Obama's 'Matrix' Is New Health Reality

March 10 (Bloomberg) — Every administration has its movie. George W. Bush seemed too often on the wrong side of guerrilla warfare in "The Battle of Algiers." Bill Clinton mixed business and pleasure with the predictably messy results of "The Apartment." Now Barack Obama has dropped us all into "The Matrix."

In the Obama Era, it seems, we all pick our way through anxious lives that have something to do with software. Like Keanu Reeves's Neo, we realize hour-to-hour that we are being manipulated by a system that has its own larger plan.

If only we keep a cool head, we tell ourselves, our powers of logic will help us escape the web. But each move we make, even the one that feels independent, takes us deeper into the Matrix.

Take one of the biggest problems in the U.S. economy today: jobs. Long before "subprime" or "cram down" became routine components of our language, we understood that employers need incentives to create new jobs to replace ones that are disappearing. We knew too that health-care costs are a growing deterrent to hiring or rehiring. Between 1996 and 2005 health care costs for employers rose by 34 percent relative to payrolls.

A struggling boss today who looks at a man he lays off sees a bad knee, an unambiguous PSA score or an unending Crestor habit. When it comes to rehiring, the boss is even warier. After all, older workers who want their jobs back not only need the pay but also may have put off some astronomically expensive medical procedure.

Looks Appealing

President Obama's $634 billion, 10-year health-care plan undoubtedly appeals to would-be Neos out there. In its broad outlines — the details are still to come — the plan seems to promise easier days for employers and employees alike. (There was discussion during the campaign of tax breaks for employers for providing health care.) As the president said, "Health care reform that reduces costs while expanding coverage is no longer just a dream we hope to achieve. It's a necessity we have to achieve."

As in "The Matrix," freedom is a mirage. That $634 billion reserve has to come from somewhere. The administration has already said it will cut, by $177 billion, payments to private insurance plans that serve senior citizens through Medicare. That by itself will make insurance costlier for the rest, because private companies will doubtless shift some of those costs to non-Medicare policies.

The administration will also need to raise taxes, and almost all the increases under discussion are ones that affect employers. "The administration wants to curtail itemized deductions and raise marginal rates. These are the kinds of changes that hammer employers, especially unincorporated businesses," Thomas Miller of the American Enterprise Institute told me. So in the future, the health insurance may be there, but the employers won't.

Plugged In

And there's no escape. "There are parts of the health-care proposal that look like an opportunity to unplug ourselves from the false reality of comfortable and convenient government-directed health care, but they are not real," Miller said.

The administration seems almost to relish the sinister aspect of government-run health care. Otherwise it wouldn't have elevated the "National Coordinator of Health Information Technology" — an advisory position created by the Bush administration — into a regulator with teeth. The title is worthy of Rhineheart, Neo's boss, who tells him, "This company is one of the top software companies in the world because every single employee understands that they are part of a whole."

The administration is clearly comfortable taking advantage of the current economic crisis to promulgate broad social change. This in itself is enough to make you break out in a sweat. It means Rahm Emanuel's statement that it was wrong to waste a crisis wasn't an outlier; it was part of a trend. Team Obama seems to be deploying experts of the highest caliber, cold-blooded enforcers like Agent Smith, to outfox the Neos and convince them of the futility of resisting.

It's Coming

Peter Orszag, director of the Office of Management and Budget in the Obama White House, is a nice, smart man. But Orszag's facial features took on a resemblance to those of Agent Smith when he said recently: "There's a lot of momentum behind health care." Momentum: Something's coming, so accept it or run.

All this explains why panicked Republicans are ranging wide in their search for leadership. A mere politician won't stop this Matrix — they need a superhero. Former Speaker of the House Newt Gingrich is in the news lately because he is one of the few figures in the GOP with the flair to challenge the system.

It may well be that Republicans manage to change this plot come the midterm elections of 2010. Otherwise, at least when it comes to health, all of us Neos are simply going to have to sit through the end of this movie.

(Amity Shlaes, author of "The Forgotten Man: A New History of the Great Depression," is a Bloomberg News columnist. The opinions expressed are her own.)

© Copyright 2009 Bloomberg

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