HICKS: Health care battle won, but what about war?

March 27, 2010

At the Battle of Asculum, the Greek general Pyrrhus managed to defeat a larger Roman army, but at great cost, losing perhaps 10 percent of his men. The early biographer Plutarch claims that, as Pyrrhus was congratulated on his victory, he wryly noted that with one more such victory he should lose the war.

In 2008, health care reform of some type was a wildly popular idea. Protection of Medicare, reform of prescription drug coverage, extensive liability reform, the formation of insurance pools, deregulation of state insurance restrictions, and a host of other smaller reforms all polled well with the American people.

The legislation that has emerged, however, is wildly unpopular. That is a tragedy, for significant parts of the bill must form the basis for any changes to health care markets. Health exchanges, insurance deregulation, some limits to pre-existing conditions, the taxing of high-cost plans, reduction of tax breaks for health spending would be part of any plan. A complete repealing of this legislation is tossing the baby out with the bathwater.

Much of the fiscal solvency of the legislation is a mirage. While the Congressional Budget Office has it running a small surplus over the next decade, that is true only under three tall assumptions: Congress reduces Medicare payments by $500 billion in 10 years, virtually everyone takes advantage of the insurance purchase provisions in the bill, and there is a significant reduction in insurance costs. Anyone with a lick of sense must question all three of these assumptions. If even one proves wrong, this bill adds significantly to the deficit and debt.

One obvious flaw is the seeming inconsistency of requiring insurance companies to provide coverage at the drop of a hat. A clever and healthy young adult must know there’s no reason to buy insurance; you can simply wait until you become ill. The bill’s authors argue that this group will have access to subsidized health care plans, and failure to participate will result in a fine. Some state attorneys general may challenge the constitutionality of this provision. I don’t think it matters much, because the fine is about equal to one month’s insurance coverage for a healthy 21-year-old. I’d wait for insurance until I was sick.

The potential flaws in this bill are so enormous that to opponents of the bill it looks like planned failure, designed to usher in a national health service. Some of these opponents wear funny hats and say outrageous things, but it is folly to doubt that freedom trumps federal health care for many, if not most, Americans. This will likely be clear in November.

The bill is also a tax hike that, even if necessary (as some tax increases surely are), will cause job losses. It also has provisions that discourage firms from growing their work force to more than 50. It taxes wheelchairs and artificial joints and kills call-center jobs in Indiana.

I think we have another decade of health care fights coming. By the way, elephants and donkeys were widely used at the Battle of Asculum.•


Hicks is director of the Center for Business and Economic Research at Ball State University. His column appears weekly. He can be reached at cber@bsu.edu.


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