Well, as I predicted almost a month ago Obamacare did pass. It was clear to me that the current Republicans had no strong ideological or political strategy to defeat the Democrats. It was all a matter of sweetening the deal for the few pro-life Democrats and there you go.
I think Megan McArdle might even be right, and Democrats will probably pay the price for their political stunt. But really, that won’t matter much. Republicans will not be able to revert this without at least giving it a chance to see how it works. And that, of course, is the problem. How you define what works and what doesn’t in government? You simply don’t. When you can print money or tax other people to pay your bills everything works. Until everything doesn’t.
So in one more aspect, the US is indeed moving towards the European model. It could have been much, much worse obviously. What we will have now is a huge transfer of money but the ‘means of production’ will still remain in private hands (that is why the market gained 100 points yesterday). Insurance companies will lose money covering more sick people but they will make more money covering more healthy people as well. The percentage of people receiving subsidies from the government will increase, but eventually it will taper off. We will definitely see a gap in quality (subsidized plans will definitely be much more restrict) and overall costs will continue to be about the same. You will have the media covering heart breaking stories for people who had no care and now got it. Only a handful of right wing bloggers will remember of how silly the predictions of incredible gains in life expectancy, deficit reduction and lower bankruptcy were.
Republicans might be able to tweak it here and there, but that is not going away. After all, would you change anything and destroy the new model for insurance companies? This is it, there is no way back.
A few days ago I went to a Mitt Romney’s book signing event. Mitt talked for about 30 minutes about his new book (“No Apology: The Case for American Greatness”) and then at some point he said something like “We need to change the direction Obama is taking America, otherwise we will be the France of the twenty first century!”. Standing applause!
So you see, that is a huge part of the problem. The US economy is so huge, and our system is so prosperous and rich that the big risk we run is… turning into France. It is hard to convince people this is truly a disaster… because in reality it would probably not be one.
Now, clearly there are important and dangerous consequences in having the US following this new model. The reason the US can be the ‘world’s policy’ is that our economy is so much larger than others that we can spend the same percentage of GDP and have a much larger force. With the new model where taxes are higher and growth is smaller, this will not hold. That can be an invitation for the left’s fantasy of a stronger UN (doubtful) or to an even stronger China. If you think the world today is a messy place, wait until the US starts to pull out.
Another very possible consequence is that our economy as a whole will start to innovate less and less. People who think it is just a coincidence that we have 90% of all state of the art IT companies in the US will soon start wondering why those companies are not here anymore.
But still, those consequences are decades away. All people want to talk about now is how much nicer life will be with one less thing to worry about – health care is a right now baby. We owe it to ourselves! Bring on the wine and the croutons!