Critical Condition

Health-Care Reform: Where Do We Go From Here?

President Obama has been committed to health-care reform since he became a player in the 2008 presidential race. In fact, it was his top domestic-policy issue during the campaign.

Now nine months into his presidency, he is still very resolute about getting a health-care-reform package passed before the end of this year. So far, he has given 29 speeches — and in each talk he keeps reiterating that his goal is universal coverage for all Americans. He wants to reduce the cost of health care (now about 16 percent of the nation’s GDP) and to decrease the number of uninsured (about 46.3 million, according to the Census Bureau). These two goals are not compatible.

The Senate Finance Committee approved a health-care bill Tuesday in a 14-9 vote. The Congressional Budget Office (CBO) estimated that Chairman Baucus’s plan would cost $829 billion over ten years and that it would reduce the federal deficit by $81 billion by 2019. The bill would be supported in part by tax hikes: In 2013, a new 40 percent excise tax on “Cadillac” plans offered by insurance companies — $8,000 for individuals and $21,000 for families — would go into effect; the bill also includes an excise tax on insurers, pharmaceutical companies, medical device companies, and clinical labs that would go into effect in 2010. The bill also includes an individual mandate that increases from $200 in 2014 to $750 for individuals by 2017. And the bill would increase the number of Americans on Medicaid and reduce reimbursements for those seniors on Medicare.

Now the real work begins. Earlier this year, three House bills and one other Senate bill passed out of committee. The Democrats’ task now is to weave those four bills and the new Baucus plan into one bill. For starters, Senator Harry Reid (D., Nev.) will meld the Senate Finance Committee plan into the HELP committee’s bill. The CBO estimated the latter to cost about $1.3 trillion.

But the debate between the Senate and the House plans involves disagreements over fundamental questions — such as whether insurance companies should be taxed on “Cadillac” plans, and whether there should there be a surtax on the wealthy and a “windfall profits” tax on insurance companies. And while liberal Democrats want a “public option” — a government-run health-care plan that would compete against private insurers — some of the more conservative Democrats want a trigger that would activate a public option if health-care costs don’t decrease, or for the states to set up their own public options.

It is unclear to me where health-care reform will end up but I do know that if President Obama gets his wish, health care will ultimately be more expensive and, as a consequence, government will have to set a global budget and care will be rationed. Taxes for all Americans will increase, deficits will rise, and the United States will be on its way to a Canadian-style, single-payer “Medicare for All” system with long waiting lists, denied care, and lack of access to the latest drugs and diagnostic treatments.

— Sally C. Pipes is president and CEO of the Pacific Research Institute. Her latest book is The Top Ten Myths of American Health Care: A Citizen’s Guide.

Sally C. Pipes is the president, CEO, and Thomas W. Smith Fellow in Health Care Policy at the Pacific Research Institute. Her latest book is The False Promise of Single-Payer Health Care (Encounter). Follow her on Twitter @sallypipes.