Special Report

Undoing Obamacare

Suddenly, everyone wants out.

By 7.2.12

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You would have thought that Chief Justice John Roberts had shouted "fire" in a crowded theater. In upholding Obamacare, he set off a headlong race for the exits by the same lobbying groups -- believe it or not -- that had cut deals with the administration to create the legislation. Back then, the lobbyists were telling each other: If you’re not at the table, you’re on the menu. Now the bodies are piling up in the doorway as those who pandered to the president trample over each other in their haste to get out of the blazing or crumbling structure that is Obamacare. To paraphrase Oscar Wilde on the death of Little Nell, no one without a heart of stone can witness this deadly scene without wanting to laugh out loud.

As reported on the front page of this weekend's Wall Street Journal, every one of the health-care industry groups that signed on to Obamacare in 2009 is looking for a way out.

Hospital groups now say they want Congress to peel back $155 billion in payment cuts that they agreed to in 2009. Representatives of Blue Cross Blue Shield Association, Aetna, Inc., and Humana Inc. say they need greater freedom to adjust premiums to reflect risk. Medical-device companies are making a new push to roll back their 2.3% tax. Hotels, retailers, and restaurant chains are clamoring for a two-year delay in enforcement of a requirement that they cover full-time workers or pay a penalty, giving them until 2016 to comply.

Implement-and-improve, the Democrats are now saying in indicating a new willingness to make election-year concessions in revising the hated law. Or as the president put it on Thursday: "The highest court in the land has now spoken. We will continue to implement this law. And we'll work together to improve on it where we can."

But the race to the exits by doctors, hospitals, drug makers, insurers and others is evidence that the law is already beyond repair. To put that another way, the series of deals between the government and health-industry groups that gave rise to Obamacare is falling apart.

"The bargain that was struck seems to be out the window," Bruce Siegal, chief executive of the National Association of Public Hospitals and Health Systems, was quoted as saying.

It is worth recalling how the White House and the Democratic leadership in Congress brought the doctors, the hospitals, and other special interest on board in the first place. In her telling of the story ("Democrats Hoodwink the Health Lobby," WSJ, July 10, 2009), Kimberly Strassel noted that after retaking the House in 2006, Democratic Party leaders put out the word that drug companies and others that did not hire Democratic lobbyists would not get a hearing in Washington. She wrote in her Potomac Watch column:

The ruling party is now seeing the fruits of its bullying. These days, a meeting of health-care lobbyists is better described as a reunion of Senate Finance Chairman Max Baucus's former aides. The new cabal of Democratic lobbyists does not exist to protect the industry from Congress. It exists to present Democratic ultimatums to business.

When Senate Republicans last month hosted a meeting to discuss reform ideas, Mr. Baucus's office called in a block of these Democratic lobbyists to deliver a message. "They said, 'Republicans are having this meeting and you need to let all your people know if they have someone there, it will be viewed as a hostile act,' "reported one attendee to the Baucus caucus.

Under such conditions, different industry groups were bullied and cajoled into signing on to a program that clearly threatened their own independence and integrity:

  • Under the leadership of Billy Tauzin, the Big Pharma lobby agreed to do a $150 million Obamacare-friendly advertising campaign in return for protection against strict price controls on Medicare prescription drugs and drug re-importation from Canada (one of Obama's campaign pledges). Tauzin also agreed to chip in $80 billion from the industry to help close a gap in Medicare drug coverage For his success in brokering a deal with the administration, the former congressman turned pharmaceutical industry lobbyist, was paid $11.6 million in 2010.
  • The health insurers' lobbying group under Karen Ignagni cut a deal with the administration in which it gave up A and B in order to get C and D: It agreed A) to bite its tongue in the face of avalanche of new mandates and other problems, and B), to commit publicly to squeezing some $2 trillion in costs out of the system, in order to get C), a law that was supposed to force 30 million uninsured to buy insurance, and D), the all-important promise that administration would not put them all out of business by exercising the so-called public option.
  • The American Medical Association lent public support to Obamacare in return for promises of a "doc fix" -- protecting doctors from the automatic imposition of future reductions in their compensation. In a truly remarkable display of docility, 150 doctors from 50 states played dressy-up for the president in October, 2009 -- wearing White House-provided white lab coats as they applauded his pep talk on Obamacare. "Nobody has more credibility with the American people on this issue than you do," Obama told his guests at the photo op in the Rose Garden.
  • Hospital groups agreed to $150 billion in future Medicare and Medicaid cuts -- just to protect themselves against even steeper cuts down the road.
  • Then there was the AARP sell-out. In the fall of 2009, many people were surprised when the American Association of Retired Persons (AARP) announced its support for Obamacare even though one of the ways the Democrats proposed to "pay" for the health care law was by taking an axe to the popular Medicare Advantage program and forcing millions of seniors back to the more expensive coverage of traditional Medicare. As David Catron wrote in this space ("The American Association for Retiree Plunder," 3-30-11), AARP is really an insurance company fronting as an advocacy group. Most of its revenues come from sales of "Medigap" policies that fill in for gaps in standard Medicare. As Catron explained, "AARP endorsed a law that does real financial harm to seniors in order to reap a crop of new customers when Obamacare guts Medicare Advantage." That impression was partly confirmed later in a trove of emails made public by House Republicans. "We really need to talk," an AARP lobbyist wrote in an email to the White House, noting that calls from seniors were running 14 to one against Obamacare.

So those are some of the ways by which the president and his allies in Congress contrived to jimmy up enough credibility to pass the Affordable Health Care bill into law. Even then, with large Democrat majorities in both houses, the bill passed by narrowest of margins.

It was the same kind of luck (or ill fate) that kept the bill from being struck down in its entirety when -- as others have commented -- Chief Justice Roberts rewrote the statute in order to save it, insisting that the individual mandate was constitutionally defensible because it was, in his word, a "tax." He arrived at that conclusion despite repeated assertions by the president and others that the mandate was not a tax.

In reacting to the ruling, President Obama intoned that the Supreme Court had "reaffirmed a fundamental principle that here in America -- in the wealthiest nation on earth -- no illness or accident should lead to any family's financial ruin."

But Chief Justice Roberts said no such thing in rendering his judgment. To the contrary, he looked and sounded like Pontius Pilate publicly washing his hands. He was at pains to absolve himself and the court of further responsibility in having to deal with a very flawed and messy law. Here are two quotes from the chief justice: 

"We do not consider whether the Act embodies sound policies. That judgment is entrusted to the Nation's elected leaders."

"Members of this Court are vested with the authority to interpret the law; we possess neither the expertise nor the prerogative to make policy judgments. Those decisions are entrusted to our Nation's elected leaders, who can be thrown out of office if people disagree with them [emphasis added]. It is not our job to protect people from the consequences of their political choices." 

All of which sets the stage for a head-on collision in November between a president saying implement-and-improve and his challenger saying repeal-and-replace.

Let us hope that no one advocating repeal is beguiled into thinking that any part of Obamacare should be considered salvageable. The whole thing (all 2,700 pages) should be dumped in the nearest recycling bin.

It is no good pretending -- as the Obama administration has done throughout the long debate over health care -- that anything will come true if you wish for it hard enough.

Ross Kaminsky put it very well in another Spectator article in the weekend edition, when he observed: "Obama's laundry list of items which insurance companies must and must not do [is] a perfect reflection of the Democrat mentality that they can raise costs to insurers and health care providers without hurting quality, availability, or affordability for the public. It is the economic equivalent of believing, as my six-year old daughter does, in magical flying unicorns."

From the start, a clear majority of Americans has grasped that point, recognizing the lunacy of believing that it would be a good idea to launch a massive new entitlement program at a time when the nation -- according to the president's own debt panel -- was careening toward bankruptcy with the entitlement programs we already have.

Not only is the Affordable Health Care Act unaffordable; it is the exact wrong way to go about reforming and improving the health care system. When it comes to making decisions about your health care, the president and his allies in Congress believe that they know how to spend your money better than you do. They want the whole health care industry to be micro-managed by bureaucrats and political appointees, which will reduce both competition and choice -- leading to every imaginable ill from higher costs and rising premiums, to indifferent and inefficient patient care, and to rampant cronyism, favoritism, corruption, and mismanagement. One example of the favoritism that has already occurred: The administration has granted more than 1,000 waivers, mostly to unions and businesses that publicly support Obamacare -- just not for themselves.

It is time to reverse the incipient nationalization of the health care industry and to set about improving the system with new policies aimed at maximizing competition and choice.

There is ample opportunity, for instance, for enabling consumers to reap immediate benefits in the form of lowered premium and greater choice through the simple expedient of allowing health insurance to be sold across state lines. This would give individual consumers the freedom to buy low-cost, low-priced health insurance -- from a far larger universe of sellers.

As much as some of us regret the fact that Chief Justice Roberts did not join the four conservative justices in striking down the law in its entirety, he did accomplish one important thing:

He scared the hell out of the various industry lobbying groups; he made them think about what they had wrought in assisting in the creation of a law that isn't going to do them any good, and may cause them a world of hurt.

Let's hope that others wake up to the same realization before it is too late.

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About the Author
Andrew B. Wilson, a frequent contributor to The American Spectator and a former foreign correspondent, writes from St. Louis.