The Logical Extension of Obamacare

by Yuval Levin
Last month, the Peterson Foundation invited six think tanks to offer their ideas for fixing our country’s fiscal problems. Reading through the proposal submitted by the Center for American Progress this morning (which starts on page 40 of this document), I ran across an extraordinarily bold and shameless acknowledgement of what some of us on the right have thought must be the left’s natural next step after Obamacare. We have assumed that, having created a powerful price-control and rationing board for Medicare (the IPAB) and a system of federally designed state exchanges for selling insurance to younger Americans (into which, as this recent McKinsey study shows, tens of millions of those who now have employer-based coverage will flow), they would then use these new mechanisms to give the federal government the authority to impose price controls and rationing directly on private insurers, simply putting the whole sector under government control without formally bothering to outlaw it. Well, the CAP proposal states:
In our plan, aggressive implementation of PPACA, along with some enhancements to its existing cost-control mechanisms, will result in dramatically lower health expenditures, both for the federal government and overall. But predicting the exact effect of the myriad test programs and reforms in the new health law is fraught with uncertainty. Thus we also include a failsafe mechanism that would ensure significant savings. Our failsafe would be triggered if, starting in 2020, total economywide health care expenditures grow at a rate faster than the economy. Should that happen, we would empower the IPAB to extend successful reforms in Medicare and other public programs to insurance plans offered in the health care exchanges and then potentially to all health care plans, such that the target is met. This will ensure that costs are constrained across the health care sector, preventing cost-shifting and maintaining access for all.
We can no longer pretend we haven’t been warned. I frankly assumed we would not see a public articulation of this idea until the Obamacare cost and displacement crisis really hit—and so might never see it if we succeed in repealing the law. But here it is, strengthening the case for repeal all the more.

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