November 24th 2008
Health Care: Obama’s ‘Slow Moving Catastrophe’
As progressives moan that they’ve done the unthinkable – elected a centrist – the depth of radicalism at the core of Prez-elect Obama’s health care initiative is coming to light. The Wall Street Journal reads the tea leaves (“The Obama Health Plan Emerges“) and foresees trouble; lots of trouble.
It all comes down to two words: Max Baucus. The Montana senator, as Senate Finance chair, controls the pursestrings that will have to be ripped open for a universal (or universal-ish) plan, and also recently released a health care policy blueprint. It’s close to Obama’s plan and it’s close to the heart of the money-man, so let’s take a look:
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 campaign over, reality strikes. Interestingly, the WSJ sees the public component, not the mandate, as the more radical element of the Baucus proposal. It says the plan would be “extraordinarily” expensive because it would lead to growth in government’s share of health care spending – and there’s a lot of potential growth here, as health care represents over 17 percent of the US economy.
How extraordinarily expensive will it be? The draft ballparks the “investment” at as much as $150 billion a year, and WSJ says that’s conservative, since subsidies would go to families earning up to 400% of the federal poverty level. That’s 61.5% of Americans, or about 184 million people — less those already on Medicare and Medicaid.
Medicare is currently $36 trillion short of meeting its obligations, and its board acknowledges that the actual number, given current trends, is probably several trillions higher. But, the WSJ points out, the Baucus plan “doubles down” on the Medicare option nonetheless:
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.
So, without ever calling it universal health care, the plan would eventually accomplish it by making the government plan the only alternative, whether it’s fiscally viable or not. One wonders if there’s enough high income and business tax income to be generated to fund the plan.
Is the Baucus plan the Obama plan? Since it is the more economically realistic of the two, it’s probably closer to what the Dem-dominated Congress will pass if Obama continues to push his health care proposal.
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