Politics & Policy

Laws of the Universe vs. Obamacare

The intractable truth is that getting millions of new people health insurance is not costless.

EDITOR’S NOTE: This column is available exclusively through King Features Syndicate. For permission to reprint or excerpt this copyrighted material, please contact: kfsreprint@hearstsc.com, or phone 800-708-7311, ext. 246.

If only the laws of the universe didn’t make it impossible to conjure something out of nothing. In a magical world free of such encumbrances, Democrats would be spared the bother of hiding the inevitable costs of Obamacare.

The latest gambit of Democrats in the Senate and perhaps in the House is to take roughly $250 billion out of health-care reform — for Medicare payments to doctors — and spend it in a separate bill. This instantly makes Obamacare appear cheaper, although its impact on the federal budget will be precisely the same. This isn’t even competent three-card monte. It’s the logic of the spendthrift who has maxed out on his Visa and MasterCard but thinks it’s frugal to put a new $6,000 Samsung 65-inch LCD flat-screen TV on his American Express card instead.

Every year, Medicare payments to physicians are supposed to fall. Congress always temporarily defers the cut. The House version of Obamacare scrapped the cut altogether, a reason it had so much red ink. The Baucus bill deferred it for the first year (at a cost of $10.7 billion), then pretended Congress would subsequently cut doctors payments a drastic 25 percent. Without this otherworldly assumption, the Baucus bill would increase the deficit by roughly $150 billion over ten years.

That violates the Obama pledge not to increase the deficit for health care by one dime by 1.5 trillion dimes. So Democrats plan to spend the dimes elsewhere. Problem solved. In this Orwellian spirit, the Associated Press reports that the separate measure will free up another $10.7 billion in the Baucus bill, “money that could then be spent on other priorities.”

Why stop there? If all the subsidies and other costs are removed and passed separately from the Baucus bill, it becomes a $900 billion deficit-reduction measure, and Obamacare can be advertised as the world’s most affordable entitlement.

The intractable truth is that getting millions of new people health insurance is not costless. New insurance regulations intended to benefit the sick and uninsured will increase premiums for everyone else. Supporters of the Baucus plan implicitly respond, “Well, yes, that’s why the bill has subsidies.” But the subsidies are tightly limited to keep from exploding the deficit.

If the subsidies go up, the new taxes will have to go up. And those are already causing a revolt on the Left. In a revelatory moment, the unions argue that a tax on insurance companies offering high-priced “Cadillac” insurance plans will be passed along to consumers and hit the middle class. In this, they embrace a long-standing conservative argument that corporations don’t pay taxes, their customers do. Perhaps for the first time ever, the head of the AFL-CIO thinks Milton Friedman has a point.

The Joint Committee on Taxation estimates that 87 percent of the tax would fall on Americans making less than $200,000 a year. Other Baucus taxes on drug companies and device-makers will be similarly passed along. The No. 2 Democrat in the Senate, Dick Durbin, says the insurance tax will have to be reduced. He told the AP that will cost money, “adding that he did not know where it would come from.” That could be Obamacare’s motto.

This is the choice: Either premiums for middle-class people go up with limited compensating subsidies, or generous subsidies are funded with even more hidden middle-class taxes, or — most likely — some noxious combination of both.

Any of these choices is wrong politically. Democrats must, then, deny there’s a cost to most people and hide it however they can. At the same time they attempt to stuff a massive new entitlement inside the politically necessary constraint of a deficit-neutral price tag of less than $1 trillion. They are like the movers who can’t fit the couch through the door frame and keep backing it up and trying it a different way.

It’s not going to fit. For that, blame the laws of the universe.

Rich Lowry is the editor of National Review. © 2009 by King Features Syndicate

EDITOR’S NOTE: This article has been amended since its inital posting.

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