The topic of the day seems to be health care, with both ends of the ideological spectrum hyperventilating over the significance of the 60-40 Senate vote at 1 this morning, with Washington blanketed in snow, to go ahead with debate on Senator Reid's legislation. A final vote is reportedly scheduled for 7 p.m. on Christmas Eve. Leave aside what it says about the Senate that they work such odd hours. And leave aside, for now, all the special political deals for certain states and even individual hospitals that were cut as a way of purchasing the support of individual senators for the legislation – the New York Times has an excellent account of some of these deals in today's paper.
On the Democratic side, I got an e-mail on Saturday from the director of the White House Office of Health Reform, Nancy-Ann DeParle, boasting that after "decades of gridlock," now "our country is closer than ever to passing the single most important piece of domestic legislation since Social Security." Her e-mail complains about what she calls "excessive insurance company profits," which is pretty remarkable given that Ms. DeParle herself reportedly made $6 million serving on medical boards, and given that the director of the health care staff of the Senate Finance Committee worked until recently as vice president for public policy and external affairs at WellPoint, a big health insurance company. Usually when someone talks about "excessive" profits I ask for a definition of excessive, but the Senate bill actually provides that in terms of the percentage of insurance company revenues that have to be spent on providing health care. Luckily, there were no such constraints on "excessive" profits during Lawrence Summers' $5.2 million a year, one-day-a-week job at the D.E. Shaw hedge fund, or Rahm Emanuel's two-and-a-half year, $16.2 million stint as managing director in the Chicago office of Wasserstein and Perella. In the Obama administration, it's apparently okay to make profits buying and selling shares of health insurance companies or helping them to buy and sell each other, but not by actually controlling or operating such a company. Aetna's shareholders, who were publicly promised by President Obama speaking to their CEO, "Aetna is a well-managed company and I am confident that your shareholders are going to do well," are now going to have to do well without making any excessive profits.
On the Republican side, several people have forwarded to me the letter to Senator Ben Nelson of Nebraska from Dr. Becky Hollibaugh of Warren Memorial Hospital in Friend, Nebraska, complaining that as a doctor of osteopathy (a different degree than an M.D.) she makes less than a dishwasher repairman, and denouncing Mr. Nelson as a "socialist-coddling coward." The Wall Street Journal complains that "the federal government will control 55% of total U.S. health spending under ObamaCare, according to the Administration's own Medicare actuaries." Actually, what the Medicare actuaries say (pdf) is that under the current law, "public expenditures (principally Medicare and Medicaid) are estimated to represent 52 percent of total NHE in 2019." If the Senate passes Senator Reid's Patient Protection and Affordable Care Act of 2009, the actuary says, "the public share would be between 51 and 55 percent, depending on how health expenditures by Exchange plans were classified. Similarly, expenditures from private health insurance, which are estimated to be 31 percent of NHE under current law, would fall in the range of 28 to 32 percent." The Journal says "federal government" when it means all government, and it neglects to mention that the actuary says the government share will be somewhere between 50 and 55% of the national health expenditure in 2019 whether or not ObamaCare passes. And remember, the total government share of health care spending in America was 45.3% in 2007.
So what's the takeaway? For my friends on the left, please, a little humility is in order. "The single most important piece of domestic legislation since Social Security"? First of all, it hasn't passed yet. Second of all, despite all the self-aggrandizing statements of the White House, it's just hard to see ObamaCare as more significant than the Civil Rights Act of 1964, the creation of Medicare and Medicaid in 1965, or the Reagan tax cut of 1981. Remember, the main thing the bill does is take the government share of health care spending to about 55% from about 45%, a shift that probably would have happened anyway under the current laws and trends. As a political matter, the Democrats will now own health care under the Pottery Barn Rule, which, as the Republicans found out with Iraq, is not without its risks. And, in the humility department, Democrats may want to remember as they pat yourselves on the back about the expansions in health insurance coverage that these expansions are paid for with tax increases on productive Americans and with money borrowed from China and from future generations against promises of cost savings that may or may not materialize as promised. It's easy to be generous while spending other people's money.
For my friends on the right, please, a little perspective is in order. From 1980 to 2007, a 27-year period in which there were 19 years of Republican presidents and eight of Democrats, total government health care spending in America grew to $1.036 trillion in 2007 from $106 billion in 1980. Even adjusting for inflation, that's a huge increase in government spending, and it far outpaces the growth in GDP or population during that period. The government share of health care spending also grew from 1980 to 2007, to 46% or 45% from about 42% in 1980. You haven't seen Republicans campaigning to eliminate Medicare, Medicaid, or the veterans health system (at least since Ronald Reagan denounced socialized medicine back in 1961), so it's a bit hard to understand why government health spending at $1.036 trillion and 45% of total national health expenditures in 2007 was nothing to get upset about, while increasing it to 55% -- an increase that would happen anyway partly because of the aging of the Baby Boom generation – is a trigger for rants about how Senator Nelson is a "socialist-coddling coward." The same Republicans who backed the TARP to put hundreds of billions of federal dollars into banks and automakers now say that putting that kind of money into health care amounts to socialism? As George Melloan said, "What transpired under a Republican administration, albeit with a Democratic Congress, in the second half of 2008 will discredit Republican claims to be for small government for years to come."
The health care overhaul may yet run aground in differences between the House, whose left-wingers want a strong "public option,' and the Senate, whose centrists oppose such a "public option." But it isn't too soon for free-market forces – my friends on the right – to start scouring the history books for examples of cases here and overseas in which big government programs that became too expensive, distorted incentives too much, or were obvious failures were finally repealed. Welfare reform and the abolition of the Interstate Commerce Commission in the 1990s, pension reform in Poland, also in the 1990s, and the repeal of prohibition in 1933 are just a few examples. President Obama is spending a lot of time on thinking about exit strategies – winding down the Bush administration's commitments in Iraq and through TARP. Someday, if it becomes clear that the costs are unsustainable and the outcomes unacceptable, some successor to Mr. Obama will have to craft a similar exit or wind-down strategy for the government's health-care overreach. If I can understand the frustration and anger on the right, it is because usually it takes years of failure and great human costs to reach the levels of public disapproval necessary to motivate such a rollback.