Why ObamaCare Must Be Repealed

Why ObamaCare Must Be Repealed

By Sally Pipes - August 17, 2010

Today, Canadians familiar with America's new healthcare law are recognizing remarkable similarities between our healthcare future and their healthcare past. Obamacare adheres closely to the Canadian rubric for how to nationalize a formerly private healthcare system.

Republicans can stop this march back to the future if they win control of the House and Senate this fall, take the presidency in 2012, and commit to repealing Obamacare quickly and completely. Anything less will consign the United States to repeat Canada's 50-year journey toward socialized medicine.

To see how incremental reforms of the sort advanced by Obamacare can result in a full government takeover, it's instructive to consider the Canadian story. It begins in 1946, when Tommy Douglas, the socialist premier of Saskatchewan, secured legislative approval of government-funded hospital insurance for all residents of the province. The federal government followed suit in 1957, funding hospital insurance for the entire country.

Douglas led the way again in 1961, when Saskatchewan became the first province to fund full medical insurance for all its residents. In response, some 700 doctors in Saskatchewan went on strike for 23 days, charging that the Douglas plan opened the door to government control of health care. Several thousand citizens joined them, staging an orderly protest against the new "medicare" scheme outside the legislative building in the provincial capital.

The protests eventually died down, and by 1966, the Canadian government had passed legislation providing money to provinces that followed Saskatchewan's lead. Two years later, they all had.

Proponents of the reforms touted them as a happy medium between the British system, where the government owned and operated hospitals, and the American system, where healthcare services were largely left to the private market. Canada's federal government provided funding to the provinces, which the provinces used to deliver care.

This happy medium soon crumbled. With health care now effectively "free" -- that is, paid for by other taxpayers -- Canadians began visiting the doctor twice as much. Exploding demand drove up costs. To keep spending under control, the federal government simply reduced how much it sent to provinces to run the system. Provinces in turn cut payments to doctors and covered fewer services and cutting-edge treatments.

At first, doctors responded by billing patients directly for amounts greater than the government reimbursements. But in 1984, the federal government outlawed such practices -- thereby banning private delivery of services covered under the Canada Health Act. At this point, the Canadian government effectively controlled health care in the country.

The Canadian experience offers a preview of what Obamacare has in store for the United States.

Saskatchewan was the first province to ratchet up government control over the provision of health services -- much like Massachusetts. Just as Saskatchewan served as the model for Canada's healthcare system, the Massachusetts experiment was the template for Obamacare. And just as Saskatchewan's streets filled with protesters in the early-1960s, streets and city squares across America filled with tea partiers as the passage of Obamacare drew near.

The cornerstone of the Massachusetts plan -- and of Obamacare -- is the individual mandate, which requires all citizens to obtain health insurance. Defenders of the mandate claim that it's the best way to achieve universal coverage without an outright government takeover of the healthcare system. Massachusetts has been able to bring its uninsured rate from 10 percent to below 3 percent.

Of course, most of the Bay State's newly-insured citizens are enrolled in government-run and subsidized plans under Commonwealth Care -- at great cost to state taxpayers.

These plans don't fully cover the cost of their beneficiaries' medical care. Historically, doctors would have charged the privately insured more to make up for the shortfall. But Massachusetts' four largest insurers can't afford to pay providers any more, as they already hemorrhaged $150 million in the first quarter of this year. Ordinarily, they'd pass the increases onto consumers, but Bay State politicians forbade them from raising rates. One provider won on appeal and the others are awaiting decisions. But Governor Deval Patrick says he will appeal this ruling.

As they attempt to deal with this disaster, Massachusetts officials are quickly realizing what Canadian officials learned 30 years ago -- the only way to control costs inside a government-directed health system is to cut doctors' pay, transfer patients into managed care, and introduce arbitrary spending caps and price controls.

Not surprisingly, that's what Bay State leaders have tried to do. Last year, a state commission recommended that the government stop paying healthcare providers for each procedure and instead compensate provider networks with a flat fee per patient. Of course, such a system of global payments, or "capitation," encourages provider groups to skimp on care, as they get to keep any money not spent treating patients. State Senate president Therese Murray has decided to delay introducing legislation until 2011 because of the backlash.

Obamacare promises to expand coverage in the same way that Massachusetts did -- by expanding government-funded insurance. Canada did the same thing. Worse, Rep. Lynn Woolsey (D-CA) - introduced on July 21 an amendment to the Affordable Care Act, backed by 128 lawmakers, to bring back the "public option" that failed to make it into the final health reform package.

To pay for all this new coverage, Obamacare introduces a number of new taxes on individuals and businesses. Once the Treasury has its hands on all that new revenue, it's unlikely that it will ever be able to let go. Those taxes will be here to stay.

And when costs spiral out of control -- as they have in Canada and in Massachusetts -- American officials will likely double-down on their bets and seize ever-greater control of the healthcare system. Canada banned the private delivery of medicine in response to runaway costs, while Massachusetts sees a system of global per-patient budgets as the solution to its cost problems. Federal officials will no doubt implement some combination of the two.

Fortunately, we're not yet consigned to a Canadian-style fate. According to Rasmussen Reports, nearly 60 percent of likely voters favor repealing the healthcare law. If Republicans take control of Congress this fall and the presidency in 2012, they'll be well-positioned to repeal Obamacare before the most egregious government controls kick in. If they don't, American health care in 2050 will bear a striking resemblance to Canadian health care in 1950.

Three years ago, Tommy Douglas - often dubbed Canada's "Father of Medicare" - was named the "Greatest Canadian" by the Canadian Broadcasting Corporation. One can only hope that President Obama is never named the "Greatest American" for importing Canada's healthcare system to the United States.

Sally C. Pipes is President & CEO of the Pacific Research Institute. She is the author of The Top Ten Myths of American Health Care: A Citizen's Guide.

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