Politics & Policy

Obama’s Rationing Plan

President Obama recoils when his adversaries call his health-care plan a “government takeover” or suggest it will lead to bureaucratic rationing of care. He insists it would do nothing of the sort and dismisses such criticism as unfounded partisan rhetoric.

The president’s defensiveness is understandable: He knows that his plan is unpopular, in large part because the public deeply distrusts the federal government he wants to put in the driver’s seat. Among voters’ greatest concerns is that a health-care bill approved by Congress would lead to arbitrary government cost-controls that would make it more difficult for patients to get care when they need and when they want it.

Which is why the president’s latest health-care gambit is puzzling.

#ad#At the eleventh hour, President Obama has put yet another new idea on the table — the so-called federal Health Insurance Rate Authority — which will only deepen the fears of an anxious electorate, and rightfully so, because the express purpose of this authority is to give the federal government final say over the premiums private health insurers can charge their customers.

Perhaps the president simply could not resist the short-term political value that endorsing such an idea would open up for him. His “closing argument” for passage of his health-care plan certainly gives credence to this theory: His latest stump speech can be summarized as a demagogic harangue against the profits of private health insurers, which he now blames for practically every failing in American health care.

Or perhaps he felt he needed to shore up enthusiasm among House liberals. After all, he is asking them to support passage of the Senate bill, and many liberals find that measure insufficiently activist for their taste.

But whatever the motive, rolling out this idea at this time will almost certainly make the average voter even more suspicious of what Democrats are up to.

Once upon a time, the president seemed to believe that the rise in health-care costs was a function of many complex forces in the health sector. And that is why he hailed last year’s “deal” with doctors, hospitals, medical-device companies, drug companies, and insurers as a milestone in his “bend the cost-curve” drive.

Now, however, he is saying that the solution to costs is much simpler than that. All that’s needed is a federal authority to set insurance-premium rates, and painless cost control will soon follow.

But what happens if the premiums the government allows are insufficient to cover the medical costs of an insurer’s enrollees? After all, the federal government isn’t saying that insurers can diminish their coverage. To stay solvent, insurers will almost certainly argue that the government has to do something about the underlying costs of care. And, given the track record, the government’s predictable response will be to extend price controls even further into the health sector, perhaps by allowing all insurers to piggyback on Medicare’s regulated rates for doctors, hospitals, and others. But these kinds of price controls aren’t painless. They only work to hold down costs by driving out willing suppliers of services. Demand would be unchanged — if anything, demand will be stronger than it would have been without artificially deflated prices. The natural outcome is that, in time, there would be fewer hospitals, clinics, and physicians willing to take care of patients at the government’s arbitrarily low reimbursement rates.

The worst fears of the American public would then be confirmed. Government cost-control — even in the form of harmless-sounding “premium caps” — leads inexorably to waiting lists and inferior care.

The president and his allies are not principally on a mission to improve Americans’ health care — they are on an ideological mission to expand the power of government over Americans’ lives. This latest presidential power grab confirms that fact.


The Editors comprise the senior editorial staff of the National Review magazine and website.

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