FREEPORT – The chief selling points of ObamaCare are looking as wilted as last summer’s flowers.

A growing number of health insurance companies are confirming that premiums are going up, not down. It was always nonsense to claim that the cost of insurance would be lowered by forcing insurers to sell policies loaded with benefits mandated by a government bureaucracy to everyone at pretty much the same price irrespective of health condition.

It is also becoming clear that the implementation of ObamaCare will increase the deficit, not reduce it. The lower deficit claim always rested critically on the assumption that Medicare payments to doctors would be reduced by nearly $200 billion over the next 10 years. But these reductions are unlikely to happen, because if they did many doctors who are already unhappy with the program’s low reimbursement rates would refuse to take any new Medicare patients.

A recent report by the Office of the Actuary of the Medicare system concludes that payment reductions to physicians are not feasible, and further that billions of dollars of savings related to assumed Medicare productivity improvements are unlikely to be realized.

Most importantly, ObamaCare shifts the cost of insurance from consumers to providers and taxpayers, but does little to control the underlying cost of care. Economists at the Center for Medicare and Medicaid Services now expect health-care spending to increase an average of 6.3 percent annually through 2019, well above the expected rate of inflation, in part because of the new law.

Even after the imposition of new taxes, fees and penalties to pay for it, the legislation has the potential to become the most expensive entitlement program in the country’s history. Many voters clearly understand the threat this poses.

Having captured the House and having made significant gains in the Senate, many Republicans think that the legislation can be repealed. But repeal is probably impossible before 2013, and in any case will become increasingly difficult as new rules and entitlements become effective.

There will be a sizable constituency for expanded Medicaid coverage and federal subsidies, and liberal politicians, like Maine’s Rep. Chellie Pingree, who think that more government is the way to reform, will likely fight hard to keep the program intact.

Others, like Sens. Olympia Snowe and Susan Collins, will likely want to tinker around the edges to fix it, even though the legislation starts with the wrong foundations and is fatally flawed.

The only hope Republicans have for side-tracking Obama-Care is to agree on a detailed and comprehensive substitute that offers the legitimate promise of controlling the cost of care and lowering the cost of insurance. Rep. Paul Ryan’s Roadmap for America would be a good place to start.

A comprehensive and effective substitute will require that consumers, providers and policymakers acknowledge two fundamental principles that ObamaCare ignores. The first is that health care is subject to the forces of price, competition and regulation. Many supporters of ObamaCare do not believe this is true, and think that the principles of economics don’t apply to health care.

The second and connected principle is that the rise in health care costs will never be satisfactorily constrained as long as we rely on a third-party payment system. Third-party payers, be they governments or private insurers, try to constrain costs through price controls, or supply rationing. But third-party payers can’t control demand.

Demand is constrained only by consumers who pay directly for products and services and have to make decisions about how to allocate resources.

Expanded use of health-savings accounts for minor and preventive care, combined with catastrophic insurance policies, would give consumers more responsibility for their health-care decisions, give them an incentive to seek value, and give providers an incentive to create it.

These important incentives are missing from ObamaCare. Insurance would do what it is supposed to do, which is provide protection against unexpected and expensive accidents and illness instead of being a ticket to an all-you-can-consume health-care buffet.

The issue of who pays is of fundamental importance to effective health care reform, but it isn’t clear if Republican legislators are willing to tackle the question, or if enough of them even understand its central significance.

ObamaCare supporters, of course, are perfectly happy with the payment system as it is, even while they wonder why costs are rising so rapidly.

If Republicans can’t repeal ObamaCare, they may be able to halt funding for its implementation while they formulate reforms of their own. But they need to proceed quickly.

– Special to the Press Herald