The Magazine

A Fine Mess

The substance of the Reid bill is as bad as the process that produced it.

Jan 4, 2010, Vol. 15, No. 16 • By JAMES C. CAPRETTA and YUVAL LEVIN
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In the Democrats' rush to pass some kind of health care legislation before public opposition overwhelms them, tactics have long since overtaken substance. Their only remaining goal is to pass a bill, any bill. As the endgame has unfolded, all eyes have been fixed on the unseemly process taking place in the halls of Congress: backroom legislating with rushed votes to minimize scrutiny and public review; secret deals with deep-pocket industries; outright and outlandish vote buying using taxpayer funds; procedural maneuvers to shut off debate and prevent meaningful amendments.

The process has been ugly--so ugly that it has distracted both voters and legislators from the product being cobbled together, which if anything is even worse than assumed. A look at the bill itself--at what exactly will be unleashed on the country if this legislation becomes the law of the land--reveals an appalling disaster in the making, for its own sponsors no less than for the rest of the country.

The litany of conservative concerns is familiar by now, and the latest version of the bill contains the full parade of horribles: massive tax increases in bad economic times, new mandates on employers that will depress hiring, fewer options for families buying insurance, new layers of bureaucracy between doctors and patients, upward pressure on premium costs, and a failure to address the causes of exploding health care costs more generally. But this latest iteration of Obamacare is a nightmare not only for conservatives. The fine details don't look much better from the left.

The mix of insurance regulation and subsidies at the center of the various versions of the Democrats' health care bills until this most recent iteration was designed to channel Americans toward a government insurance program of one sort or another. The idea was to end risk-based insurance by making it essentially illegal for insurers to charge people different prices based on their health, age, or preexisting conditions; to force everyone to participate in the system so that the healthy do not wait until they're sick to buy insurance under the new rules; and then to introduce a government-run insurer that, whether through Medicare's negotiating leverage or through various exemptions from market pressures, could undersell private insurers and so offer an attractive "option" to people being pushed out of employer plans into an increasingly expensive individual market.

The goal was to get a large swath of the public insured by the government, and so gradually create a socialized insurance system. Conservatives opposed this scheme because they believe a public insurer would not be able to introduce efficiencies that would lower prices. Liberals supported it because they think a public insurer would be more fair and more effective.

But in order to gain 60 votes in the Senate, the Democrats have now had to give up, for all practical purposes, on any version of that public insurer, while leaving the other components of their scheme in place. The result makes no sense whatsoever--not to conservatives, not to liberals, not to anyone. Rather than reform a system that everyone agrees is a failure, it will subsidize that system and compel participation in it--requiring all Americans to pay ever-growing premiums to private insurance companies, most of which are for-profit, while doing essentially nothing about the underlying causes of those rising costs. The thought that, after all of this, a Democratic Congress is going to force Americans to send their premiums to the despised insurance industry and then subsidize that industry to boot has sent the left into such a state of frenzied recriminations it could sink the whole enterprise yet.

And that is by no means the only problem for the left in this bill. The mad rush to pass something obscures a crucial component of the bill's design that could prove very problematic for Democrats. For all of President Obama's insistence that we must have action now, and all the talk by congressional Democrats about the terrible costs of delay, the key components of the Senate bill would actually not go into effect for four years. Essentially all of the spending provisions and insurance reforms--including the individual mandate to purchase health insurance, the employer mandate to provide it, the state insurance exchanges, the federal subsidies for coverage, and the Medicaid expansion--would only go into operation in 2014.