The Right Way to Reform Healthcare

James P. Pinkerton was a domestic policy aide in the Reagan and Bush 41 White Houses. He is a fellow at the New America Foundation and a contributor to the Fox News Channel.

By now it is obvious that the Establishment was snookered on Obamacare. The political impact of that miscalculation will be felt today, as voters repudiate the Democrats who supported the legislation. But what will happen next on healthcare? Right now, the Establishment seems clueless, and yet fortunately, insurgent Establishmentarians, led by Maria Shriver and Sandra Day O'Connor, are breaking with elite orthodoxy, offering a better healthcare solution.

[Check out our editorial cartoons on healthcare reform.]

Since the current healthcare approach is a costly fiscal and medical failure, Shriver and O'Connor are offering a new direction. Their argument: It's cheaper, as well as more compassionate, to cure a disease as opposed to treating it and insuring for it. In short, they are offering hope for healthcare based on hard science, not on political promises, nor evanescent charisma.

Yet what, exactly, did the bulk of the Establishment, and the Democrats, get wrong these past two years? Here's what: They fell for the theory that greater government supervision of the health insurance market could provide savings. That theory, as propounded by the White House brainiacs, was elegant: We know there's a lot of waste in the healthcare system, and we can find it. In the meantime, we will cover everyone, and people will be so grateful that we can then squeeze down on overall healthcare spending. As White House economic czar Lawrence Summers explained earlier this year, "A prerequisite for any serious attempt at cost control is insuring universal coverage, otherwise cost constraints will have manifestly unacceptable human impacts." QED: More people covered, less spending, everybody happy—except, maybe, for a few Republicans.

[Check out our editorial cartoons on the GOP.]

The Establishment loved the idea of every American getting a low-cost plan. No costly "Cadillac" coverage, to be sure, but no conscience-shocking deprivation, either. Indeed, many business leaders quietly looked forward to Uncle Sam taking healthcare off their hands; they would happily pay higher taxes to be rid of the health-insurance hassle.

Yet within a few months of Obamacare's enactment, it became painfully apparent that healthcare costs were still rising. Speaking at an event hosted by the U.S. Chamber of Commerce in July, Erskine Bowles, co-chair of President Obama's deficit commission, said of Obamacare, "It didn't do a lot to address cost factors in healthcare. So we've got a lot of work to do." And yet what, exactly, had "we" been doing for the past two years?

[See a slide show of 10 things that are (and aren't) in the healthcare bill.]

Nothing about Obamacare, for instance, was staunching the rise in Medicare costs. In August, the Treasury Department put out a positive report on the entitlement program's projected finances; its rosy-scenario-ing led Medicare's independent-minded chief actuary, Richard Foster, to file his own rebuttal: "The projections shown in the report do not represent the 'best estimate' of actual future Medicare expenditures." The best estimate on spending, he added, was far higher.

In other words, the Establishment healthcare plan was a failing to meet expectations. Voters became angry, fearful of both government overreach and healthcare rationing, even as costs were going up, not down.

Neither the Obamans nor the Establishment seemed to grasp the stubborn reality: People like healthcare—and they want more of it, not less. A Kaiser Family Foundation poll in early 2009 surveyed national attitudes on health issues; it found that the public, by a more than 4:1 margin, believes that it is not getting sufficient treatment: "Sixty-seven percent of ordinary Americans don't think they are getting the treatment they need." By contrast, just 16 percent of Americans think they have been overtreated. Meanwhile, the popular culture blooms with medical dramas about "the disease of the week"; nobody makes TV shows about health insurance.