Book Review: The Truth about Obamacare

Health care reform may prove to be President Obama’s signature domestic achievement — as well as the undoing of the Democratic Party. Contrary to his claim that Americans would grow to love Uncle Sam as doctor-in-chief, public support for statist “reform” continues to fall. Few Democrats in marginal congressional districts are talking about health care on the campaign trail.

Sally Pipes, president of Pacific Research Institute, paints a grim picture of the future of American medical care. She hails from Canada and tells stories of medical refugees from up north. There is Danny Williams, premier of the province of Newfoundland, who earlier this year flew to Florida for heart surgery. Three years ago, Ms. Pipes writes, “former Liberal Member of Parliament Belinda Stronach traveled to California for a late-stage breast cancer operation — even though, while in office, she had opposed any privatization of Canadian health care.” Europeans come to America, too.

The reasons are obvious. Ms. Pipes warns that care like that in Canada and other socialized systems, characterized by ancient equipment, doctor shortages, long waiting times and old drugs, is America’s future. Several countries actually are liberalizing their state-controlled systems. But “Obamacare takes the country in an entirely wrong direction, toward universal systems that have already been tried, with poor results, in Canada and Europe,” Ms. Pipes writes.

Obviously, American health care is not perfect. Federal tax policy — the exemption of health insurance from the income tax — has promoted the expansion of private insurance. Medicare, Medicaid and other government programs have increased public funding of health care. The result is a third-party payment system, driving “a third-party wedge between consumers and insurance companies,” distorting the entire market, Ms. Pipes notes.

No surprise, this system doesn’t work well. The obvious answer is to reduce the government’s role. As Ms. Pipes observes, “Any attempt to fix our health care system by pouring in more tax dollars for more government programs that employ more government bureaucrats is, to put it plainly, unlikely to succeed.”

But Democratic “reform” turned out to be just that. Ms. Pipes summarizes what’s in the nearly indigestible 2,562-page legislation. The measure includes a mandate to purchase health insurance, subsidies for those who do and penalties for those who don’t, a requirement that employers offer health insurance policies, health “exchanges” for the purchase of approved policies, and regulations — endless regulations — of health insurance. Finally, she writes, there are “taxes, taxes, and taxes.”

Ms. Pipes puts the issue into perspective when she observes:

“This huge new entitlement, which features more nooks and crannies than an English muffin, promises to provide insurance to 34 million previously uninsured people. Left unsaid is that despite Obamacare’s sweeping scope and stunning cost, an estimated 23 million Americans will still be uninsured. So, after the creation of 159 new agencies, the promulgation of 2,562 pages of bureaucratic regulations, and the spending of $2.5 trillion in tax dollars, two-thirds of those uninsured still will be. Only in government could that be considered a victory.”

The bulk of The Truth About Obamacare analyzes the details of the Obama program and the problems it is supposed to fix. What of the uninsured, for instance? The numbers commonly tossed about have little to do with medical reality because many of these people are on or eligible for government programs, are here illegally or are wealthy people who prefer to self-insure. Even the much smaller number of long-term uninsured receive health care, just not in the best or most efficient manner.

America spends more on medical care per person than any other country, but that alone means little. The United States is a wealthy nation, and most people highly value good health. The problem is that America’s third-party payment system is inefficient. Thus, the objective of “reform” should be to make spending more efficient, not arbitrarily reduce outlays.

Unfortunately, The Truth About Obamacare makes for grim reading. Medicaid is a mess. The insurance mandate is unconstitutional — at least, if the Constitution is still relevant to American government.

The “reform” bill reinforces reliance on employer-provided insurance, which has done so much to encourage cost-plus medicine. The regulatory-intensive exchanges will set “the stage for a government takeover” of the system, Ms. Pipes warns.

“Comparative effectiveness research” (CER) sounds benign, but it creates a basis to ration health care. Ms. Pipes points to similar policies in the United Kingdom, warning that CER “could also lead to a stifling of innovation. It could force medical researchers to focus on developing treatments that are more likely to be approved, rather than treatments that are likely to save lives.”

The new legislation creates a long-term care benefit, the CLASS (Community Living Assistance Services and Support) Act, which will be an expensive, pay-as-you-go Ponzi scheme like Social Security. Writes Ms. Pipes: “Future generations of taxpayers can look forward to shouldering billions upon billions in debt to pay for this new long-term entitlement.”

The legislation undercuts consumer-directed care — high-deductible plans and health savings accounts, which encourage patients to make cost-conscious choices. At the same time, Uncle Sam’s expensive intrusiveness will drive ever more doctors, particularly in primary care, into retirement. Of course, there will be high taxes to pay for all the new spending.

The Truth About Obamacare closes with a positive agenda. The start, obviously, however improbable, is to repeal of Obamacare. Then federal policy should encourage increased individual purchase of health insurance, expanded Health Savings Accounts and vouchers for poor people who don’t have insurance.

Congressional Democrats are understandably running away from their legislative handiwork. Sally Pipes details how the president and Congress have seized more control over our health care while increasing its cost. It is an accomplishment of which only a determined statist could be proud.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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