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Frum Forum


Obamacare: The Morning After

March 24, 2010

By David Gratzer

At the beginning of their 1972 series, after the fumbled opening games, Bobby Fischer settled down and played a game so brilliant and imaginative that, at the end, even Spassky stood up and applauded.

President Obama has pulled off a staggering political win. Yes, the final vote in the House was narrow and tight, but he managed to push through his health-reform plans. Frankly, his political victory is awesome. He adds to an impressive list: wrestling the nomination away from the former First Lady, winning a landslide in 2008, championing the stimulus package.

But governance is more than simply politics and political victories. It is also about policy and ideas.

Let’s be clear, for all the hot talk about repeal and sweeping Republican victories in the fall, much of this legislation is here to stay. Sunday was a game changer. As my colleague and editor David Frum has noted, it’s difficult to see how some of the immediate benefits of the bill — think about filling in Medicare’s donut hole — would be scrapped any time soon.

But at the end of the day, Obamacare may be strong medicine — totalling almost a trillion dollars in ten years, according to CBO scoring — but it’s almost surely an unhelpful remedy.

Republicans and conservatives need to regroup and rethink. Healthcare policy is important, with huge implications on deficit spending, corporate competitiveness, and economic vitality. And, let’s not forget: it affects real people.

American healthcare faces three fundamental challenges:

  1. Moving past employer-based health insurance.
  2. Rising out of wage and price controls during the Second World War, we are straddled with a healthcare financing arrangement that the majority of us have � but no one really likes. The system needs to be modernized. Back in 2008, Senator McCain floated an alternative, but his ideas were light, and the policy prescriptions were loose. Moving forward, we need to move past employer-based health insurance.

  3. Getting better value for money.
  4. OMB Director Peter Orszag is right � we don’t get value for our money. Health insurance premiums have more than doubled since 2000, yet not even the slickest lobbyist would suggest that healthcare is twice as good. New and more aren’t necessarily better and more effective. In other sectors of the economy, prices fall with time, and quality increases. Healthcare stands as an exception, and that needs to change.

  5. Improving health (not just healthcare coverage).

After the Massachusetts reforms passed, the New England Healthcare Institute noted in a paper that Boston has “lots of health care, not enough health.” The authors dubbed it the Boston Paradox: despite massive expenditures on healthcare, people in the state were no healthier, plagued by preventable illnesses. The only problem with that observation is parochialism; nationally, Americans spend more than ever on healthcare, but suffer in large numbers from basic health woes, in part because of the obesity epidemic. Americans need to be healthier, not just covered.

Obamacare flirts with a partial solution to the first challenge (it won’t work), assumes a panel of experts can solve the second challenge (it can’t), and doesn’t do much about the third.Here’s my point. They’ve scored a brilliant political win, but the challenges of reforming American healthcare largely remain. Back during his address to the joint session of Congress in September, Mr. Obama noted that he wanted to be the last President to talk about health reform. He won’t be.

For my part, I’ll be writing more on these three challenges in the coming days. And weeks. And years.

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