The Hillarycare Sequel to Obamacare

Published September 30, 2015

National Review Online

As Obamacare heads into its third full year of implementation and the 2016 presidential election campaign kicks into high gear, expect the law’s leading intellectual authors and defenders to shift their tactics from defense to offense. They want to solidify Obamacare’s reach and fulfill their original vision. Their continued aim is to cement the federal government’s control over American health care and the practice of medicine.

Hillary Clinton, the front-runner for the Democratic nomination for president in 2016 and the former secretary of state in the Obama administration, is the logical champion of the sequel to the Affordable Care Act because she paved the way for Obamacare with the plan she pushed as first lady in 1993 and 1994. She provided its intellectual origin.

The similarities between the original Hillarycare and Obamacare are striking.

Both plans were built around the concept of “exchanges” — originally called “Health Insurance Purchasing Cooperatives” in Hillarycare.

Both plans relied on an employer mandate.

Both had minimum federal benefit requirements, and federal preemption of the traditional state role in the regulation of health insurance.

Both saw an extensive role for federal agencies in establishing the health benefits that a consumer must have access to, and those services that wouldn’t be available.

The only real daylight that has ever been visible between Clinton and Obama on health care occurred in 2008, over the individual mandate. Clinton, campaigning for president, supported a mandate as part of her health-care plan. Then–senator Obama, also campaigning for president, opposed it and vigorously attacked Clinton over the issue, only to drop his opposition after getting elected. With that flip-flop, Obamacare became indistinguishable in all of its key features from the plan pushed by Hillary Clinton 15 years earlier.

So it is not surprising that Clinton is now campaigning to “build upon” Obamacare, mostly by trying to blunt the high cost of Obamacare’s regulatory excess with yet more costly regulation. Nor is it surprising that what she is promising sounds an awful lot like what Obama promised nearly seven years ago — free health care, with no consequences. In recent days, she proposed a $250 annual limitation on what people must pay for pharmaceutical products (with insurers presumably covering all costs above that amount and charging higher premiums as a result). She also wants to give everyone in the United States three free trips to the doctor each year, along with a $2,500 tax credit ($5,000 for couples) for people with high out-of-pocket expenditures. Who would pay for all of this?

She claims it would be paid by cost savings from painless government-imposed cost controls, especially on drug companies. But, of course, price controls are never “costless.” Access to new drugs will suffer. By definition, with price controls there will be less innovation and fewer new products to address the many ailments that afflict millions of patients every year.

And Clinton’s agenda will not stop there. She has signaled that she will continue the Obama administration’s plans to impose more government control on the provision of services, as well as adopt the cost-control agenda of the Democratic party’s top thinkers.

In a New England Journal of Medicine op-ed from January 2015, Health and Human Services Secretary Sylvia Burwell provided the roadmap for what lies ahead. Burwell announced that, as insurance enrollment was expanding due to Obamacare, it was time for her department to take the lead and “shape the way care is delivered” across the United States to cut costs and improve efficiency. In other words, HHS is launching more intrusive micromanagement of how providers organize themselves to care for patients.

HHS’s plan to  “shape” how health care is delivered centers on using Medicare’s purchasing power to coerce doctors and hospitals to conform to the government’s plans. The names of the various pieces of the initiative can sound benign – such as Accountable Care Organizations (ACOs), “bundled payments,” and “paying for performance” — but their effect is to force practitioners into government-sanctioned care arrangements. In the case of ACOs, which are government-regulated managed-care plans, doctors are now being coerced into joining them to get higher Medicare-reimbursement rates.

At the same time, Medicare’s beneficiaries are also being “automatically enrolled” into ACOs — forced to become patients of these networks, without their explicit consent. If their physician is in an ACO, so are they — by default. Thus, the Medicare bureaucracy has created a new vehicle built entirely on coercion rather than choice. Over time, it is quite predictable that ACOs will become the mechanism for more micromanagement of physician practices.

It will be far easier for HHS to regulate how providers deliver medical care when physicians mainly practice in large groups. Right now, it’s hard to control the nation’s doctors from a remote bureaucracy in Washington, because physicians still mainly practice medicine in small groups. There are too many of these small-group practices for HHS to control easily. But by coercing doctors to join large, and usually hospital-based, health systems — or by forcing them to become employees of ACOs — it will be much easier to control how care is delivered, because HHS will be able to impose rules on a much smaller number of health systems. It will then be up to the ACO or hospital to enforce HHS’s rules on their affiliated providers.

Some of the key architects of Obamacare, who are also advisers to Hillary Clinton, have come forward with explicit plans for giving the government even greater cost-control authority. Former Obama official Ezekiel Emanuel, along with a lengthy list of co-authors, has recommended more explicit, governmentally imposed cost controls on both public and private-sector health care, all in the name of cost control. The overall concept is called a “global budget,” and the implicit enforcement mechanism is the extension of the government’s regulated payment rates in Medicare to the rest of the health system.

The effect of this approach to cost control would be to export out of Medicare to employer plans and other insurance arrangements the many perverse incentives now embedded in Medicare’s regulated rates. The government has no real way to determine the right price for medical services, so it invents technocratic schemes to create the illusion of competence. The reality is a system that both overpays and underpays frequently — and thus misallocates resources.

These same themes were prevalent in Clinton’s last campaign for president, in 2008. Speaking at a campaign stop at the Broadlawns Medical Center in Des Moines, Iowa, she said:

It is time that we put patients, not drug companies and insurance companies, first. That means changing the way they do business. . . . Because ultimately, the American taxpayer pays for the development of a lot of these drugs through NIH grants and other kinds of research grants; we pay for the clinical trials, and then we pay the highest prices in the world. And we’re going to begin to rein that in.

She would go back to this line or argument often during the 2008 campaign and has brought it back again in her current quest for the White House.

Her populist message will have some political appeal, of course. There is a pervasive anti-business mood taking shape in the electorate. But the pandering should fall flat with many Americans. They were already promised reduced costs with Obamacare, and now most Americans are paying much more for their health care. They should be skeptical of more promises of cost-free health care courtesy of the federal government.

Moreover, Americans remain rightly uneasy about the massive expansion of the government’s overall role in the health system. Polls continue to show that more voters oppose Obamacare than support it for this very reason. They are right to have these concerns.

The central, driving theme of Obamacare is a massive shift of power and authority from states, employers, physicians, and individuals to the federal government. Only a small portion of that authority has been exercised to date by the federal bureaucracy. If Hillary Clinton is elected president, she will push her campaign proposals, but she will also build upon the Obama administration’s current plans to have the federal government run every aspect of medical care. That was the unfinished piece from her original vision, which formed the intellectual inspiration for Obamacare. Whatever remaining autonomy there is for private initiative in the health system would be wiped away.

An effective counter to this agenda must begin with a relentless critique of the disastrous consequences of government-run health care. The public agrees that the quality of health care would suffer greatly with the government fully in charge.

But opponents cannot just offer up critiques of Obamacare. The public wants effective health-care reform, just not the kind that passed in 2010 or what Hillary Clinton will promise. However, if there is no politically viable alternative in sight, it will not be possible to block the sequel to Obamacare, much less roll back what is already in place from Obamacare 1.0.

It is crucial, therefore, that the 2016 GOP presidential nominee offers a plan to the country that provides access to secure insurance to everyone in the United States without handing to the federal government all power and authority over the health system.

Fortunately, most of the work to develop such a plan has already been done. Senators Richard Burr and Orrin Hatch and Representative Fred Upton have introduced a credible health-care proposal, as has House Budget Committee Chairman Tom Price. These plans would broaden insurance enrollment, give those with preexisting conditions affordable options for coverage, and slow rising costs by introducing intense price competition and consumer choice. They would meet these key objectives without the massive expense and governmental overreach of Obamacare. The GOP candidate should build upon the themes and ideas developed in these plans.

There’s reason for optimism, despite the many challenges with rolling back a law that was enacted more than five years ago. Hillarycare perished in 1994 when Americans realized it would introduce too much governmental control into the health system. The public remains wary of Obamacare for the same reason.

There is still an opening to offer a better way forward. But that window of opportunity will close after 2016. So now is the time for the GOP candidates to begin countering Obamacare and Hillarycare with plans of their own.

— Scott Gottlieb is a physician and resident fellow at the American Enterprise Institute. James C. Capretta is a senior fellow at the Ethics and Public Policy Center and a visiting fellow at the American Enterprise Institute.

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