America's health-care bill

Obama's Christmas present

Dec 24th 2009
From Economist.com

The Senate votes to brings affordable health care for Americans a huge step closer

AFP/AP

IT WAS, critics and admirers agreed, the most consequential vote in the Senate for more than 40 years; since, in fact, the bill that created America's state-run health scheme for the elderly back in 1965. On the morning of Christmas Eve, Barack Obama's promise to deliver affordable health care to every American moved a giant leap closer to fulfillment as the chamber voted, on strictly party lines, in favour of a bill that has already been the best part of a year in the making.

The previous Democratic president, Bill Clinton, failed at the same task, and that failure marked the remaining seven years of his presidency. Universal health care has been the most cherished goal of Democratic politicians for close to a century; and now, the shameful fact that a country as rich and powerful as America leaves tens of millions of its citizens with only the most basic health care is on its way to being expunged. The bill still has tricky obstacles to negotiate before it ends up on the president's desk. But Mr Obama can reflect, as 2009 comes to an end, that his place in the pantheon of American reformers looks secure.

There is plenty for the reformers to congratulate themselves about. Working within the framework of America's distinctive health system based on private providers, some 30m people who are not currently covered will be given access to health insurance via a system of subsidies and regulated insurance exchanges. Life-time caps of payouts to sick people will be largely eliminated; insurance companies will lose the right to refuse coverage to applicants on the basis of past or present ill-heath; and price discrimination against older people will be sharply scaled back. Employers will be obliged to provide coverage for their workers, or face a stiff fine. Younger people, who often regard themselves as "invincibles" with no need to insure themselves, will be required to do so.

On the other hand a golden opportunity to effect a root-and-branch reform of the cost side of the equation has been missed. America's health system, excellent though it is for those with good insurance, is hideously expensive. America spends twice the share of its national product on health care as any other industrialised nation, for overall results that are surprisingly mediocre. This is because the set-up contains distortions that encourage over-consumption and over-prescription. And the bill that has emerged from the Senate, like the version that was passed by the House earlier in the year, does far too little to tackle these problems. Will Congress, after the bruising battles of 2009, be minded to come back for a second round any time soon? It seems unlikely.

Yet without radical change, the constantly increasing cost of caring for an aging population with ever-more advanced technologies risks bankrupting the government, which bankrolls payment for the poor, for children, for its own employees and for the old. Extending health insurance to tens of millions more Americans is estimated to cost just under $900 billion over the next ten years. Though this amount is supposedly paid for in the shape of tax increases and spending cuts, those are savings that were urgently needed just to help contain the swelling budget deficit but which now will not be available for that purpose. As a reminder of that, the Senate rounded off its work for 2009 by voting to increase the national debt ceiling to $12.4 trillion; and it is sure to have to increase it again early in 2010, as next year will see another $1 trillion-plus federal deficit.

Republicans, of course, contend that for just this reason it would be far better for the health bill never to become law. That is possible, but unlikely. [snip]

[snip]

[snip] The shortcomings of the bill, in the form of higher deficits and possibly higher insurance premiums, may well not be apparent to voters for quite some time.

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