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TRANSCRIPT
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Centennial ReviewEditor, John Andrews
Principled Ideas from the Centennial Institute
Volume 3, Number 5 • May 2011
Publisher, William L. Armstrong
Sally C. Pipes is president of the Pacic Research Institute in San Francisco.She was previously with the Fraser Institute in Vancouver, BC. Her books includeMiracle Cure: How to Solve America’s Health Care Crisis , The Top Ten Myths
of American Health Care , and The Truth About Obamacare . She grew up inCanada and is now a U.S. citizen. This essay is based on her lecture at ColoradoChristian University on February 18, 2011.
Centennial Institute sponsors research, events, and publications to enhancepublic understanding of the most important issues facing our state and nation.By proclaiming Truth, we aim to foster faith, family, and freedom, teach citizen-
ship, and renew the spirit of 1776.
When Canadians’ demand for health care proved far greaterthan the government anticipated, policymakers had to se
a global budget in order to control costs. The result has
been long waiting lists for care, rationed care, and a lack
of access to the latest treatments and procedures. In 2010
according to Canada’s Fraser Institute, the average wai
from seeing a primary-care doctor to getting treatment by a
specialist was 18 weeks. Americans are not used to waiting
and don’t want to wait.
When it came to passage of the Affordable Care Ac
however, President Obama, Speaker Pelosi, and Senate
Majority Leader Harry Reid did not seem tocare what Americans wanted. In a Rasmussen
poll prior to the vote, 55 percent were not in
favor of the legislation.
The people’s dissatisfaction was increasingl
evident in the Tea Party movement and
town-hall meetings, climaxing in the 2010
election. The new Republican House quickly voted to
repeal Obamacare. But the Democratic Senate voted
against repeal—and a presidential veto awaited the bill in
any case.2
Shaky Pillars
Let’s look at President Obama’s main pillars in this far-
reaching legislation: universal coverage, reducing the cos
of health care, and the individual mandate. Fourteen
pillars are described in my book The Truth About Obamacar
(Regnery, 2010), but these three are central.
According to the administration, the Affordable Care Ac
will make it possible for 34 million of the 50.7 million
uninsured Americans to be insured by 2019. Ofcial
estimate that 18 million of them will be added to Medicaid
the program for low-income Americans.3 The rest wil
receive a subsidy from the federal government to help
OBAMACARE: WHAT NOW? WHY IT IS FAILING AND
HOW TO REPLACE IT
By Sally C. Pipes
March 23, 2011, marked the
rst anniversary of Obamacare
becoming law. “We have to pass the
bill so we can nd out what is in it,”
said Speaker Nancy Pelosi before
Congress voted on the 2,500-pagePatient Protection and
Affordable Care Act. It
passed, and we found out.
This essay will outline key components of the
legislation, explain why it will be disastrous for
our country, and offer solutions that will keep
America’s health care system the nest in the
world.
Americans want affordable, accessible, quality health
care for everyone. How do we achieve that? One vision
for reform focuses on empowering doctors and patients.
The other focuses on increasing the already large role
of government through mandates, subsidies, taxes, and
controls.1
Unfortunately, it is this latter vision that Barack Obama
favors. Prior to becoming president, he repeatedly
advocated a single-payer, government-run system—what
the late Senator Ted Kennedy called “Medicare for all.”
After taking ofce, Mr. Obama gave 58 speeches on his
goals for reforming health care so as to provide universal
coverage and reduce costs.Canada Isn’t the Answer
The United States spends 17.6 percent of GDP on health
care—one-sixth of our economy—and Obama contends
that number is much too high. He says our example should
be Canada and its single-payer system, which only spends
10.4 percent of GDP on health care. But most Americans
don’t realize that this percentage is what the Canadian
government determines it can afford to spend on health
care.
Americans
don’t want to
wait 18 weeks
for a specialist.
W e s t
C o n s e r v a
S u m m i t 2 0
M o r e S p e a k e r s A d d e d
R e s e r v e T o d a y - S e e P
a g e
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CENTENNIAL REVIEW is published monthly by the Centennial Institute atColorado Christian University. The authors’ views are not necessarily those ofCCU. Designer, Danielle Hull. Illustrator, Benjamin Hummel. Subscriptions freeupon request. Write to: Centennial Institute, 8787 W. Alameda Ave., Lakewood,CO 80226. Call 800.44.FAITH. Or visit us online at www.CentennialCCU.org.
Please join the Centennial Institute today. As a Centennialdonor, you can help us restore America’s moral core and preparetomorrow’s leaders. Your gift is tax-deductible. Please use theenvelope provided. Thank you for your support.
- John Andrews, Director
them buy insurance in the state-based exchanges that will
be set up in 2014.4 Yet the nonpartisan Congressional
Budget Ofce (CBO) has estimated that, by 2019, 23
million Americans will still be uninsured. So much for the
president’s goal of universal coverage.
On bending the cost curve down, Mr. Obama wanted to
be able to sign a bill that cost no more than $900 billion
over the rst 10 years. He didn’t achieve that either. First,
the CBO forecast puts the cost of Obamacare at $940
billion over the same period.
Second, that forecast itself is low, since major
features that will drive up the cost of health
care do not come into effect until 2014. These
include setting up the state-run insurance
exchanges, federal subsidies, expansion of Medicaid, elimination of discrimination based
on pre-existing conditions, and the hiring of government
employees to staff the boards and commissions.5
When you take all of these factors into account, it is likely
that the Affordable Care Act will cost in the range of $2.5
trillion in its true rst decade, 2014 to 2024. Obamacare is
the largest entitlement program to hit America since the
Great Society. So much for the president’s goal of reducing
costs overall. Nor does the legislation guarantee lower costs
for you personally. Contrary to the president’s oft-repeated
statement that premiums for the average family will declineby $2,500, the CBO stated after passage in March 2010
that they will increase by $2,100.
Then there was Obama’s mantra that “if you like your
health insurance and you like your doctor, nothing will
change.” The chief actuary of the Centers for Medicare
and Medicaid Services in his own administration, Richard
Foster, not only told Congress that the bill “won’t hold
costs down.” He also admitted that it “won’t let everybody
keep their insurance if they like it.”
Pushback by Judges and Lawmakers
The individual mandate, forcing people to purchas
insurance or pay a ne, is probably the most contentious
part of the legislation. Several lawsuits over the
constitutionality of the mandate and the entire law have
been led. In one case led by Virginia’s attorney general,
and in another led in Florida by 26 states along with the
National Federation of Independent Business, federa
judges have ruled against Obamacare. Three other judges
have upheld the legislation.
Under the U.S. Constitution, Congress has the authority
to levy taxes on the American people but not the power
to force individuals to purchase a good or service in the
private market. This is the key issue in these cases. It i
not clear how the Supreme Court will ultimately rule, but
if the mandate or the entire law is overturned, it will be
a victory for limited government—and for the American
people. There is no question that they do not want the
government to be in charge of their health care.
It is important that the Republicans in the House andSenate keep up the pressure for full repeal and replacement
of this legislation. If the GOP wins the presidency and
Congress in 2012, there is a good chance that Obamacare
could be overturned in 2013. There is a precedent: the
Medicare Catastrophic Coverage Act was repealed in 1989
In the meantime, while the
constitutional challenges move ahead
the House is pursuing strategies to
repeal parts of the legislation and to
defund it. The tax on medical devices
the Independent Payment Advisory
Board, and the long-term-care component (known as the
CLASS Act) are all candidates for repeal. The burdensome
1099 requirement for business transactions over $600 has
already been repealed. Denial of funding for Obamacare is
also important, since it would halt implementation of such
provisions as the major Medicaid expansion, the hiring of
new IRS agents, and federal subsidies to help lower-income
people buy insurance.
Agenda for Genuine Reform
If the Patient Protection and Affordable Care Act isrepealed by Congress or annulled in the courts, what then?
It can be replaced with practical and viable solutions tha
Universal coverage?
No. Lower costs?
No again.
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STATE LEGISLATORS
IN A QUANDARY
By Mark Hillman
Even before 2010, tackling healthpolicy at the state level was not easy.Federal tax law narrows the options, asSally Pipes explains. And people haveexpectations that are economically unrealistic, because we’ve transformedhealth “insurance” into a forced savingsplan to nance routine procedures.
Economists dene an “insurable event” as something that occurs without warning, is unlikely to occur, andis undesirable. We understand this for all other types of insurance, but we expect health insurance to pay for themedical equivalent of tune-ups and oil changes.
Well-meaning legislators forbid insurers from denyingcoverage or raising rates based on pre-existing conditions —only to nd that doing so makes health insurance lessaffordable for younger and healthier customers.
Mandates that require insurance companies to coverpreventive examinations are touted as cost-savers. Butthey reduce costs only for the few in whom they detect aserious illness. For the vast majority, preventive screeningsnecessarily increase costs.
Under the misnamed Patient Protection and AffordableCare Act, state legislators can no longer debate health carepolicies on their merits. Instead, they must consider themultitude of uncertainties created by federal law.
Some implore state lawmakers to pass nothing thatacknowledges Obamacare, condent that the Supreme Court will nd its individual mandate unconstitutional. Thoughperhaps the safest course politically, this is tantamount tobetting all your chips on what Justice Anthony Kennedy had for breakfast.
It’s no small risk. The Heritage Foundation has warnedthat “the sooner a state declares ‘non-compliance’” withObamacare, the sooner the federal government will beginto impose its own regulations.
So others believe that states should act swiftly to preservetheir own authority rather than allow the federal government
to usurp that role. The challenge is to enact “defensive”policies—doing the minimum to achieve compliance— while thwarting federal intervention into state policy.
If insurance policy weren’t sufciently problematic beforeObamacare, today’s options are even worse. ■
Mark Hillman championed market solu-
tions for health care during his tenure in the
Colorado Senate, 1999-2005. He later served
as State Treasurer. He is now a wheat farmer
on the Eastern Plains, a news columnist, and a
Centennial Institute Fellow.
Voices of CCU
Centennial
Institute
Colorado Christian University
really would lead to universal coverage and lower costs. This
would put America on the road to providing affordable,
accessible, quality health care for all. The agenda for
genuine reform should include:
• Make each policy-holder’s health insurance his own,
just like long-term care, home, car, and life insurance.
Insurance should not be linked to one’s employment.
• To effect this, change the federal tax code so that employees
no longer get insurance fromtheir employers. Current law,
while it gives employees a
pre-tax benet, ties people to
their jobs. If they lose their
job, they lose coverage, since
insurance is not currently portable. If they then go into
the individual market, they will have to purchase coverage
with after-tax dollars. By xing this distortion, we can allow
the growth of the individual insurance market.
• Permit the purchase of health insurance across state lines,
further encouraging a competitive marketplace.
• Temporarily increase federal funding to state high-risk
pools (about $25 to $50 billion would be needed) so that
the eight million Americans who are chronically ill with no
health insurance for two years or more can get affordable
coverage until a properly functioning individual market
evolves.
• Encourage states to do medical malpractice reform by
capping non-economic damages and punitive damages.
According to Pricewaterhouse Coopers, the cost of
doctors practicing defensive medicine is about $210 billiona year. Medical malpractice reform as enacted in Texas has
signicantly reduced frivolous lawsuits and what doctors
have to pay for insurance.
• Encourage states to reduce costly mandates and
regulations on insurance companies, which add signicantly
to the cost of a plan. Currently, there are about 2,100 such
mandates across the nation.
• Expand tax breaks for Health Savings Accounts.
• Voucherize Medicare and Medicaid.
Who Do You Want in Control?
But suppose the Affordable Care Act is not repealed and
replaced? Many economists believe that the legislation
will eventually be amended to include a government-run
insurance plan—the so-called “public option.” After that,
exactly as occurred in Canada and Britain, demand for
health care will be higher than projected by the government,
the cost will increase beyond what government wants to
pay, and a global budget will have to be set—one that
government can afford.
If repeal fails,
single-payer is
our future.
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Centennial Review
May 2011
Centennial Institute
Colorado Christian University 8787 W. Alameda Ave.Lakewood, CO 80226
Return Service Requested
Obamacare: What Now? Why It is Failing andHow to Replace It
By Sally C. Pipes
One year in, the President’s
government-dominated vision for
health care is missing its targetsand losing support. Unless we
reverse course, Canadian-style
rationing awaits Americans.
Centennial Review, May 2011 ▪ 4
Private insurers will then be “crowded out” and everyone
will be enrolled in a Canadian-style single-payer system
with the inevitable long waits, rationed care, and lack of
access to the latest treatments. The governor of Vermont
is already calling for such a single-payer system—as is the
head of MassHealth in the Bay State, where there are huge
cost overruns from the implementation of Romneycare.
The question Americans must ask themselves is, Who
do you want to control your health care: a government
bureaucrat, an HMO bureaucrat, or you? Most of us would
agree with what Newfoundland Premier Danny Williams
bluntly told the Canadian media about ying south to pay
for his own heart surgery in Miami: “It’s my heart, it’s my
health, it’s my choice.”
Choice—universal choice—is the key to universal coverage
in America. President Obama’s government-dominated
vision for achieving universal coverage while bending thecost curve down is not possible. Taxes will be up, care will
be rationed, and the quality of care will decline.
If the United States gets a single-payer, “Medicare for all”
system like Canada’s, where will Canadians in life-and-death
circumstances go then? Where will we as Americans go
Unless the Patient Protection and Affordable Care Act is
repealed and replaced, we will all be on Hayek’s “road to
serfdom.” We need an off-ramp, and we need it soon. ■
Footnotes:
1. Many think that America has a free market in health care, but the reality
is that 50 percent of our health care system is in the hands of governmen
through Medicare, Medicaid, SCHIP, and the VA system.
2. Although the Obama Administration remains committed to
implementing its signature piece of legislation, public support for the law
continues to erode. A Rasmussen survey on the bill’s anniversary found
that almost 60 percent of Americans supported repeal. Indeed, according
to a recent KaiserHealthNews poll, 22 percent think the law has already
been repealed, and 26 percent are unsure.
3. A new report estimates that this expansion will cost the states $118
billion, signicantly higher than the CBO estimate.
4. It is worth noting that, of the 50.7 million uninsured, 14 million ar
already eligible today for Medicaid and SCHIP and have not signed up
This is because, if you enroll in these programs, it is very difcult to nd adoctor, since government reimbursement rates to doctors are too low and
as a result, doctors do not accept these patients.
5. There are 159 new boards and commissions to be set up and staffed
under the law—and about 16,000 new IRS agents to be hired to ensure
that lers show on their tax returns that they have insurance and, if not
that they pay the penalty.
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