Magazine | April 19, 2010, Issue

Obama’s Waterloo

Yes, it may still be

Since Obamacare moved unsteadily over the first finishing line, liberals have been jubilant and conservatives wracked by variations on depression, including existential despair. This is a rare emotion on the right, and even when experienced, it tends to be expressed inappropriately. John Derbyshire’s hilarious We Are Doomed is the nearest thing to a conservative suicide note. Its exuberance undermines its professions of despair.

But the argument that socialized health care, once firmly established, will both ensure liberal majorities into the foreseeable future and starve the defense budget is a realistic prediction of a serious threat. In such circumstances, as Mark Steyn points out in his distinctive blend of hilarity and doomsaying, conservative parties in order to be elected would gradually cease to offer conservative policies. A generation or two later, conservatives themselves would die out or — let us look on the bright side — “evolve” into the sober half of a fully social-democratic political spectrum. And all this time, U.S. power in the world would be shrinking.

Hence an unusually passionate internal Republican debate over repeal. If Obamacare covers the euthanasia of conservatives, then it must surely be the aim of the GOP to repeal it. Replacing or reforming it would be fine, too, provided that what emerges is something very different from a state-financed and state-run health-care system. But here Republican despair springs its final trap: It is alleged to be impossible to repeal Obamacare (or any other government entitlement program) since the voters will never give up a “free” benefit, however costly it proves in taxes, freedom, or health.

Summary: Repeal is impossible. We are doomed.

The principal evidence for these assertions is the British National Health Service. Introduced in 1948 by a Labour government, the NHS was an instant success and within a short time it had become the nearest thing to a religion in post-Christian Britain. Its basic principle — that medical treatment should be free at the point of consumption — is sacrosanct. Its undeniable failings — e.g., long waiting times for elective surgeries for painful conditions — are blamed on the government of the day, never on the NHS itself. It is financially untouchable. All political parties now pledge either to increase or (in times of financial crisis and spending cuts) to “ring-fence” expenditures on the NHS.

This history seems to mount an irrefutable case for the inevitability of Obamacare. A former British minister of health, Enoch Powell (himself a strong devotee of free markets), seemed to concede the point when he said: “In the welfare state not to take away is more blessed than to give.” That concession, however, points to the first vital difference between the NHS in Britain in 1948 and Obamacare in the U.S. today: In 1948, nothing was taken away.

Almost everyone gained when the NHS came in. Working people and the poor had previously obtained decent health care from a patchwork quilt of public and private institutions: charity hospitals, government poor relief, and so on. The middle class paid for health care of a similar quality. Both now received such care “free at the point of consumption” (i.e., paid for out of taxation) and naturally felt like gainers. Only the very rich had previously enjoyed health care with frills. Most of them were rich enough to pay both higher taxes and their insurance premiums. And as F. Scott Fitzgerald never said: “The rich are different from you and me. They have accountants. And tax havens.”

By contrast, most Americans in jobs today (and their families) have good health-insurance policies. At best, they gain nothing under Obamacare; at worst — for instance, if they lose employer-provided insurance — they may feel like losers. Some of those now counted as winners — i.e., the wealthy or young non-insured — will also feel like losers if they are forced to buy insurance but remain inconveniently healthy. Above all, not even manifest beneficiaries of Obamacare get something “free.” They will still have to pay insurance premiums. So because Obamacare both “takes away” and does not “give,” it fails Powell’s test of inevitability.

#page#The second great difference is that the introduction of the NHS reflected the settled opinion of almost the whole of British society. Elite opinion was concerned about the health of the poor, and Tories as much as Labour were prepared to use state power to improve it. Neville Chamberlain, as health minister in the inter-war years, had brought in measures to boost working-class health. World War II promoted collectivism: By 1944, only a few classical-liberal eccentrics (Hayek being the best-known) objected to compulsory collective social provision. And thus, the main legislative lineaments of the 1948 National Health Service were actually drawn up by the Conservative Henry Willink, health minister in Churchill’s coalition government, and presented to Parliament in 1944. Small differences separated the two versions — Labour nationalized the hospitals that Willink had wanted to keep independent — but they were essentially the same comprehensive health service.

Obamacare is plainly not the result of universal agreement — and not merely because Republicans oppose it. Most Americans do so, according to most polls. Nor is it the practical expression of a universally accepted collectivist philosophy; even after the financial crisis, more Americans support free-market ideas than favor government intervention. It cannot therefore expect the instant but lasting popularity of the NHS.

The third difference between the two systems is the patients. Brits in 1948 were a deferential people in a much more hierarchical society. Rationing was part of their everyday lives. They believed a doctor when he said that nothing could be done for them. Most modern Americans get good health care. They have learned to expect it. They will complain if they don’t get it. So they will be much more critical of Obamacare than Brits have been of the NHS.

A final difference is that the NHS and Obamacare were introduced under very different financial conditions. The NHS was initially cheap — and it was forecast to get cheaper as people’s health improved and they needed less medical treatment. This forecast proved wrong for a devastating reason — namely, Powell’s first law (yes, it’s that man again), which states that spending on health care, unless restrained by price, is capable of rising to consume the entire national income. Thus, as patients demanded more, and as scientists invented more (and more expensive) treatments, there was a tendency for health-care spending to rise indefinitely.

This was disguised for a long time by various clever devices. Not until 1962 did a British government embark on a hospital-building program. It devoted almost all available finance to current spending. The NHS also succeeded in underpaying doctors by importing them from poorer countries (while British doctors left for Australia and the U.S.). And a local GP explained to me in the 1960s that he dealt with the problem of too many patients arriving in his surgery by simply assuming that they were healthy — unless they returned for a second visit.

By such devious methods, NHS spending was held down to 6 percent of Britain’s GDP as late as the 1970s. That helps to explain how Britain, though burdened with socialized health-care spending, was able to maintain a decent defense structure. America’s spending on health care even before Obamacare starts is in the mid-teens as a percentage of GDP. Even if that percentage falls, as the Democrats forecast, the federal share of it will almost certainly rise sharply — with the malign consequences for America’s world role that Mark Steyn forecasts.

And rise it will, as Powell’s first law predicts. As the British became less deferential, they demanded better services. NHS spending has risen to more than 9 percent of GDP. It will rise further. But because the system is inefficient, productivity is static. When asked what improvement a patient might personally see from this massive extra spending, a skeptical wag replied: “He’ll be treated by a richer doctor.”

Brits accept this because they were long ago corrupted by the free-lunch aspect of the NHS. Yet Obamacare is not even advertised as a free lunch. Unlike the NHS, it rests on people’s being required to pay. Is there an example of what happens when people are required to pay for health care? Well, yes: In 1988, Congress passed the Medicare Catastrophic Coverage Act to provide insurance for catastrophic illnesses and long-term nursing care. The act had bipartisan support. But seniors eligible under the law were asked to pay a premium ranging from $4 per month to $800 per year. When they rioted and attacked Rep. Dan Rostenkowski’s car, Congress promptly repealed the law.

Repeal is not impossible. It may even be Obama’s Waterloo.

– Mr. Hume is the pseudonym of a European writer on politics and health care.

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