-center plans would both improve access to health care and cut costs. But having flunked their own test, expect the Dems to take a page from the 2nd Circuit in Ricci: a new test, based on universality. Market forces bad; soak-the-rich tax rates good. So what if it forces another Obama flip-flop--you'd need fact-checkers--or at least Google--to notice.

It's dishonest and Byzantine. Also, as MaxedOutMama observes, it "has just a few tiny economic fallacies." And after a summer hangin' with the Hill and "hopey-change," health reform legislation might wind up riskier than Nigerian email. Heck, even this satire seems more plausible.

Cost-cutting was a dead end. So now, the Dems started a stampede to ram a new healthcare law through before another economist reads it (contrary to the process in 1994). In response, conservatives should channel Dean Smith and adopt the four-corner stall. Delay is good. Because the Dems' healthcare cure would be worse than the disease.