Obamacare's self-serving exaggerations, political fantasy

Robert Samuelson:

The most misused word in the health care debate is "reform." Everyone wants "reform," but what constitutes "reform" is another matter. If you listen to President Obama, his "reform" will satisfy almost everyone. It will insure the uninsured, control runaway health spending, subdue future budget deficits, preserve choice for patients and improve quality of care. These claims are self-serving exaggerations and political fantasies. They have destroyed what should be a serious national discussion of health care.

The health care conundrum involves a contradiction that the administration steadfastly obscures: In the short run -- meaning four to eight years -- government cannot both insure the uninsured and rein in health spending. Here's why. The notion that the uninsured get little or no care is a myth: They now receive about 50 percent to 70 percent of the health care of the insured. If they become insured, their health care would rise toward 100 percent; that would increase both government and private health spending, depending on how the insurance is provided.

Until health costs are better controlled, expanding insurance coverage will be expensive. The president talks endlessly about the need to limit spending and eliminate waste. These are worthy goals. But changing the way medical care is delivered and paid for would take years and involve disruptive and unpopular measures. Patient co-payments might increase; networks of doctors and hospitals might displace individual practices; the tax exclusion for employer-paid health insurance might be curbed. Obama downplays the obstacles. Any "reform" isn't likely to compel needed changes, partly because it's not clear what will work.

Evaluations of proposals reflect this reality. The Congressional Budget Office judges that the legislation in the House would, through expanded Medicaid and subsidies for private insurance, cut the uninsured to 17 million in 2019 from 46 million in 2007. But the cost would be $1 trillion over a decade; of that, $239 billion would add to the budget deficit. Worse, the costs would rise faster than the sources of financing, including a tax on the wealthy. In 2019, the projection's last year, the deficit would be $65 billion. Assuming that deficit rises 4 percent a year, the cumulative shortfall in the second decade would total about $800 billion.

But Obama sees all blue sky. "Here's what reform will mean for you," he said at a recent rally. "It will mean lower costs and more choices and coverage you can count on. Health insurance reform will save you and your family money," he said. (Note: Except for subsidies, it's doubtful families will experience savings anytime soon.) And later: "We'll also change incentives so that our doctors and our nurses can finally start providing patients with the best care and not just the most expensive care. And if we do that, then reform ... will lower our deficits in the long run."

Contrast Obama's reassuring rhetoric with this exchange at a congressional hearing between Sen. Kent Conrad, D-N.D., chairman of the Senate Budget Committee, and Douglas Elmendorf, head of CBO.

Conrad: "From what you have seen from the product of the committees that have reported, do you see a successful effort being mounted to bend the long-term cost curve?"

Elmendorf: "No, Mr. Chairman. In the legislation that has been reported, we do not see the sort of fundamental changes that would be necessary to reduce the trajectory of federal health spending by a significant amount. And on the contrary, the legislation significantly expands the federal responsibility for health care costs. ... The (cost) curve is being raised."

...

One of the reasons that prices keep going up is the lack of market discipline because of the distortions to the free market caused by the availability of health care insurance. The proposals of the Obama administration only exacerbate that problem by adding more demand. Health saving accounts would return some market discipline to the decision process when teamed with catastrophic health insurance for the big stuff.

The Democrats problem is they do not trust the market forces to reach results they favor so they take a control freak approach to a problem they can never really control rather than by rationing care and taking the decision away from the patient and the doctor.