The coming Democrat retreat on health care

Charles Krauthammer:

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Conventional wisdom always makes straight-line projections. They are always wrong. Yes, Obama's aura has diminished, in part because of overweening overexposure. But by year's end he will emerge with something he can call health care reform. The Democrats in Congress will pass it because they must. Otherwise, they'll have slain their own savior in his first year in office.

But that bill will look nothing like the massive reform Obama originally intended. The beginning of the retreat was signaled by Obama's curious reference -- made five times -- to "health-insurance reform" in his July 22 news conference.

Reforming the health care system is dead. Cause of death? Blunt trauma administered not by Republicans, not even by Blue Dog Democrats, but by the green eyeshades at the Congressional Budget Office.

Three blows:

(1) On June 16, the CBO determined that the Senate Finance Committee bill would cost $1.6 trillion over 10 years, delivering a sticker shock that was near fatal.

(2) Five weeks later, the CBO gave its verdict on the Independent Medicare Advisory Council, Dr. Obama's latest miracle cure, conjured up at the last minute to save Obamacare from fiscal ruin, and consisting of a committee of medical experts highly empowered to make Medicare cuts.

The CBO said that IMAC would do nothing, trimming costs by perhaps 0.2 percent. A 0.2 percent cut is not a solution; it's a punch line.

(3) The final blow came last Sunday when the CBO euthanized the Obama "out years" myth. The administration's argument had been: Sure, Obamacare will initially increase costs and deficits. But it pays for itself in the long run because it bends the curve downward in coming decades.

The CBO put in writing the obvious: In its second decade, Obamacare significantly bends the curve upward -- increasing deficits even more than in the first decade.

This is obvious because Obama's own first-decade numbers were built on arithmetic trickery. New taxes to support the health care plan begin in 2011, but the benefits part of the program doesn't fully kick in until 2015. That excess revenue is, of course, one time only. It makes the first decade numbers look artificially low, but once you pass 2015, the yearly deficits become larger and eternal.

... In the end, Obama will have to settle for something very modest. And indeed it will be health-insurance reform.

To win back the vast constituency that has insurance, is happy with it, and is mightily resisting the fatal lures of Obamacare, the president will in the end simply impose heavy regulations on the insurance companies that will make what you already have secure, portable and imperishable: no policy cancellations, no pre-existing condition requirements, perhaps even a cap on out-of-pocket expenses.

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They will pay for this by requiring young people who are not buying insurance to do so. It is easy to make car insurance mandatory, because you can deny licenses for the car and the driver. It will be much harder to effect that kind of control on health care.