Obama Will Ration Your Health Care

Think of his health plan as a federal HMO

People are policy. And now that President-elect Barack Obama has fielded his team of Tom Daschle as secretary of Health and Human Services and Melody Barnes as director of the White House Domestic Policy Council, we can predict both the strategy and substance of the new administration's health-care reform. The prognosis is not good for patients, physicians or taxpayers. If Mr. Daschle meant what he wrote in his book "Critical: What We Can Do About the Health-Care Crisis," Americans can expect a quick, hard push to build more federal bureaucracy, impose price controls, restrict medicines and technology, boost taxes, mandate the purchase of health insurance, and expand government health care.

In his book, Mr. Daschle proposes a National Health Board to regulate the way health care is provided. This board would have vast powers in regulating the massive federal health-care system -- a system that includes Medicare, Medicaid, and other programs. Under Mr. Obama, it is likely that that system will be expanded and that new government insurance for the nonelderly, nonpoor will be created. Given the opportunity, Mr. Daschle would likely charge the board with determining which treatments and drugs are cost effective and therefore permissible to use for patients covered by the government. And because the government is such a big player in the health-care market (46% of health-care spending comes from the government), the board would effectively set parameters for private insurers.

It is nearly certain that the process of determining which drugs and which treatments would be approved for use would be quickly politicized. The details of health-care policy may not be kitchen table conversation, but the fact that a Washington committee can deny grandma a hip replacement due to her age, or your sister a new and expensive drug, is. Health care is personal and voters will pressure lawmakers on access to care.

Liberal experts, Mr. Daschle included, believe that America needs to ration new technology and drugs. In his book, Mr. Daschle complains about overuse of new technology and praises the United Kingdom's National Institute for Health and Clinical Excellence (NICE), a rationing system that controls government costs. NICE's denial of care is legendary -- from the arthritis drug Abatacept to the lung cancer drug Tarceva. These drugs are effective. It's just that the bureaucrats don't consider them cost effective.

Americans will not put up with such limits, nor will our elected representatives. Mr. Daschle himself proves this. He punts the hard decisions about rationing to an unelected board. Yet his main proposals are not only about expanding subsidized programs to cover more people but about adding the massively expensive benefit categories of mental health, which has a strong lobby behind it, and long-term care, which is important to the broad middle class.

One of the great myths in health care is that the uninsured are responsible for driving up private premiums by shifting costs. Uncompensated care certainly shifts some costs to private payers. Yet these costs are actually quite manageable in the aggregate, akin to what retailers lose due to shoplifting. The major cost shift is from government programs -- Medicare and Medicaid -- to private plans. The government pays doctors to treat Medicare and Medicaid patients. But the rates it pays, on average, are less than the cost for providing care to these patients. This is why Medicaid patients, and increasingly Medicare patients, struggle to find doctors. Putting more people on these programs will destabilize the remaining private system and create a coalition for price and wage controls.

Americans will never tolerate this. Remember our managed-care experiment in the 1990s. It succeeded in its main goal of controlling costs without an aggregate reduction in health quality. But in asking Americans to limit their choices, it prompted a bipartisan act of Congress to provide patients with a Bill of Rights. Now Mr. Daschle proposes nothing less than a giant HMO with a federal bureaucracy setting the benefit plan.

Mr. Daschle's model is Massachusetts. But Massachusetts's plan is an unfolding disaster and demonstrates how Mr. Daschle's private/public model is merely a stalking horse for government-dominated health care. The headline claim is that the program has signed up 442,000 more people for health insurance. The reality is that 80,000 of these were simply put on Medicaid and 176,000 more on the taxpayer-subsidized plans. Costs have exploded, requiring additional tax hikes and the entire system is only possible due to sizable transfers from the federal government. The plans are so unaffordable that in 2007, 62,000 people were exempted from the individual mandate. So much for universal coverage.

The only way the Massachusetts plan will survive is with continued and increasing federal subsidies -- that is, tax revenue from the residents of other states. The only way Mr. Daschle's proposed plan would survive is with massive deficit spending -- that is, with taxpayer money from future Americans, many of whom are not yet born.

Mr. Daschle and the Democrats have spent years developing both the policy and political strategy to make the final push for taxpayer-financed universal health insurance. They have the players on the field, a crisis providing a sense of urgency, and a playbook filled with lessons learned from years of health policy reform disasters -- most recently that of HillaryCare in 1994.

The big questions for believers in private medicine are at this point political and strategic. With employers and most insurers reportedly on board with the new administration's desire for radical overhaul, who will step in to ask the tough questions? Will these issues get raised in time to provoke a meaningful, fact-based debate? Americans could easily find that Mr. Obama's 100-day honeymoon ends with a whole new health-care regime they hadn't quite bargained for.

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