HP-Med-0017-Stock iStockphoto/Jason Stitt

A prominent Wall Streeter I know recently had a meeting with a top Asian political official. The Asian leader didn't want to talk about North Korean nukes, the U.S. Dollar, or even China. He asked about the prospects for American healthcare reform.

His fear, it seems, is over the heaping debt being added to the U.S. rolls, and its implications for higher inflation and long-term U.S. interest rates. President Obama's push to enact healthcare reform this fall won't be a race against the Senate clock, or even the August recess. It will be a pursuit to stay ahead of the rising yield on the 10-year T- Bill.

The biggest risk the Administration faces is simple: That the mounds of debt that their big healthcare expansion portends will spook foreign investors, who will in turn push up long term interest rates. Don't let the relatively "modest" score released last night by the Congressional Budget Office--of the Senate HELP Committee's healthcare plan (the "Kennedy" Bill)--assuage. That score came in at about $1 trillion over 10 years. It was less than some expected. But it doesn't include the cost of expanding Medicaid or financing new debt to pay for it all. One top healthcare analyst, former Medicaid Director Dennis Smith, puts the real cost of the plan closer to $2 trillion. Even at $1 trillion, that means we're spending $65,000 per newly insured American (the plan only covers 16 million of the estimated 50 million uninsured).

All that new spending will deter foreign investors from buying U.S. treasuries, driving up interest rates and reducing the value of the dollar. Fiscal instability is the Administration's real political nemesis, not the Republicans. Just like rising interest rates undid President Jimmy Carter, et tu Obama?

One investor friend of mine mused that the best "pair" trade on Wall Street right now is going short on the health care industry and the price of the 20 year T Bill simultaneously. You can short the 20-year bond by buying an exchange traded fund, ticker symbol TBT. Maybe that's the way to hedge against health care reform? Someone should be checking to see if TBT shows up in Senators' stock portfolios.

As for Obama's big, government directed health reform plan--once it gets enacted (replete with an overly expensive "public" insurance program) both medical stocks and long-dated T-Bill prices are likely to plummet. The prospects for choice among private health plans are likely to decline along with them.

Scott Gottlieb, M.D., is a resident fellow at AEI.