Friday, April 5, 2013

It Isn’t A Question Of If Obamacare “Collapses”

Tuesday, April 2, 2013, 8:27 PM
So I was watching Fox News’s excellent Special Report with Bret Baier. Baier was reporting about how the special exchange for small businesses is going to have to be delayed for another year. This is on top of other reports that Obamacare will cost the government more than expected, will raise health insurance premiums, will cause people to lose their employer-provided coverage, and will discourage employers from hiring workers full-time. Baier wondered if Obamacare was in danger of collapse.
I don’t think there is a danger that Obamacare will collapse. It is a certainty. The question is what Obamacare collapses into. Whatever the administration’s public relations nonsense, Obamacare was never really a long-term solution to the country’s health care policy problems. It was a halfway house for single-payer health care and centralized government rationing of health care for the working-aged. That doesn’t mean that the designers of Obamacare anticipated or intended every problem of implementation, but the whole point was to make the system of employer-provided coverage through private insurance companies undesirable. That was why Obamacare originally had a “public option.” That was why, when the public option was killed, Democrats had the otherwise nonsensical idea of expanding Medicare to people in their fifties. The point of the public option and the Medicare expansion were to give a government-provided health care option for people who were fleeing the premium increases and dropped employer-provided coverage that was produced by… Obamacare. I got the idea from reading Yuval Levin (who might have used the metaphor) that Obamacare was designed to make private health insurance coverage small enough that future Democratic presidents and congresses could drown it in a bathtub. The good news is that the public option and the Medicare expansion didn’t happen. So we are at least one, and maybe two major laws away from single-payer.
The bad news is that a “collapse” doesn’t necessarily mean what conservatives want it to mean in the context of Obamacare. As Obamacare is institutionalized, Obamacare will transform the insurance market and expectations that people had before Obamacare. Obamacare will produce new problems (and exacerbate old problems) that won’t seem fixable just by repealing Obamacare. By 2016, you won’t necessarily be getting your old employer-provided coverage back just because Obamacare is repealed. Insurance premiums on the individual market will be a lot higher and it will seem awful scary to be out there on your own without the Obamacare subsides. The case against Obamacare is fine, and conservatives should make it with enthusiasm, but the key to getting rid of Obamacare and avoiding single-payer will be determined by whether conservatives are willing to offer alternative policies that can plausibly offer lower premiums combined with health care security for catastrophic health expenses and whether conservatives can offer policies that will deal with the uninsured who have pre-existing conditions. Such policies exist. A key for whether conservatives win is whether the center-right and the Republican party can make advancing those policies a priority rather than chasing fantasies like flat taxes and national sales taxes and such.
On a related note, I think that this post I wrote over at the old No Left Turns blog holds up rather well. Here is most of it:
Megan McArdle wonders whether Obamacare will ever get much more popular than it is now. I’m not sure that is the right way to look at it. The idea that Obamacare was going to become much more popular by November 2010 was always some combination of self-delusion and a cynical attempt to gull wavering congressional Democrats from marginal or right-leaning constituencies. The more important issue is how Obamacare changes the structure of the health care market and how these structural changes will influence the politics of Obamacare in the next 2-6 years. People don’t have to learn to love Obamacare. They only need to have their interests structured in such a way that repealing Obamacare seems like a change for the worse and (eventually) that single-payer health care is the most obvious solution to the problems produced by Obamacare. The way different elements of Obamacare will play out will be uncertain.

1. Prices – If the experience of Massachusetts with insurance mandate/coverage mandate/government subsidy is anything to go by, Obamacare will lead to an even faster rise in insurance premiums. This sounds like a major weakness for Obamacare, but, if conservatives are not careful and articulate, it could actually strengthen the political case for even more government-run health care. For one thing, it won’t be obvious to everybody that Obamacare is the reason for rising premiums. The politics of rising premiums will be a jump ball. Obama supporters and liberals generally will argue that the premium increases are the result of mean, fat cat, greedy insurance companies that will benefit from Republican attempts to liberalize the health insurance market. The argument will be that the insurance companies are already bleeding you dry and that if the Republicans get their way, the insurance companies will charge you even more or even deny you coverage altogether. They will say that it is better to go with the next iteration of Obamacare (or Bidencare or Pelosicare or whatever) and crack down on those mean insurance companies with some combination of price controls and expanding programs of government-provided health insurance. Rising health care premiums will also create urgency for Obamacare’s forthcoming premium subsidies to middle-class families. Rising premiums will make people feel vulnerable and suspicious of any health care reform that seems to leave them on their own to pay for coverage that only barely seems affordable even with ‘help” from their employers and the federal government. Supporters of market-oriented health care reforms will have to offer policies that promise lower prices, but also policies that address what is reasonable about people’s feelings of vulnerability.

2. Guaranteed Issue – This provision will force insurance companies to offer policies to people with preexisting conditions (so far only for children but eventually everybody) and seemingly at about the same premium rate as everyone else. This will tend to increase premiums on everybody, but as people with preexisting conditions are guaranteed coverage (it is complicated now, but if you develop a condition while insured, it becomes a disincentive from leaving your job and possibly losing coverage), they become a constituency against repeal.

3. Medicaid expansion – Obamacare is estimated to increase the population on Medicaid by as much as twenty million by 2014. I’m not sure it will be that much, but even if it is half that, it is still a sizeable constituency against repeal of Obamacare. And it isn’t just the people on Medicaid. People who aren’t on Medicaid will worry about what happens to people who lose coverage. It will seem awfully cruel to take people off Medicaid in an environment in which premiums are rising very fast.


  1. Hello,

    I am having a problem downloading the podcast. When I right click and save I am just getting the content. Not sure if it's a problem on my end or yours. Thanks.

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  2. Great post. My company provides life and home insurance in Malden MA so I try to stay on top of any recent news or changes to laws that could directly have an impact on our insurance offerings. Thanks for sharing your insight and update here, very much appreciated.