The Next Stage of the Health-Care Debate

Published March 1, 2011

National Review Online

The last few weeks have seen something of a tactical change in the Obama administration’s approach to defending the health-care bill enacted last year. In two instances, the administration has admitted that the law is a hugely problematic and burdensome mess and given the appearance of a willingness to do something about it. But in both cases, that willingness turns out to be far less than it seems.

First, in a Senate Finance Committee hearing last month, HHS Secretary Kathleen Sebelius admitted that the CLASS Act — which is the new entitlement program for long-term care in Obamacare — is “totally unsustainable” as it’s laid out in the law. She then repeated the point before the House Ways and Means Committee, saying “we very much share the concerns that have been expressed that, as written into law, the framework of the program was not sustainable.” She insisted, however, that the law gives her the flexibility to completely redesign the program on her own, without any new authority from Congress, and that she could do it in a way that would make the program less than totally unsustainable.

The CLASS Act was basically a gimmick intended to game the CBO process so that the overall bill could be scored as reducing the deficit. The law says this new program would start collecting premiums five years before it starts providing benefits, so that within the ten-year budget window that the CBO is required to score it would turn out to have a net surplus and so help offset some of Obamacare’s other costs. But once the program really got going, it would very quickly start running huge deficits. Having passed the bill (in part on the back of this and other absurd “deficit reduction” claims), the Obama administration now wants to avoid the impression of being caught off guard when its fiscal assumptions collapse and so is acknowledging what has been obvious to basically all outside observers from the beginning: that the CLASS Act is a budgetary time bomb. So, as the New York Times put it (with a tone of credulity worthy of Pravda in its heyday), “administration officials, who played down such concerns 15 months ago, say they now share them.” Everyone’s entitled to a change of heart, right?

Then this week, President Obama himself seemed to signal another such change on the question of Obamacare’s impositions on the states. Speaking to a group of governors yesterday, the president said he would support legislation that would allow states to opt out of some of Obamacare’s requirements (including the individual mandate, the employer mandate, and the state exchanges) if they show they can achieve exactly the same results in some other way. Obamacare itself actually already contains such a provision, but it would allow states to apply for such waivers starting in 2017 — after these mandates and requirements have been in place for three years. Obama now says he would let states apply for waivers in 2014, when the new rules begin.

This change of heart, like the one regarding the CLASS Act, is a concession to the fact that the law’s requirements are understood by many state officials (of both parties) as immensely burdensome and problematic. But like the one regarding the CLASS Act, it is also not an actual concession in practice. The states would be required to show that their alternative policies would provide the same or greater insurance benefits to the same or greater number of people, presumably as assessed by HHS. So it allows no flexibility regarding ends, and therefore very little flexibility regarding means. In fact, while it would allow conservative-leaning governors essentially no freedom to move in the direction of greater competition and more consumer-driven health care (which conservatives tend to see as the actual path to reducing costs and therefore insuring more people while improving quality) it would give liberal-leaning governors significant freedom to move in the direction of more government control. Indeed, as the New York Times notes today, while the approach Obama supports would not allow for many consumer-driven reforms it “might allow interested states to establish a single-payer system in which the government is the sole insurer.” And of course, it would not actually tell governors exactly what they should do in advance but — in the pattern of the larger law, which is also powerfully evident in Sebelius’s claim to be able to make sweeping changes on her own — it would let HHS decide what counts and what doesn’t. As former HHS Secretary Mike Leavitt told the Washington Post:

Obama was essentially telling states, ‘We’ll give you permission to ask for permission sooner rather than later.’ What Republicans are saying is that we don’t want to have to ask for permission at all, because we can’t afford to build the system that you’ve laid out for us.

It seems that the administration has landed on a new way of dealing with the fact that the health-care debate will be far from over when the president is up for reelection next year. Rather than defend their health-care law, they’re going to say that it has many huge problems that they want to fix, but then allow for only those fixes that do not actually permit a different approach to our health-care financing crisis. They must hope that this will counteract the growing practical concerns about the law. But admitting that Obamacare is deeply flawed and that some major claims made on its behalf before it passed were false should have a very different effect: It should strengthen the case for repealing the law and replacing it with actual health-care reform.

Yuval Levin is Hertog Fellow at the Ethics and Public Policy Center and editor of National Affairs.

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