Obama, Race, and Health Care

Understanding America's real and imagined grievances

After an exceedingly disappointing 10 months in office pursuing a hyper-partisan agenda, President Barack Obama reminded me last week of why, for a brief moment during his campaign eons ago last year, he actually won my heart. He seemed then to be a genuinely different kind of candidate, heterodox and capacious, capable of transcending the great divides of our time to forge perhaps a new—and improved—political consensus.

Remember that great line from his speech? "There is not a liberal America and a conservative America; there is the United States of America. There is not a black America and a white America and Latino America and Asian America; there is the United States of America."

He reignited that spirit over the weekend when he took to the airwaves and rebuked—calmly but firmly—the ideological yahoos in his party—the Nancy Pelosies, Maureen Dowds, and Paul Krugmans—for calling opponents of ObamaCare racist. "[Race] is not the overriding issue here," he admonished. It's an argument about "what's the proper role of government."

Exactly. But if Obama wants to regain the momentum on health care reform, he will have to do more than just refrain from impugning the motives of his opponents. He will actually have to listen to them and do what he said he would during his campaign: put affordable coverage within the grasp of more Americans without forcing them to purchase it, without raising their taxes, and without breaking the federal bank.

Obama has been trying to shore up support for health care reform by noting that he will veto any health care bill that isn't deficit-neutral. "I will not sign a plan that adds one dime to our deficits either now or in the future. Period."

But it isn't racist to wonder if that statement depends on what Obama's definition of "deficit neutral" is. The Congressional Budget Office, for instance, had noted that the House Democrats' health care bill would add $220 billion to the deficit over 10 years. But the White House proclaimed the bill to be "deficit neutral" anyway. Why? Because it simply refused to count $245 billion in Medicare payments to providers in the bill that it viewed as excessive.

Since then, the CBO has certified that the Senate's Baucus bill (which many House Democrats have already declared dead-on-arrival because it does not contain their beloved public option) would reduce the deficit by about $50 billion over 10 years. But that's only because it will offset its costs by sticking it to the American people—many of them making under $250,000—in the form of higher taxes, penalties, and fees.

Despite that, its "deficit neutrality" depends on two caveats: one, leaving 17 million Americans uninsured. And two, Congress holding Medicare reimbursement rates to providers to the declining levels prescribed in the bill for the next two decades. But this is something that Congress has never been able to do, so the CBO projection is totally meaningless. The CBO itself says as much, noting that its analysis assumes that the Baucus bill will be followed in toto forever, which is "often not the case for major legislation."

But the real issue is that deficit neutrality—even if it were achievable under ObamaCare—is a sham goal. The country's deficit has tripled since last year and is expected to balloon to $9 trillion over the next decade. Declaring "neutrality" in the face of this is not a policy position. It is a cop out. It is code for permanently cementing deficits into the federal budget, and virtually guaranteeing either hyper-inflation, hyper-taxation, or both down the road.

Obama insists that two-thirds of his health care tab—or over $500 billion over 10 years—will be paid for by squeezing out waste and inefficiency from Medicare. But if there are such savings waiting to be tapped in Medicare, shouldn't they go toward slashing the deficit—not adding more entitlements? Is it a symptom of racism or the mental health of the American public that it is taking to the streets to protest such warped priorities?

Indeed, if Obama were genuinely interested in helping uninsured Americans purchase health care, he wouldn't be talking about imposing an individual mandate and confiscating up to $3,800 in penalties every year (as per the Baucus plan) from families that don't comply. He would do what he said he would during the campaign: make irresistibly cheap options available to them.

Obama's whole argument for the mandate is based on the idea that uninsured folks impose an unacceptable financial burden on the rest of us when they land in emergency rooms and get care they can't pay for. But uncompensated care costs only about $40 billion annually—or about 2 percent of the country's $2.2 trillion health care spending. That's less than what department stores lose to shoplifting every year.

But even if one accepts that argument, shielding the insured from the costs of this uncompensated care requires only that the uninsured get some form of bare-bones, catastrophic coverage. And a healthy, young guy could do so for as little as $80 a month if he could purchase insurance from states like Kentucky, that haven't jacked up coverage costs by forcing insurance companies to include everything from in-vitro fertilization to hair prostheses in their basic package, as states like New Jersey have done. Indeed, if individuals could purchase coverage across state lines, the ranks of the uninsured might be cut by up to 17 million—almost half of uninsured Americans—without costing Uncle Sam a dime.

The main reason Americans can't do so is a 1945 federal law called the McCarran-Ferguson Act. This law handed states the primary role in regulating health insurance in violation of the Constitution's Interstate Commerce Clause, which expressly gives Uncle Sam authority to check state barriers that inhibit the free flow of goods and services. Yet Obama has said not a word about reforming this law in the scores of speeches he has given. Nor have his fellow Democrats made any mention of it in the thousands of pages of legislation they have produced.

Americans elected Obama because he presented himself as a fiscally responsible adult who—in contrast to his predecessor—was interested in looking for workable, pragmatic solutions, not promoting an ideological agenda. But Obama pulled a massive bait-and-switch upon assuming office, using every issue—the financial meltdown, the recession, the deficit, global warming, and, of course, rising health care costs—to expand the scope and size of government. That's what Americans are protesting now, not his skin color.

He was, after all, black before he got elected, as he himself pointed out to David Letterman.

Shikha Dalmia is a senior analyst at Reason Foundation and a biweekly Forbes columnist. This article originally appeared at Forbes.