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Obamacare: It’s Not Inevitable



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The drumbeat is getting louder.

Last week, the New York Times reported that the broad outline of a health-care reform bill is starting to come into focus in Congress. Yesterday, E.J. Dionne Jr. argued in his Washington Post column that the political stars are lined up for a successful health-care push this year.

Expect more of the same in coming days and weeks. The train is leaving the station, we will hear. Get on board or be left behind, interested parties will be warned.

It’s a smart tactic. If passage of an Obama-style bill is all but inevitable, then those in a position to contest it are more likely to get out of the way. Why make what’s going to happen anyway more painful and costly than necessary?

But, of course, Obamacare is not at all inevitable. Indeed, at this point, it’s hard to see how Democrats, on their own, can the pass what they have promised.

Health-care policy isn’t hard if the only concern is handing out new subsidies for coverage. The Congressional majority certainly could coalesce around creation of some kind of plan to provide premium discounts for tens of millions of additional households. That’s the easy part.

What’s not so easy is paying for the added cost to the government — which is likely to be about $150 billion per year initially, and much more as the years go by.

Where will the Congressional majority find the money to pay for such an expensive program? The Obama budget plan targeted upper-income households, private health insurers, and drug companies, and suggested some modest Medicare payment reforms as well. But those offsets only totaled $634 billion over ten years, and Congress has already signaled that the suggested limit on the deductibility of home-mortgage interest and charitable contributions for upper-income households, a $300+ billion tax hike, is all but dead. The Medicare payment reforms seem likely to undergo a downsizing too when they are put under the political microscope. 

Senate Finance Committee Chairman Max Baucus has signaled an interest in taxing employer-paid premiums, but that is no slam dunk either. It’s hard to see rank and file Democrats taking on the political risk of taxing job-based health benefits “for the first time in history” in the face of vehement union opposition.

Fundamentally, the health-care bill the Congressional majority would like to pass would redistribute wealth from one segment of the population to another. The amount in question is likely to be $1.5 trillion or more over the coming decade. Presidential candidate Obama promised Americans with insurance his health-care plan would cut their costs by $2,500 per year. That’s what they are expecting still, as the president hasn’t told them otherwise since taking office. It does not seem inevitable that the public will readily go along with paying a hefty bill instead.



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