Great piece from Ponnuru and Levin in which they argue that “Obamacare cannot succeed while remaining Obamacare” and must inevitably be reformed or collapse into a single payer system that raises taxes and rations care. (I think the latter is not a bug but a feature. The president himself in unguarded moments has acknowledged his goal is a slow march to single payer.)
The health-care law was built on the assumption that the well-known deficiencies of our health-care system — the large number of uninsured Americans, the rising costs of coverage and care — are not the result of misguided public policies that have prevented markets from addressing these problems, but are a sign that health-care markets cannot work without extremely heavy regulation. This view in turn rests in part on liberals’ assumptions about what health insurance should do. During the legislative debate over the law, President Obama argued that all coverage should be “comprehensive,” pre-paying for a large percentage of medical expenses. The alternative would be insurance that guards against the risk of catastrophic expenses but leaves routine expenses to be covered out of pocket. Wide-ranging government intervention logically follows from the first preference: Liberals are quite right to think that markets will not yield widespread comprehensive coverage, because such coverage is a highly inefficient arrangement.
In short, Obamacare seeks to expand the reach of an inefficient model of health-care coverage, and since markets won’t do so, it avoids them. The law’s basic method is to transform insurance into a product that few would voluntarily buy and then force everyone to buy it. It outlaws insurance as traditionally conceived by requiring insurers to cover everyone on the same terms regardless of his health status — the equivalent of requiring companies to offer homeowner’s insurance at the same price whether or not the home is burning down. Because this regulation removes the incentive to buy insurance, the government then orders people to do it — or, after Chief Justice Roberts amended the law, taxes them for not doing it.
The law also vastly expands Medicaid, which is a crummy form of insurance: Researchers who compare the program’s beneficiaries with people who have no insurance at all often have a hard time finding much of a difference in health. Many doctors do not take Medicaid patients because the program underpays them, and the law does little to improve those patients’ access to care even as it increases their numbers.
Obamacare attempts to cut costs in Medicare by tightening the price controls that have failed to restrain the program’s costs for more than three decades. It retains the structure of Medicare’s fee-for-service system but reduces some of the fees. The predictable result will be that hard-pressed physicians either stop taking Medicare patients (reducing elderly Americans’ access to care) or perform a greater volume of services to make up the difference: and such excess care is more or less the definition of costly inefficiency in American health care. The Independent Payment Advisory Board — a 15-member panel charged with forcing Congress to trim costs — is prohibited from using any method except such traditional price controls.
The law also encourages the centralization of medical practices. It gives hospitals more bargaining power over doctors and incentivizes the consolidation of hospitals, which will only contribute to the larger consolidation of the health-care system. If you think fewer providers facing less competition and giving patients fewer options is the way to restrain health-care costs, then you should expect good things.
And, of course, Obamacare promised universal coverage, but in its latest report the CBO projects that a decade from now — after $1.7 trillion in new spending and about a trillion in new taxes — there will still be 30 million people without health insurance in America.
…embody a fundamental disagreement about whether market forces can work in health care as they do in the rest of our economy. The truth is that if we want a system in which real insurance has been outlawed, then we have to have something like Obamacare or a single-payer plan. We can then decide whether we want to control costs by imposing some kind of bureaucratic rationing, or want to pay ever higher taxes to mitigate such rationing. If we don’t want this kind of system, we have to repeal Obamacare.