http://online.wsj.com/article/SB122714181668742739.html?mod=googlenews_wsj
"Universal" government-run health care proved too ambitious even for FDR, who stripped it out of the Social Security Act of 1935. Lyndon Johnson settled for Medicare and Medicaid. Now liberals think the political moment has finally arrived to achieve what has eluded every other Democratic President from Harry Truman to Bill Clinton.
[/align][/align][/align]One signal is yesterday's news that Barack Obama has selected Tom Daschle, the very liberal former Senate warhorse, to head the Health and Human Services Department. But an even clearer sign was last week's release by Montana Senator Max Baucus of a policy blueprint that closely resembles the one Mr. Obama campaigned on for 17 months. The plan is significant not only because its author is Chairman of the powerful Finance Committee, which oversees taxes and about half of all government spending. Mr. Baucus is also one of the more moderate, and cautious, senior Democrats.
If the Obama White House decides that reorganizing the 17.1% of the economy that the U.S. is likely to spend on health care in 2010 is a first-year priority, then Mr. Baucus's bill will be the place they start. Americans need to learn what they'd be paying for.
First, Democrats want the government to create a national insurance exchange, or marketplace, in which all comers could buy into a range of heavily regulated private policies at group rates. These private plans would then "compete" with a new public insurance option, i.e., a program managed by the government and modeled after Medicare. Lower-income earners would get subsidies to make coverage "affordable." Businesses that didn't cover their employees would pay a tax on some portion of their payroll.
The last cog is the "individual mandate." This requirement that everyone buy coverage has grabbed most media scrutiny of the Baucus plan, because Mr. Obama opposed it during the campaign. But the many moving parts don't work together unless the young and healthy foot the bill for care of the older and sicker -- one reason Hillary Clinton kept nagging Mr. Obama about the individual mandate during the primaries.
The irony is that the public option -- not the mandate -- is far and away the most radical part of the plan. Green eyeshade objections are obviously out of favor in modern Washington, but the reality is that the Baucus-Obama plan would be extraordinarily expensive as it slowly but relentlessly grew the government's share of health spending. The draft doesn't include an exact cost, though casually notes the ballpark "investment" could run as high as $150 billion a year.
Even those huge outlays are likely conservative, considering that subsidies would go to families earning up to 400% of the federal poverty level. According to the Census Bureau, that would apply to 61.5% of the American population, or about 184 million people -- less those already on Medicare and Medicaid.
Some financing will come from the "pay or play" tax on businesses, but because Mr. Baucus is no more omniscient than anyone else, the tax rate is left undefined. If it is too low, companies will have every incentive to "cash out" their employee liabilities and pay the tax instead. Then workers will flood the public option.
The Baucus plan expects to make up more of the money with nips like better health technology and tucks such as "a national focus on wellness." But those don't come close to adding up to $150 billion -- or the health system would have made them already. As for the claim that centralizing health spending will lead to more "efficiency" . . . well, that is the triumph of hope over evidence.
[/align][/align]Over the past 40 years, per capita health spending has grown an average of 2.1 percentage points faster than the economy. The dominant U.S. insurer -- Medicare -- has had no success in mitigating this climb, despite valiant attempts. Since the 1980s, Medicare has actually
controlled the prices that physicians and hospitals are paid for thousands of billable services. In 2007, the program spent some $425 billion according to these arbitrary guesses. Because of its huge purchasing power, and because many private plans adopt its reimbursement rates, Medicare significantly shapes all health-care financing and delivery.[/align]Now the Democrats want to double down with the public option, apparently on the theory that the bureaucracies fail only when they're too small. Even without the new program, Medicare and Medicaid costs are rising substantially both as a share of the economy and the federal budget. The nearby chart tracks the historical behavior of government health spending and the Congressional Budget Office's post-2007 fiscal scenario in the absence of reform. Today, health entitlements account for 4% of GDP but will rise to 7% in 2025 and about 15% in 2062.
Not that the current level of benefits will ever be paid. According to the Medicare trustees, the program's excess costs over the next 75 years -- that is, the difference between expected outlays and revenues -- is more than $36 trillion, which even they acknowledge is several trillion too low given current trends. Even if Congress doubled all individual and corporate tax rates, it still wouldn't raise enough revenue to pay for Medicare and Medicaid.[/align][/align]The Obama-Baucus solution to this slow-motion catastrophe is to add tens of millions more people to the federal balance sheet. Because the public option will enjoy taxpayer sponsorship, it will offer generous packages to consumers that no private company could ever afford or justify. And because federal officials will run not only the new plan but also the "market" in which it "competes" with private programs -- like playing both umpire and one of the teams on the field -- they will crowd out private alternatives and gradually assume a health-care monopoly.
Many proponents of plans similar to Mr. Baucus's openly cite this as one of their goals. Eventually, the public option will import Medicare's price controls into the private sector as it tries to manage the inevitable cost overruns. When that doesn't work, Congress will deal with the problem by capping overall spending and rationing care through politics (instead of prices) -- like Canada does today.
Either Senator Baucus and President-elect Obama are making promises that can't possibly be kept. Or they're not being honest about their plans for U.S. health care.
Government Healthcare rammed down your throat!
