Repeal or "Fix"
The debate over Obamacare narrows.
10:35 AM, Oct 5, 2010 • By JEFFREY H. ANDERSON
Less than a month before the midterm elections, candidates of both parties seem to have found something on which they can agree: There’s no sense in trying to defend Obamacare as it was passed by Congress and signed into law by the president. Instead, the debate over the federal health care overhaul has devolved into a contest between two opposing positions, staked out (for example) in one Senate race by candidates Rand Paul (R., Ky.) and Jack Conway (D., Ky.) and aptly characterized by Conway on Fox News Sunday: “I’d like to fix [Obamacare], and [Paul] wants to repeal it.”
The fact that we’ve gotten to this point is quite telling. When President Obama signed Obamacare into law on March 23, he wasn’t predicting that a debate over fixing versus repealing would characterize the lead-up to the November 2 midterm election. Yet, just a few months after the law’s passage and more than three years before it would be implemented in any meaningful degree, even Obamacare’s supporters are granting that it’s broken. (If not, why the need to “fix” it?)
The question, then, would seem to be whether Obamacare is really worth trying to fix, and a review of its effects in three key areas might help provide the answer.
Federal spending: The widely publicized 10-year price-tag for Obamacare estimated by the Congressional Budget Office (CBO) was $938 billion. The CBO has since bumped up its estimate by $115 billion, bringing the tally to $1.053 trillion. However, this is only the CBO’s estimate for 2010 to 2019, while Obamacare wouldn’t go into effect in any meaningful way until 2014. According to the CBO, less than 2 percent of Obamacare’s publicized “10-year” costs would hit before its fifth year.
For Obamacare’s real first decade (2014 to 2023), the CBO projects that its costs would be $2.0 trillion, including nearly $300 billion in 2023 alone (meaning that, at the end of Obamacare's real first decade, costs would still very much be rising).
Moreover, the CBO never presented this $2.0 trillion estimate for Obamacare’s real first decade — or the more widely reported $938 billion estimate for what essentially amounts to Obamacare’s first six years — as the total cost of Obamacare. Rather, this estimate was for the “gross cost of coverage provisions.” The White House and Congressional Democrats highlighted this number, and (partly because the CBO doesn’t present the total number in anything like a clear fashion) the press ran with it. But the CBO doesn’t present this as Obamacare’s total tab, which would be higher still.
With America already facing a $13 trillion national debt, how would the Democrats pay for this (to the extent that they would)? According to the CBO, they would pay for it by siphoning $1.1 trillion (from 2014 to 2023) out of Medicare and other federal health care programs and spending it on Obamacare — and by raising taxes and fines on the American people by a cool $1.0 trillion (in addition to the tax increases that will result from their letting the Bush tax cuts expire).
Health costs: The CBO says that, in the individual market, the typical American family’s annual health care premiums by the end of this decade would be 10 to 13 percent higher under Obamacare than they would be without Obamacare — an increase of $2,100 per family, per year. Medicare’s chief actuary says that Obamacare would also raise overall nationwide health costs from 17 percent of the gross domestic product (GDP) today to 21 percent of GDP by the end of the decade — making costs $311 billion higher than they are projected to be without Obamacare.
Even President Obama is now saying that Obamacare is “going to increase our costs,” and “we knew that” all along. But pre-passage, the president said nothing of the kind. Instead, he insisted that Obamacare would bend the cost-curve down. The Washington Post reported that he “flatly” told them that he would not “accept a bill that doesn't ‘bend the curve’ on rising health-care costs.” Helpfully, senatorial candidate Conway now says, “We need to find some ways to control costs”—a curious statement in the wake of his party’s having just passed a mammoth, $2 trillion overhaul that would allegedly do just that.
Existing insurance coverage and quality of care: Famously and repeatedly, President Obama told Americans: “If you like your health-care plan, you can keep your health care plan.” But the facts suggest otherwise. Shortly after passage, the New York Times reported that AT&T would be “evaluating prospective changes to the active and retiree health care benefits offered by the company,” and that other employers might well follow suit. Documents provided by Verizon, according to the Times, said, “‘To avoid additional costs and regulations, employers may consider exiting the employer health market and send employees’ to state-run insurance exchanges, where people can buy insurance.”
In June, figures leaked from the Obama administration estimated that, under “mid-range” projections, 51 percent of employees would not be able to stay on their current health care plans. Under the “best case” scenario, 39 percent would lose their plans; under “worst case” projections, 69 percent would lose them. Among small-business employees, projections were even worse: between 49 and 80 percent would lose their plans.
Last month, the American Council on Education wrote that Obamacare “could make it impossible for colleges and universities to continue to offer student health plans,” which currently provide coverage to more than 4.5 million students nationwide.
Meanwhile, Obamacare’s rather brazen Medicare cuts threaten Medicare coverage in general and Medicare Advantage coverage in particular. According to the CBO, in its real first decade, Obamacare would cut Medicare Advantage by more than $250 billion. That represents average cuts of about $25,000 for each of the 10 million Medicare Advantage enrollees. These cuts haven’t yet kicked in, but their impact is already being felt. Last week, the Boston Globe reported that Harvard Pilgrim Health Care “will drop its Medicare Advantage health insurance program at the end of the year, forcing 22,000 senior citizens in Massachusetts, New Hampshire, and Maine to seek alternative supplemental coverage.” As a senior executive for the company observed, “We became concerned by the long-term viability of Medicare Advantage programs in general.... We know that cuts in Medicare are being used to fund national health care reform.”
But Medicare Advantage plans aren’t the only Medicare benefits that Obamacare threatens. The Medicare chief actuary projects that, by the end of the decade, Obamacare’s cuts in Medicare hospital reimbursement rates (inaccurately called "productivity adjustments") will cause them to fall below even Medicaid reimbursement rates. The chief actuary writes, “roughly 20 percent of Part A [hospital] providers would become unprofitable within the 10-year projection period as a result of the productivity adjustments” and therefore “might end their participation in the [Medicare] program.”
The Real Choice
The general sense of American citizens echoes the official government projections that Obamacare would increase federal spending and taxes, increase health costs, and jeopardize existing health coverage. In a recent Associated Press health care survey, conducted by Stanford University and the Robert Wood Johnson Foundation, respondents — by a tally of 67 to 10 percent — said that five years from now, Obamacare would require them to pay higher, rather than lower, taxes. By a tally of 60 to 11 percent, they said that Obamacare would raise, rather than lower, their health costs. By a tally of 67 to 8 percent, they said they are currently receiving “good” or “excellent,” rather than “poor” or “very poor,” health care — and by a tally of 65 to 7 percent, they said they have “good” or “excellent,” not “poor” or “very poor,” health insurance. But respondents reluctantly expect both their own health care and other people’s health care to get worse, rather than better, under Obamacare.
Such results are all the more compelling because likely voters have consistently opposed Obamacare more vehemently than Americans as a whole, yet the AP survey didn’t even screen for registered voters, let alone likely ones. Furthermore, only 25 percent of the survey’s respondents were Republicans, compared to 37 percent Democrats. That 2-to-3 ratio won’t remotely reflect the actual turnout in November.
The real choice, however, that voters face in November is not truly between repealing and fixing Obamacare. It’s between repealing and expanding ObamaCare. As Yuval Levin has written in these pages:
In other words, the “public option” would return, and government-run health care would result. Thus, as Levin concludes, “The nature of the new law means that it must be undone — not trimmed at the edges.”
It’s hard to imagine that you could fix something that would increase federal spending by over $2 trillion in its real first decade and, in return for that extraordinary investment, would raise health costs and lower the quality of care. And you couldn’t. Rather, the strategy of Obamacare supporters is to try to keep the legislation alive long enough to expand it into a true “single-payer” system, a true government monopoly — and to get themselves reelected in the process. But, for voters, there is a way out.
Imagine if you had only barely started construction on a house that you knew you couldn’t afford, wouldn’t like, hadn’t designed, and (once built) would be stuck living in for the rest of your life. And imagine that the house wouldn’t even keep standing on its own unless you continually rebuilt it in ways that would make you like it even less. Then imagine that, at this early date, you still had a choice: You could either scrap the project and walk away, free and clear, or else tell the same architect who designed the house so poorly in the first place to go ahead and build it while making a few tweaks along the way to try to improve things. That’s essentially the choice Americans face with Obamacare.
The only way to fix Obamacare is to repeal Obamacare.