Co um Speaday
W se it ers Aee P
Centennial Review
Principled Ideas from the Centennial Institute
Volume 3, Number 5 • May 2011
OBAMACARE: WHAT NOW?
WHY IT IS FAILING AND
HOW TO REPLACE IT
By Sally C. Pipes
March 23, 2011, marked the
first anniversary of Obamacare
becoming law. “We have to pass the
bill so we can find out what is in it,” When it came to passage of the Affordable Care Act,
said Speaker Nancy Pelosi before
Congress voted on the 2,500-page
Patient Protection and
Affordable Care Act. It
Americans care what Americans wanted. In a Rasmussen
passed, and we found out. don’t want to favor of the legislation.
This essay will outline key components of the
legislation, explain why it will be disastrous for
our country, and offer solutions that will keep
America’s health care system the finest in the
world.
Americans want affordable, accessible, quality health
care for everyone. How do we achieve that? One vision
for reform focuses on empowering doctors and patients.
The other focuses on increasing the already large role
of government through mandates, subsidies, taxes, and
controls.1
Unfortunately, it is this latter vision that Barack Obama
favors. Prior to becoming president, he repeatedly
advocated a single-payer, government-run system—what
the late Senator Ted Kennedy called “Medicare for all.”
After taking office, Mr. Obama gave 58 speeches on his
goals for reforming health care so as to provide universal
coverage and reduce costs.
Canada Isn’t the Answer
The United States spends 17.6 percent of GDP on health
care—one-sixth of our economy—and Obama contends
that number is much too high. He says our example should
be Canada and its single-payer system, which only spends
10.4 percent of GDP on health care. But most Americans
don’t realize that this percentage is what the Canadian
government determines it can afford to spend on health
care.
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When Canadians’ demand for health care proved far greater
than the government anticipated, policymakers had to set
a global budget in order to control costs. The result has
been long waiting lists for care, rationed care, and a lack
of access to the latest treatments and procedures. In 2010,
according to Canada’s Fraser Institute, the average wait
from seeing a primary-care doctor to getting treatment by a
specialist was 18 weeks. Americans are not used to waiting
and don’t want to wait.
however, President Obama, Speaker Pelosi, and Senate
Majority Leader Harry Reid did not seem to
poll prior to the vote, 55 percent were not in
wait 18 weeks The people’s dissatisfaction was increasingly
for a specialist. evident in the Tea Party movement and
town-hall meetings, climaxing in the 2010
election. The new Republican House quickly voted to
repeal Obamacare. But the Democratic Senate voted
against repeal—and a presidential veto awaited the bill in
any case.2
Shaky Pillars
Let’s look at President Obama’s main pillars in this far-
reaching legislation: universal coverage, reducing the cost
of health care, and the individual mandate. Fourteen
pillars are described in my book The Truth About Obamacare
(Regnery, 2010), but these three are central.
According to the administration, the Affordable Care Act
will make it possible for 34 million of the 50.7 million
uninsured Americans to be insured by 2019. Officials
estimate that 18 million of them will be added to Medicaid,
the program for low-income Americans.3 The rest will
receive a subsidy from the federal government to help
Sally C. Pipes is president of the Pacific Research Institute in San Francisco.
She was previously with the Fraser Institute in Vancouver, BC. Her books include
Miracle Cure: How to Solve America’s Health Care Crisis, The Top Ten Myths
of American Health Care, and The Truth About Obamacare. She grew up in
Canada and is now a U.S. citizen. This essay is based on her lecture at Colorado
Christian University on February 18, 2011.
Centennial Institute sponsors research, events, and publications to enhance
public understanding of the most important issues facing our state and nation.
By proclaiming Truth, we aim to foster faith, family, and freedom, teach citizen-
ship, and renew the spirit of 1776.

them buy insurance in the state-based exchanges that will
be set up in 2014.4 Yet the nonpartisan Congressional
Budget Office (CBO) has estimated that, by 2019, 23
million Americans will still be uninsured. So much for the
president’s goal of universal coverage.
On bending the cost curve down, Mr. Obama wanted to
be able to sign a bill that cost no more than $900 billion
over the first 10 years. He didn’t achieve that either. First,
the CBO forecast puts the cost of Obamacare at $940
billion over the same period.
Second, that forecast itself is low, since major
features that will drive up the cost of health Universal coverage? constitutional challenges move ahead,
care do not come into effect until 2014. These
include setting up the state-run insurance
No. Lower
exchanges, federal subsidies, expansion of No again.
Medicaid, elimination of discrimination based
on pre-existing conditions, and the hiring of government
employees to staff the boards and commissions. 5 CLASS Act) are all candidates for repeal. The burdensome
When you take all of these factors into account, it is likely
that the Affordable Care Act will cost in the range of $2.5
trillion in its true first decade, 2014 to 2024. Obamacare is
the largest entitlement program to hit America since the
Great Society. So much for the president’s goal of reducing
costs overall. Nor does the legislation guarantee lower costs
for you personally. Contrary to the president’s oft-repeated
statement that premiums for the average family will decline
by $2,500, the CBO stated after passage in March 2010
that they will increase by $2,100.
Then there was Obama’s mantra that “if you like your
health insurance and you like your doctor, nothing will
change.” The chief actuary of the Centers for Medicare
and Medicaid Services in his own administration, Richard
Foster, not only told Congress that the bill “won’t hold
costs down.” He also admitted that it “won’t let everybody
keep their insurance if they like it.”
Centennial Review, May 2011 ▪ 2
Pushback by Judges and Lawmakers
The individual mandate, forcing people to purchase
insurance or pay a fine, is probably the most contentious
part of the legislation. Several lawsuits over the
constitutionality of the mandate and the entire law have
been filed. In one case filed by Virginia’s attorney general,
and in another filed in Florida by 26 states along with the
National Federation of Independent Business, federal
judges have ruled against Obamacare. Three other judges
have upheld the legislation.
Under the U.S. Constitution, Congress has the authority
to levy taxes on the American people but not the power
to force individuals to purchase a good or service in the
private market. This is the key issue in these cases. It is
not clear how the Supreme Court will ultimately rule, but
if the mandate or the entire law is overturned, it will be
a victory for limited government—and for the American
people. There is no question that they do not want the
government to be in charge of their health care.
It is important that the Republicans in the House and
Senate keep up the pressure for full repeal and replacement
of this legislation. If the GOP wins the presidency and
Congress in 2012, there is a good chance that Obamacare
could be overturned in 2013. There is a precedent: the
Medicare Catastrophic Coverage Act was repealed in 1989.
In the meantime, while the
the House is pursuing strategies to
costs? repeal parts of the legislation and to
defund it. The tax on medical devices,
the Independent Payment Advisory
Board, and the long-term-care component (known as the
1099 requirement for business transactions over $600 has
already been repealed. Denial of funding for Obamacare is
also important, since it would halt implementation of such
provisions as the major Medicaid expansion, the hiring of
new IRS agents, and federal subsidies to help lower-income
people buy insurance.
Agenda for Genuine Reform
If the Patient Protection and Affordable Care Act is
repealed by Congress or annulled in the courts, what then?
It can be replaced with practical and viable solutions that
CENTENNIAL REVIEW is published monthly by the Centennial Institute at
Colorado Christian University. The authors’ views are not necessarily those of
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really would lead to universal coverage and lower costs. This
would put America on the road to providing affordable,
accessible, quality health care for all. The agenda for
genuine reform should include:
• Make each policy-holder’s health insurance his own,
just like long-term care, home, car, and life insurance.
Insurance should not be linked to one’s employment.
• To effect this, change the federal tax code so that employees
no longer get insurance from
If repeal fails, their employers. Current law,
single-payer is while it gives employees a
pre-tax benefit, ties people to
our future. their jobs. If they lose their
job, they lose coverage, since
insurance is not currently portable. If they then go into
the individual market, they will have to purchase coverage
with after-tax dollars. By fixing this distortion, we can allow
the growth of the individual insurance market.
• Permit the purchase of health insurance across state lines,
further encouraging a competitive marketplace.
• Temporarily increase federal funding to state high-risk
pools (about $25 to $50 billion would be needed) so that
the eight million Americans who are chronically ill with no
health insurance for two years or more can get affordable
coverage until a properly functioning individual market
evolves.
• Encourage states to do medical malpractice reform by
capping non-economic damages and punitive damages.
According to Pricewaterhouse Coopers, the cost of
doctors practicing defensive medicine is about $210 billion
a year. Medical malpractice reform as enacted in Texas has
significantly reduced frivolous lawsuits and what doctors
have to pay for insurance.
• Encourage states to reduce costly mandates and
regulations on insurance companies, which add significantly
to the cost of a plan. Currently, there are about 2,100 such
mandates across the nation.
• Expand tax breaks for Health Savings Accounts.
• Voucherize Medicare and Medicaid.
Who Do You Want in Control?
But suppose the Affordable Care Act is not repealed and
replaced? Many economists believe that the legislation
will eventually be amended to include a government-run
insurance plan—the so-called “public option.” After that,
exactly as occurred in Canada and Britain, demand for
health care will be higher than projected by the government,
the cost will increase beyond what government wants to
pay, and a global budget will have to be set—one that
government can afford.
Voices of CCU
STATE LEGISLATORS
IN A QUANDARY
By Mark Hillman
Even before 2010, tackling health
policy at the state level was not easy.
Federal tax law narrows the options, as
Sally Pipes explains. And people have
expectations that are economically
unrealistic, because we’ve transformed
health “insurance” into a forced savings
plan to finance routine procedures.
Economists define an “insurable event” as something
that occurs without warning, is unlikely to occur, and
is undesirable. We understand this for all other types of
insurance, but we expect health insurance to pay for the
medical equivalent of tune-ups and oil changes.
Well-meaning legislators forbid insurers from denying
coverage or raising rates based on pre-existing conditions
—only to find that doing so makes health insurance less
affordable for younger and healthier customers.
Mandates that require insurance companies to cover
preventive examinations are touted as cost-savers. But
they reduce costs only for the few in whom they detect a
serious illness. For the vast majority, preventive screenings
necessarily increase costs.
Under the misnamed Patient Protection and Affordable
Care Act, state legislators can no longer debate health care
policies on their merits. Instead, they must consider the
multitude of uncertainties created by federal law.
Some implore state lawmakers to pass nothing that
acknowledges Obamacare, confident that the Supreme Court
will find its individual mandate unconstitutional. Though
perhaps the safest course politically, this is tantamount to
betting all your chips on what Justice Anthony Kennedy
had for breakfast.
It’s no small risk. The Heritage Foundation has warned
that “the sooner a state declares ‘non-compliance’” with
Obamacare, the sooner the federal government will begin
to impose its own regulations.
So others believe that states should act swiftly to preserve
their own authority rather than allow the federal government
to usurp that role. The challenge is to enact “defensive”
policies—doing the minimum to achieve compliance—
while thwarting federal intervention into state policy.
If insurance policy weren’t sufficiently problematic before
Obamacare, today’s options are even worse. ■
Mark Hillman championed market solu-
Centennial
tions for health care during his tenure in the
Colorado Senate, 1999-2005. He later served
Institute
Colorado Christian University
as State Treasurer. He is now a wheat farmer
on the Eastern Plains, a news columnist, and a
Centennial Institute Fellow.
Centennial Review, May 2011 ▪ 3
 Centennial Review Centennial Institute
May 2011 Colorado Christian University
8787 W. Alameda Ave.
Obamacare: What Now? Lakewood, CO 80226
Why It is Failing and
How to Replace It Return Service Requested
By Sally C. Pipes
One year in, the President’s
government-dominated vision for
health care is missing its targets
and losing support. Unless we
reverse course, Canadian-style
rationing awaits Americans.

Private insurers will then be “crowded out” and everyone
will be enrolled in a Canadian-style single-payer system
with the inevitable long waits, rationed care, and lack of
access to the latest treatments. The governor of Vermont
is already calling for such a single-payer system—as is the
head of MassHealth in the Bay State, where there are huge
cost overruns from the implementation of Romneycare.
The question Americans must ask themselves is, Who
do you want to control your health care: a government
bureaucrat, an HMO bureaucrat, or you? Most of us would
agree with what Newfoundland Premier Danny Williams
bluntly told the Canadian media about flying south to pay
for his own heart surgery in Miami: “It’s my heart, it’s my
health, it’s my choice.”
Choice—universal choice—is the key to universal coverage
in America. President Obama’s government-dominated
vision for achieving universal coverage while bending the
cost curve down is not possible. Taxes will be up, care will
be rationed, and the quality of care will decline.
If the United States gets a single-payer, “Medicare for all”
system like Canada’s, where will Canadians in life-and-death
circumstances go then? Where will we as Americans go?
Unless the Patient Protection and Affordable Care Act is
repealed and replaced, we will all be on Hayek’s “road to
serfdom.” We need an off-ramp, and we need it soon. ■
Footnotes:
1. Many think that America has a free market in health care, but the reality
is that 50 percent of our health care system is in the hands of government
through Medicare, Medicaid, SCHIP, and the VA system.
2. Although the Obama Administration remains committed to
implementing its signature piece of legislation, public support for the law
continues to erode. A Rasmussen survey on the bill’s anniversary found
that almost 60 percent of Americans supported repeal. Indeed, according
to a recent KaiserHealthNews poll, 22 percent think the law has already
been repealed, and 26 percent are unsure.
3. A new report estimates that this expansion will cost the states $118
billion, significantly higher than the CBO estimate.
4. It is worth noting that, of the 50.7 million uninsured, 14 million are
already eligible today for Medicaid and SCHIP and have not signed up.
This is because, if you enroll in these programs, it is very difficult to find a
doctor, since government reimbursement rates to doctors are too low and,
as a result, doctors do not accept these patients.
5. There are 159 new boards and commissions to be set up and staffed
under the law—and about 16,000 new IRS agents to be hired to ensure
that filers show on their tax returns that they have insurance and, if not,
that they pay the penalty.

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Western Conservative
Summit 2011
Dick Morris Dana Perino John Bolton Kevin Jackson
“Fulfilling America’s Promise”

July 29-31 • Denver Marriott City Center

Confirmed speakers are shown. More to come.
Individuals $200 • Host a Table $2,500
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For tickets and information go to WesternConservativeSummit.com

Centennial Review, May 2011 ▪ 4