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Health Care Reform Loses Its Mojo

Many Democrats in the House and Senate were uncomfortable with the legislation taking shape on the energy and health care reform packages, created for the most part by the most left-wing members of the House and Senate -- many of whom hail from the coastal states. The politics of George Miller, Henry Waxman, Nancy Pelosi, Ed Markey, and Barney Frank is not what got the Democrats their majority in the House, and Barbara Boxer and Chuck Schumer are not role models for many of the newly elected Democratic senators in 2006 and 2008. Democratic members from more conservative districts in the flyover zones slowed down the legislative process on both cap and trade and health care reform, and got some changes to the bills in the committees. But public opposition to the bills has hardened, particularly the health care reform bill, and the anxiety of Democrats in swing districts is rising. Many House Democrats are hoping that the Senate kills cap and trade, and either kills health care reform or produces a more palatable and much smaller package than the House version that made it through three committees.

In recent days, Connecticut Senator Joseph Lieberman indicated that it might not be a good idea to consider a major health care overhaul this year, given the still unsteady state of the economy. Wisconsin Senator Russ Feingold commented this week that he doubted any bill would come up before the very end of the year, and maybe there would be no bill, period. There is the appearance of a breakdown in the will of some Democrats to fight for a bill, given the public resistance to the reform effort and the diminishing returns from the expensive campaign to sell it.

The huge increase in the estimate for the federal deficit for fiscal 2010 (now $1.5 trillion) and for the next ten years (now over $9 trillion, with a much higher CBO estimate sure to follow) has also complicated the health care reform effort. The history of federal health care entitlements is that the actual cost of each expansion was far higher than the original estimate, and in some cases multiples of the estimated cost. No rational observer believes that 45 million more people can be covered with a cost to the government of “only” a trillion dollars over ten years.

Add to this that liberal Democrats are pushing for a public insurance option that would compete for the enormous book of business of over 160 million privately insured Americans -- and not just to provide subsidies for the uninsured. According to estimates by the respected Lewin Group, the public option would drive many of the now privately insured out of the private insurance system. Given the cost experience of Medicare and the serious over-utilization problem that has been endemic to the Medicare system since its creation in the mid-60s, the potential for a crushing addition to entitlement spending with a public option is real.

Americans are increasingly, and rightly, concerned about federal spending.

Addressing the federal deficit is now the number one issue for Americans, with health care reform registering barely half as many mentions and cap and trade far down the list. There are approaches to health care reform that are consistent with cost control, but they are absent from the Democrats’ bill. Tort reform could take a slice out of over-utilization in both the Medicare and private insurance systems. Allowing insurance companies to sell across state lines, with far fewer mandates for covered services, could significantly reduce the cost of insurance. Taxing the value of a corporate provided health insurance benefit, and giving individuals the choice of a tax-free voucher as well as higher salary in exchange for choosing an individual policy, would lead to far more comparison shopping and lower insurance cost.

Democrats want people to think health care is free and that you can get more people covered for less. But so long as most people have rich, comprehensive insurance packages, whether government or private market, and think somebody else is paying for it (the government, the corporation, wealthy taxpayers), the delivery system won’t change, individual and physician behavior won’t change, and costs will spiral.

Americans are smart enough to understand that the government’s approach to bringing costs down will eventually have to be a sledgehammer -- the rationing and delayed care which is the case in the foreign health care systems Americans are most familiar with, Canada's and Britain's. It is no wonder that for older Americans it was a short trip from rationing to fear of euthanasia and speeding the elderly along their way, as is already the case in Oregon.

Until this week, I thought the Democrats’ huge advantage in Congress was so strong that a health care reform bill was still likely this year, despite public opposition. Now I think the odds are 50/50 at best. I read the decision by Attorney General Eric Holder to appoint a special prosecutor to look into alleged abuses by CIA interrogators as an act of desperation -- a bone for the left-wing base as the prospects for a health care bill acceptable to the base disappear. The Obama team wants to keep the base motivated and on its side. If they can’t deliver the next great entitlement, they seem to be betting that the base still hates George Bush and the Iraq war more than they love the public option. As to the impact of the investigation of CIA behavior on national security, the administration seems unconcerned. Regrettably, mistakes in this area do not just produce budget deficits.