Lawrie McFarlane: Obamacare should have learned from Canada

A crescendo of outrage is growing in the U.S. over the disastrous roll-out of President Barack Obama’s new health-care program.

An estimated 50 million Americans will have their existing health plans cancelled, even though the president promised (on more than two dozen occasions by one count) this would not happen.

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Millions more are reeling at the huge increase in premiums now staring them in the face — in some instances more than 100 per cent.

The website portal doesn’t work. Personal data isn’t secure. In New York, online clients trying to buy coverage were directed to a bakery store.

And these are just the immediate and obvious screw-ups. The real horror show is still to come.

It took 50 years in Canada to develop our universal program, piece by intricate piece. The Democrats in Congress tried to do it in one 2,000-page statute that hardly any of them had read. What could go wrong?

But I want to focus on a different kind of challenge. To meet its budget targets, Obama’s Affordable Care Act requires a massive intergenerational transfer of wealth.

The people who designed the program wanted the elderly to have better health care, a laudable objective. But the president had promised that overall, prices would actually go down, a virtual impossibility.

To get even close, large numbers of young people have to be signed up, by force if necessary (there are fines to compel compliance). The program needs these clients, because most 20- to 30-year-olds make little or no use of the health-care system.

In a genuine insurance scheme, purchasers like these would be charged less. But under Obamacare, those clients will pay premiums far higher than their risk profile requires.

By this means, prices are held down for the poor and elderly. In effect, young people will be made to buy insurance at rates that are inflated, because the public interest demands it.

Wealth transfers like this are commonly used in the financing of public services. The idea, in itself, isn’t novel or outlandish.

But usually, the methodology is a little more disguised or nuanced, a little less in-your-face. Progressive income-tax systems are the obvious example. Over the years, we’ve grown accustomed to the idea that the well-off should expect to be soaked.

But what’s about to happen with Obamacare is a much tougher sale. Fit young adults will be co-opted into buying “insurance” that many don’t want, at a price that any competent actuary would laugh at.

That’s a pretty clumsy financing technique, because it invites an almost mathematical refutation. If you’re 30 or younger, the numbers simply don’t add up, and probably not if you’re 40 either.

On every conservative blog-site and radio talk show, there will be armies of accountants ready to tell Johnnie B. Meek how badly he got screwed. And if what he was buying — and all he was buying — was health insurance for himself, he did get screwed.

Democrats will insist there’s a larger transaction going on here. And of course, in a sense, that’s true. They’re providing coverage for people who can’t afford it

But it was a bad mistake, possibly fatal, to fund a new national health-care program with such an easily discredited methodology. It would have been better to go the Canadian route, and use taxation models that don’t pretend to be something they’re not.

As it stands, Obamacare is both a political train wreck, and more broadly, a public-policy debacle. Far from advancing the cause of health reform, this foolishness may have killed any chance of genuine progress for a generation.

Lawrie McFarlane is a retired civil servant. He was deputy health minister in B.C. during the mid-1990s.

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