Policy Documents

Obamacare is Not Entitlement Reform

James Capretta –
June 7, 2010

James Capretta of the Ethics and Public Policy Institute provides his analysis of why Obamacare is not entitlement reform, published by the Galen Institute. In it, he writes that, 

“Health care reform is entitlement reform.” So said Peter Orszag, President Barack Obama’s first budget director, at a bipartisan fiscal responsibility summit called by the president in February 2009. President Obama had assumed office just a little over a month earlier, and he was signaling to the country and to those present at the White House that his top domestic priority during his first year in office — securing a health care law that covered all Americans with health insurance — was consistent with his commitment to impose renewed fiscal discipline.

He and his team knew there would be many in Congress, even among members of his own party, who would be wary of mounting an all-out effort to pass an ambitious health reform program given the expected cost of such an initiative and the daunting budgetary challenges already facing the country. Most House and Senate members have been aware for many years that rising health entitlement costs — in the form of Medicare and Medicaid expenditures — threaten to push the nation’s finances past the breaking point. If the country can’t pay for its existing health care commitments, how could the president afford to make expensive new promises of subsidized health care to millions of new beneficiaries? 

The president wanted to pre-empt this kind of cost and budget critique by making a bold pronouncement. Not only would his reform program cover millions of people with insurance, it would also “bend the cost-curve,” and thereby begin to make the nation’s health entitlement commitments — new as well as old — more affordable for future generations of taxpayers. This argument that health reform would actually improve the nation’s budgetary outlook even as it moved the country toward “universal coverage” became the centerpiece of the administration’s push for Congressional passage.

After a long and divisive legislative debate that lasted well over a year, the president succeeded in getting a health reform bill. Congress passed the legislation, and he signed it into law. 

Enactment of the new law hasn’t settled matters, though. The public debate continues, and the country remains deeply divided over what was passed. In part, that is due to the unusual and polarizing manner in which the Congressional majority pushed the bill through during its final stages of consideration. It was a bruising battle, and many Republicans believe the steps the administration and Congressional leadership took to avoid the need for bipartisan support simply went too far and ensured the law would be viewed suspiciously by a large percentage of the electorate.