Friday, August 7, 2009
The Best of The Funny Economist
Obama: The Grand Strategy
By Charles Krauthammer
Friday, April 24, 2009
Unified theory of Obamaism, fifth (final?) installment:
In the service of his ultimate mission -- the leveling of social inequalities -- President Obama offers a tripartite social democratic agenda: nationalized health care, federalized education (ultimately guaranteed through college) and a cash-cow carbon tax (or its equivalent) to subsidize the other two.
Problem is, the math doesn't add up. Not even a carbon tax would pay for Obama's vastly expanded welfare state. Nor will Midwest Democrats stand for a tax that would devastate their already crumbling region.
What is obviously required is entitlement reform, meaning Social Security and Medicare/Medicaid. That's where the real money is -- trillions saved that could not only fund hugely expensive health and education programs but also restore budgetary balance.
Except that Obama has offered no real entitlement reform. His universal health-care proposal would increase costs by perhaps $1 trillion. Medicare/Medicaid reform is supposed to decrease costs.
Obama's own budget projections show staggering budget deficits going out to 2019. If he knows his social agenda is going to drown us in debt, what's he up to?
He has an idea. But he dare not speak of it yet. He has only hinted. When asked in his March 24 news conference about the huge debt he's incurring, Obama spoke vaguely of "additional adjustments" that will be unfolding in future budgets.
Rarely have two more anodyne words carried such import. "Additional adjustments" equals major cuts in Social Security and Medicare/Medicaid.
Social Security is relatively easy. A bipartisan commission (like the 1983 Alan Greenspan commission) recommends some combination of means testing for richer people, increasing the retirement age and a technical change in the inflation measure (indexing benefits to prices instead of wages). The proposal is brought to Congress for a no-amendment up-or-down vote. Done.
The hard part is Medicare and Medicaid. In an aging population, how do you keep them from blowing up the budget? There is only one answer: rationing.
Why do you think the stimulus package pours $1.1 billion into medical "comparative effectiveness research"? It is the perfect setup for rationing. Once you establish what is "best practice" for expensive operations, medical tests and aggressive therapies, you've laid the premise for funding some and denying others.
It is estimated that a third to a half of one's lifetime health costs are consumed in the last six months of life. Accordingly, Britain's National Health Service can deny treatments it deems not cost-effective -- and if you're old and infirm, the cost-effectiveness of treating you plummets. In Canada, they ration by queuing. You can wait forever for so-called elective procedures like hip replacements.
Rationing is not quite as alien to America as we think. We already ration kidneys and hearts for transplant according to survivability criteria as well as by queuing. A nationalized health insurance system would ration everything from MRIs to intensive care by myriad similar criteria.
The more acute thinkers on the left can see rationing coming, provoking Slate blogger Mickey Kaus to warn of the political danger. "Isn't it an epic mistake to try to sell Democratic health care reform on this basis? Possible sales pitch: 'Our plan will deny you unnecessary treatments!' . . . Is that really why the middle class will sign on to a revolutionary multitrillion-dollar shift in spending -- so the government can decide their life or health 'is not worth the price'?"
My own preference is for a highly competitive, privatized health insurance system with a government-subsidized transition to portability, breaking the absurd and ruinous link between health insurance and employment. But if you believe that health care is a public good to be guaranteed by the state, then a single-payer system is the next best alternative. Unfortunately, it is fiscally unsustainable without rationing.
Social Security used to be the third rail of American politics. Not anymore. Health-care rationing is taking its place -- which is why Obama, the consummate politician, knows to offer the candy (universality) today before serving the spinach (rationing) tomorrow.
Taken as a whole, Obama's social democratic agenda is breathtaking. And the rollout has thus far been brilliant. It follows Kaus's advice to "give pandering a chance" and adheres to the Democratic tradition of being the party that gives things away, while leaving the green-eyeshade stinginess to those heartless Republicans.
It will work for a while, but there is no escaping rationing. In the end, the spinach must be served.