A project of the Galen Institute

The Triumph of Politics Over Health

James C. Capretta
ObamaCare Watch
Fri, 2010-10-08

During the yearlong debate over the president’s health care plan, critics repeatedly warned of the dangers of centralizing so much power in the federal government. It would, they argued, lead to stifling bureaucracy, irrational one-size-fits-all decisions, and needlessly burdensome regulatory hassles and requirements. Worst of all, it would introduce politics into everything. Instead of focusing on what’s best over the long run for patients, consumers, and those paying the health care bills, politicians would use their newfound power to increase their leverage still further, to win political fights, and to enhance their images as powerbrokers dispensing benefits to needy and otherwise helpless constituents.

President Obama and his allies called this kind of criticism overblown hyperventilation from opponents determined to say no to everything.

Well, after just six months of implementation, it’s clear that even ObamaCare’s fiercest critics underestimated just how badly and how quickly the new law would distort decision-making in American health care.

The latest sign of how bad things are — and how bad they will get — came in the form of a New York Times story indicating that the Department of Health and Human Services (HHS) has issued waivers to dozens of employers and insurers to allow them to avoid, for the next year at least, some of ObamaCare’s costly new insurance requirements. According to the Times, the HHS waivers have gone to companies such as McDonald’s and Jack in the Box, as well as to selected health insurers and union-sponsored plans. These companies and plan sponsors were warning HHS that the new health law’s ill-advised and inflexible burdens would force them to drop coverage altogether — a fact that the legislation’s critics had predicted before passage, but that the administration denied. All totaled, about one million Americans are enrolled in plans that are now exempt from the costly new requirements; it seems likely that number will only grow in coming weeks with more HHS waivers.

The Obama administration is trying to have it both ways here. On the one hand, out on the campaign trail, the administration is touting these new insurance requirements as sacrosanct protections for a long-suffering public. Indeed, the president and HHS Secretary Kathleen Sebelius have dared Republicans to pursue repeal because that would mean stripping Americans of the new insurance rules that Democrats believe are popular with voters. At the same time, however, these protections apparently aren’t so important that they can’t be unilaterally stripped away by the Obama administration itself for whole segments of the currently-insured population, based on what suits the administration’s political interests. And it’s abundantly clear that what the administration wants to avoid at all costs are headlines between now and the midterm election confirming what the public already suspects: that these new requirements are going to have the perverse effect of prompting large numbers of employers and insurers to leave the health insurance marketplace, and thus decrease choice and increase the number of uninsured Americans. Some argue that the administration’s waivers are a sign of pragmatic flexibility. But what they really show is that the administration has the power to treat people and companies differently based on political expediency. For every McDonald’s and politically-connected union plan, there are scores of others with less political clout that will either drop their coverage with little fanfare or be forced to scale back their other operations — and perhaps hire few workers — based on the costs imposed by the regulations. As my colleague Yuval Levin has noted, the powerful and politically connected get their way, while everyone else is forced to fall into line.

It’s obvious from the recent behavior of Secretary Sebelius that HHS believes it is now calling the shots in health care. In September, she issued a threat to health insurers that was astonishing. Some insurers had the audacity to note in their rate filings with various states that premium increases for next year were due in part to implementation of some of the much-touted insurance requirements favored by the administration. It’s common sense that imposition of new, mandatory coverage of certain medical bills will increase premiums by some amount. These insurers were just telling it like it is. But that was apparently too much for an administration determined to peddle the fictional narrative that somehow benefits can be bestowed by the government at no cost to anyone. And so the new health care emperor issued a warning: any insurer caught telling the truth like this again in public would be barred from participating in the government-managed marketplace set to become operational in 2014.

This is no idle threat. For many insurers, if they can’t sell to the large number of customers who are expected to get their coverage in the new government-managed “exchanges,” they will go out of business. So, in a very real sense, the HHS Secretary is threatening the livelihood of working Americans, all to advance the partisan political objectives of the administration.

It’s hard to overstate how damaging this kind of heavy-handed behavior will be to the effective and efficient operation of American health care. The federal government has made it abundantly clear that it is now the choke point for all important health care decisions. No one can do anything of consequence if it doesn’t conform to a grand federal plan. States don’t control insurance markets anymore. Employers no longer really run their own employee benefit plans. Insurers are rapidly becoming nothing more than public utilities that effectively work for the Department of Health and Human Services. And hospital systems and physician groups no longer can decide for themselves what constitutes effective medical care.

The result will be stagnation and inertia. If the government wants to run everything, all the other players are going to stand back and let them try. But that will be a disaster for patient care. A distant, centralized government simply cannot micromanage a health system for 300 million people well. It will be clumsy, and slow to adapt. Innovation will cease to occur. There will be no risk-taking or organizational initiative. Any changes will have to be initiated from Washington, which means almost everything will simply get frozen in place.

The only winners in all of this are the politicians who crave power. They now have much more of it to wield, and they have already shown they will do so to serve their own interests, not those of patients.

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