Health Care Debate: Who Is Telling the Truth?

We cannot, it seems, have a candid national conversation on health care. President Obama's speech the other night was a brilliant performance, and it may improve prospects for congressional passage of his "reform." But no possible plan will fix the "health care problem" for all time. When Obama says that "I am not the first president to take up this cause, but I am determined to be the last," he is indulging his ambition for a special place in history and illustrating why Americans don't discuss health care honestly.

The political problem was simple: Support for "reform" was collapsing. In April, 43 percent felt they'd be better off with his "reform" and only 14 percent didn't, according to a Kaiser Family Foundation poll. By August, it was 36 percent to 31 percent. To restore momentum, Obama needed to convince more people that his program would help them.

Americans generally want three things from their health-care system. First, they think that everyone has a moral right to needed care; that suggests universal insurance. Second, they want choice; they want to select their doctors—and want doctors to determine treatment. Finally, people want costs controlled; health care shouldn't consume all private compensation or taxes.

Appealing to these expectations, Obama told Americans what they want to hear. People with insurance won't be required to change plans or doctors; they'll enjoy more security because insurance companies won't be permitted to deny coverage based on "pre-existing conditions" or cancel policies when people get sick. All Americans will be required to have insurance, but those who can't afford it will get subsidies.

As for costs, not to worry. "Reducing the waste and inefficiency in Medicare and Medicaid will pay for most of this plan," Obama said. He pledged to "not sign a plan that adds one dime to our [budget] deficits—either now or in the future." If you believe Obama, what's not to like? Universal insurance. Continued choice. Lower costs.

The problem is that you can't entirely believe Obama. If he were candid—if we were candid— we'd all acknowledge that the goals of our ideal health-care system collide. Perhaps we can have any two, but not all three.

If we want universal insurance and unlimited patient and doctor choice, costs will continually spiral upward, because there will be no reason or no one to stop them. We have a variant of that today—a cost-plus system, with widespread insurance and open-ended reimbursement. Higher costs push up premiums and taxes. That's one reason health spending has gone from 5 percent of gross domestic product in 1960 to 16 percent in 2007. (Other reasons: new technologies, rising incomes.) But controlling spending requires limits on patients and doctors.

Studies of various health proposals conclude that their long-term costs exceed their long-term financing. In its second decade (2020-29), H.R. 3200—the main House bill—would increase federal budget deficits by $1 trillion, estimates the Lewin Group, a consulting firm that is owned by one of the nation's largest health-care insurers, UnitedHealth Group. Total health spending would reach 28 percent of GDP by 2029. How can Obama claim to control costs and never add to the deficit? Well, he'd adopt a provision requiring "more spending cuts if the savings we promised don't materialize." Sound convincing?

It isn't. Congress often enacts automatic triggers to control spending. The triggers usually don't work. When they might bite, Congress delays or modifies them. Consider one trigger: the "sustainable growth rate" (SGR) that Congress created in 1997 to control doctors' spending under Medicare. Since 2002, the SGR formula has consistently called for annual cuts in doctors' reimbursements. Congress has routinely overridden the formula. Now, there's pressure to scrap the whole SGR.

Obama's selling of "reform" qualifies as high-class hucksterism, but in fairness, many conservative opponents match or exceed his exaggerations and distortions with low-class fear-mongering.

These critics charge that Obama would curtail Medicare benefits or create "death panels" to deprive ill seniors of desirable care. Not only are these charges mainly false (as Obama says), but they wrongly suggest that we put some important subjects off-limits. Medicare represents one-fifth of personal health spending. Why shouldn't we debate what should be covered and who should pay? Similarly, doctors, patients and families should discuss end-of-life care. It's not just that 25 to 30 percent of Medicare spending occurs in patients' last year. Expensive, heroic care often compounds suffering.

The candor gap reflects a common condescension. One side believes it must fool Americans into thinking "reform" will do more than it will; the other thinks it must frighten Americans into believing that it will harm them in ways that it won't. Given Americans' contradictory expectations, any health-care proposal can be criticized for offending some popular goal. We refuse to face unavoidable—and unpleasant—choices.