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Tick, tick, tick: The cost of Obamacare is a time bomb

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In fighting against Obamacare repeal this week, Democrats portray their health care law as a money saver, claiming Republicans would add to the deficit by abolishing the legislation. But in their franker moments, the bill's authors admit that "reform" could be something of a time bomb that will cause exploding health care costs down the line. One top Senate aide plainly stated last summer, "This is a coverage bill, not a cost reduction bill." The time-bomb nature of Obamacare was presaged by Mitt Romney's health care bill in Massachusetts, which also expanded health insurance coverage by mandating that all individuals buy insurance, prohibiting insurers from dropping customers, and subsidizing the insurance of those with difficulty affording it.

In Massachusetts, these subsidies, mandates and regulations quickly caused health insurance and health care costs to spike, compelling the governor and state legislature to impose cost controls on insurers and providers while raising taxes on the state's residents and businesses.

David Bowen, former health staff director of the Senate Health, Education, Labor and Pensions Committee, is one of the Obamacare authors to admit the bill could be a time-bomb.

Three months after the bill passed, and after Bowen had left Capitol Hill, he gave a briefing at the K Street offices of the lobbying firm Sidley Austin -- an event the firm billed as a "unique behind the scenes look at the development of this landmark legislation and [an opportunity] to hear an insider's view about issues that the legislation left unresolved."

Bowen compared the federal legislation to the Massachusetts legislation on the score of costs. "In Mass., there was a very conscious decision to do coverage first, knowing that that would bring on a cost battle second," the former Ted Kennedy aide explained. "We certainly made the same decision. This is a coverage bill, not a cost reduction bill. There is stuff here that will begin to address the issue of cost, but this is not a cost reduction bill with a bit of coverage on it -- it is really trying to get coverage first."

"Buy now, pay later," is how Peter Suderman at the free-market Reason magazine describes this strategy, which was deliberate on behalf of lawmakers in both Boston and Washington.

In March 2009, as Congress was taking up the health care bill and Massachusetts was straining under its rapidly growing health care costs, the New York Times reported that the Massachusetts bill's authors saw that everything was going according to plan. "Only by deferring the big decisions on cost containment, [Massachusetts health care architects] said in recent interviews, was it possible to build a consensus among doctors, hospitals, insurers, consumers, employers and workers for the requirement that all residents have health insurance."

In the June 2010 briefing on K Street, one participant asked Bowen what will happen when Obamacare's bill comes due. "If the things that are in the bill fail to reduce cost, or they need more oomph," Bowen said, "then that is the next big phase of health care reform."

In Massachusetts that meant tax increases and price controls. In Tennessee, which faced a budget crisis 10 years after its 1994 state-run health insurance program, "the next big phase of health care reform" meant slashing 170,000 people from the rolls, according to Suderman.

What will "the next big phase" of Obamacare be? When the subsidies and insurance regulations drive a huge increase in demand for health care, how will Congress and the administration handle the rising costs?

The Obama administration's early actions hint at one tack: blaming the greedy insurers. The bill gives such broad discretion to the secretary of health and human services that HHS could unilaterally put the squeeze on insurers -- for instance, through tightening rules on medical loss ratios, which curb insurers' profits, executive pay and advertising spending.

With all the subsidies flowing to hospitals, doctors and drug companies, Washington is also in position to impose price controls on these industries. The new exchanges will control insurance prices, and by extension will influence prices on drugs and care.

This looming battle over where to trim costs is driving health care companies to hire up as lobbyists the lawmakers and staffers who gave us Obamacare. Already three top Democratic health care staffers have gone to K Street firms, and one has cashed out to a drugmaker.

Democrats will attack GOP repeal efforts as "irresponsible." Given the Democratic Senate, "repeal" is mostly political theater, but if you're looking for irresponsible, the Democrats' buy-now-pay-later gambit is a prime example.

Timothy P.Carney, The Examiner's senior political columnist, can be contacted at tcarney@washingtonexaminer.com. His column appears Monday and Thursday, and his stories and blog posts appear on ExaminerPolitics.com.

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