The bad news for Obamacare keeps rolling in. WSJ:

The first handful of states have released approved 2017 rates for people who buy health insurance on their own and the results so far are consistent with what many expected: There are significant increases in premiums for next year.

Some insurance regulators have begun announcing their approval of rate increases, including an average jump of 62% for the biggest plan in Tennessee and increases of around 43% in Mississippi and 23% in Kentucky for large carriers.

…some state regulators say they are facing an unusually difficult scenario in which they had to choose between agreeing to the price increases or seeing the plans withdrawn from some markets entirely, as large insurers AetnaInc. and UnitedHealthcare have begun doing.

The U.S. has two big problems with health care, and they are related: the cost of health care, and the availability of it. Obamacare concentrated its efforts on the availability side of the question—trying to devise a way in which more people could gain access to health care, while doing less to address the cost spiral.

The argument for prioritizing availability is not a bad one, in theory: people need health care, and you can’t tell them to wait until the whole system is fixed. Obamacare defenders will still point out, as many are doing in response to this latest news, that the double digit premium hikes aren’t a problem for those whose health care costs are subsidized under the system—their subsidies just go up.

Fair enough. Obamacare critics shouldn’t overlook the reality that there are now twenty million people who are now covered by insurance who used not to have it. That is a good thing.

However, the question for critics has always been sustainability: is the health system that Obamacare establishes something that can really last? And here’s where the problems come in. Those double-digit premium increases hit two groups right away: the millions of people who need Obamacare (and will have to pay escalating financial penalties if they don’t have it) who aren’t stinking rich; and the taxpayers who are facing an escalating bill for Obamacare subsidies that are going up much more radically than proponents told us they would.

Over time, this isn’t going to work. On the one hand, the outcry from ordinary, unsubsidized Obamacare victims whose incomes will be squeezed by escalating costs for what is, in the end, pretty mediocre health insurance, will create a political storm. Second, the escalating costs of Obamacare subsidies will join other unsustainable entitlements related to health care. This will create a massive federal budget crunch that will be a disaster for everyone, but especially for the poor people who depend on federal subsidies and support.

To keep afloat, Obamacare will have to cut benefits and raise prices, which means, among other things, that the young people who now subsidize the middle aged (premiums for young people are artificially high, especially for young men, in order to keep premiums for the middle aged lower than they would otherwise be) won’t get the same level of subsidy or service when it’s their turn to be middle aged. It is, in other words, another one of the generational rip-offs that many blue model social programs turn into in their death throes.

What’s needed is a set of reforms that start from the other end: cost. The root problem with American health care isn’t that some people don’t have enough money to pay for the health care they need. The root problem is that the system overall is too expensive for society to pay for as a whole. The cost trends for American health care, especially as the population ages and new forms of treatment become available, are bound to increase. What that means is that as long as the cost spiral continues, efforts to increase availability by subsidizing those who can’t afford it are doomed to fail. Fewer and fewer people will be able to afford their own insurance, more and more will have to be subsidized, and the cost of the subsidies will ultimately break the biggest bank of all.

What will happen as that breaking point comes closer is a set of increasingly ugly fights as people squabble over health care.

This isn’t actually necessary. We live in an age in which technological change has the ability to increase the quality and decrease the cost of more and more elements of the American health care system. The main policy task for health care reformers—and it is a challenging one—is to figure out how to redesign the health care system, and the government policies that regulate and shape its evolution. If those efforts are successful, over time costs will stabilize and even decline wherever possible.

As we do that, it’s going to be easier and easier to provide universal access to increasingly advanced levels of health care. As health care costs stabilize and decline, it will cost less to subsidize those in need, and the numbers of people who need subsidies will decline. Meanwhile, making the giant health care industry more dynamic will reduce the costs of other economic sectors. Inflated health care costs is a huge drag on for example, public education, with health care costs for current and retired employees cutting heavily into the funding available for actual classroom instruction. Ditto for infrastructure. The list goes on.

Reducing the cost and improving the quality of health care would act like a giant tax cut on the economy, increasing growth overall—something that in turn would make the country’s health care bills even easier to pay.

Obamacare proponents aren’t wrong to worry about the availability of health care; it is a real and a growing problem. But the system they have built will make the health care problem worse and in the long run much harder to address. That is already clearly starting to happen, and the smarter analysts are even predicting how the unraveling will proceed.

The next wave of health care reform must look at costs. And the cost problem mustn’t be solved by rationing, as blue model enthusiasts and naive statists instinctively think, but by reforming the system to harness the huge potential of the information revolution to do to the cost of health care what the Industrial Revolution did to the cost of manufactured goods.

The basic opportunity of our time is this: just as the Industrial Revolution made the masses of middle class Americans ‘goods-rich’ beyond the dreams of their ancestors, so that even poor people today have ‘stuff’ like flat screen TVs, clothes, air conditioning, cell phones and cars that people could scarcely imagine 150 years ago, so the information revolution has the ability to make people ‘service-rich’ in the 21st century. Harnessing that power to the development of a new health care system is our greatest single challenge—and opportunity.

That has to be the starting point of health care reform, and the problems of Obamacare are going to make health care reform more urgent, as well as more difficult, as we go forward.