Politics & Policy

Obamacare’s False Dawn

The public option is a recycled means of pretending away Obamacare's costs.

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.

The public option is back. Its Lazarus act is hailed as a sign of how rosy the health-care debate looks for Democrats.

August is but a sepia-tinged memory. Passage of a sweeping bill is now considered a lock by the wisest and most conventional Beltway pundits. And legislation may even include the most shining prize of all, the public option that liberals — no matter what the talking points for public consumption — consider a way station to the Valhalla of a government-controlled system.

The flush on Obamacare’s cheeks, though, is not necessarily a sign of health. The return of the public option speaks to a key — perhaps decisive — substantive weakness in the legislation. It’s no accident that the public option came roaring back in the immediate aftermath of an insurance-industry-commissioned study arguing that Obamacare would increase premiums.

The study made Democrats yelp so loudly because it hit on such a sensitive spot. The Democrats must make people believe their inherently unbelievable promise of vast new public benefits for free. Since this defies common sense, the determinedly commonsensical American people don’t buy it. A Gallup Poll finds that 49 percent of people expect their costs to get worse under Obamacare, compared with 22 percent who say they will get better. The skeptics are right.

States such as Maine, Vermont, Massachusetts, and New Hampshire have imposed Obamacare-style regulations, and have seen premiums jump for everyone. If people can wait to get sick until they obtain insurance, fewer healthy people will carry insurance. The cost of an older and sicker insurance pool naturally increases. To prevent this spiral of “adverse selection,” Obamacare imposes a mandate requiring all adults to buy insurance. But Democrats in the Senate Finance Committee — sensitive to its politically unpalatable requirements and fines — watered it down. 

This only stokes the cost problem. According to the National Journal, MIT health economist Jonathan Gruber says that under this looser regime, the young and healthy will drop their insurance, and premiums will go up by 10 percent. Sarah Bianchi, the chief domestic-policy adviser for the Kerry and Gore presidential campaigns, fears the same dynamic. 

This is exactly the point made by the much-reviled insurers. How to address this concern and placate a restive Left? Revive the left-for-dead public option. Nancy Pelosi insists that the public option will achieve “the lowest cost for America’s working families,” who shouldn’t be left on their own “to negotiate with insurance companies.”

This is yet another chimera. To tamp down fears that a public option is a vehicle for a government takeover, the House bill has a relatively tepid version that will supposedly only attract 10 million people. If so, that won’t help the broader middle class much. If a more “robust” public option is designed to drastically undercut private insurance rates and pull in more people, the costs of the squeeze it puts on doctors and hospitals will be passed along to the private system. In this scenario, the public option will be like Medicare, a program beggaring the private system even as it grows out of control itself.

In short, the public option is a recycled means of pretending away Obamacare’s costs. When the Office of the Actuary at Health and Human Services said the House bill would increase system-wide costs, the Democrats had a ready response — the bill is already being changed. The perfect bill that will bring greater coverage coupled with miraculously declining costs is always just over the horizon, a shimmering mirage of wishful thinking and willful dishonesty.

Eventually, Democrats will have to settle on a final bill and won’t be able to sweep its weaknesses under the rug of the next drafting process. Whatever its final form, it will raise taxes, cut Medicare, and — in all likelihood — increase insurance premiums. If the past few months of polling are any guide, it will be under 50 percent approval. Its benefits, such as they are, won’t kick in until 2013, while the taxes will start immediately.

If this is inevitable, what’s a heavy lift?

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

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