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Year Four of the Obamacare Era

March 27, 2013

By Avik Roy

Why conservatives will win the health-care debates of the future.


Three years ago last week March 23, 2010 President Obama signed the Patient Protection and Affordable Care Act into law. In the intervening period, conservatives have worked tirelessly to build the case for repealing Obamacare, by calling attention to the law’s broken promises and policy flaws. But Obamacare’s third year was unkind to the law’s opponents. First, the Supreme Court upheld its constitutionality, by a margin of one vote, that of Chief Justice John Roberts. Then, last November, Americans voted to reelect President Obama, taking repeal off the table until at least 2017, and possibly forever. So the core question facing conservatives today is: What should we do now? Should we continue to fight for repeal, despite the long political odds? Or is there another path forward, one that will expand freedom and bring our entitlement state under control?

Some of Obamacare’s tax increases and Medicare cuts have already been implemented, but it is on January 1, 2014, that the bulk of its regulations, mandates, and subsidies go into effect. And it is that last item subsidies that is the most politically potent. In a little over nine months, as many as 30 million Americans will become eligible for Obamacare’s insurance subsidies. By 2017, according to estimates by the Congressional Budget Office, 25 million people will be enrolled in Obamacare’s private-insurance exchanges, with an additional 10 million newly enrolled in the Medicaid program.

If the next Republican nominee for president promises to repeal Obamacare, the unfortunate truth is that he will be promising at best to disrupt health-care coverage for these 35 million Americans. To put that number in context, 12 million Hispanics voted in the 2012 election. Is a party that may embrace citizenship for illegal immigrants prepared to discard a much larger bloc of voters?

HOPING FOR REPEAL

On the other hand, those who still seek repeal have hope. As Jay Cost points out in a thought-provoking piece, the politics of Medicare, say, and those of Obamacare are somewhat different. Medicare was a financial windfall for the older people who received nearly free health care as a result, and thereby also for the providers of health-care services, like doctors and hospitals, who got rich off the program. The cost of Medicare to average taxpayers has, by contrast, remained opaque. That has given opponents of Medicare reform a substantial degree of political leverage over the supporters of reform. Even Paul Ryan’s controversial premium-support plan promises to make no changes to the program for Americans who are ten years or less away from becoming eligible.

By contrast, while Obamacare will subsidize health insurance for tens of millions of currently uninsured voters, the law will impose significant and visible costs on the rest of the population. It will impose steep fines on medium-sized and large employers that do not provide health insurance to every full-time employee. It will dramatically raise the cost of health insurance for young people who aren’t insured through their employer by as much as 100 percent and it will make coverage costlier for every American, through an array of taxes and benefit mandates. It will force many seniors out of the popular Medicare Advantage program. Most infamously, it will require that most Americans purchase government-certified health insurance or pay a fine: the "individual mandate."

So, the question that repeal advocates must unsentimentally and rigorously answer is whether the constituency of people most harmed by Obamacare will be larger, and more passionate, than the constituency of people who most benefit.

The 2014 midterm elections will be an opportunity to find out. Will young people who have voted overwhelmingly for Democrats in recent years put social issues aside and protest their rising insurance costs? Will seniors on Medicare Advantage who already favor Republicans vote in even larger numbers for conservative candidates? Because 2014 will be the year in which premium "rate shock" will be at its sharpest, it will be the year in which Republicans will have their best opportunity to illustrate the law’s worst flaws.

REASONS FOR CAUTION

It is likely that Obamacare’s subsidized insurance exchanges will have some initial difficulties. Earlier this month, an Obama-administration official said he was "pretty nervous" about whether the exchanges would be ready on time. "The time for debating about the size of the text on the screen, or the color, or is it a world-class user experience that’s what we used to talk about two years ago," he said. "Let’s just make sure it’s not a Third World experience."

Republicans are likely to get some mileage out of the exchanges’ rough startup. But perhaps not as much as they hope after all, the exchanges will largely serve those who today have no insurance at all. While those individuals will probably face delays in gaining coverage, they are likely to be insured by the time November 2016 rolls around. And voters who stand to gain subsidized insurance through Obamacare are far less likely to favor repeal. The more potent argument will revolve around how Obamacare increases premiums for those who already have insurance.

Many conservatives hope that Obamacare will collapse like a house of cards once its policy failures are fully revealed to the public. But policy failures often lead to more government, not less. Take Fannie and Freddie, the government-backed mortgage giants. Despite the housing crisis of 2008, and a taxpayer bailout of $137 billion so far Fannie and Freddie are still here, as prosperous as ever. And while European monetary union was clearly flawed from the start, the governments involved have not reacted to the crisis by withdrawing from the euro, but rather by further centralizing their fiscal and banking policies.

In Massachusetts, the fact that Romneycare failed to reduce health-care spending did not lead to a collapse of the system. Instead, in 2012, the Massachusetts legislature passed an additional round of dirigisme, including price controls for hospitals and doctors.

Put simply, Obamacare will not vanish of its own accord.

THE FUTURE HEALTH-CARE DEBATE: COST

Conservatives have to be prepared for the possibility or probability that we will fail to fully repeal Obamacare. While that may seem like cause for despair, it isn’t.

For decades, conservatives have been on the defensive when it comes to health care. Progressives have consistently campaigned to expand subsidized health-care coverage. It has been their top domestic priority. Conservatives have opposed these efforts, on account of their cost and their statist bent. Politically, that debate has placed conservatives at a disadvantage, because poor, sick, uninsured people arouse understandable sympathy.

In the Obamacare era, where nearly everyone will be covered, the terms of the debate will change. In the health-care debates of the future, liberals and conservatives will argue not about coverage, but about the cost of health care: in terms both of rising insurance premiums for the middle class and of rising government spending that is funded by taxpayers.

For the Left, reducing health-care costs requires more state control: rationing, price controls, regulations, mandates, and the like. Conservatives have a more appealing message: that we can reduce the cost of insurance, and of government health-care spending, by expanding consumer choice, and by putting Americans in control of their own health-care dollars.

We can repeal Obamacare’s age-rating provision, the one that artificially drives up the cost of insurance for the young. We can repeal Obamacare’s premium tax, which will raise premiums for everyone who has private insurance. We can expand the role of affordable consumer-driven insurance plans, which combine catastrophic coverage with health-savings accounts. We can replace the law’s constitutionally injurious individual mandate with a more voluntary mechanism that encourages affordable coverage.

On these issues, it will be conservatives who have the political advantage. Conservatives will be fighting for lower cost and greater choice, whereas progressives will be making ideological arguments about the virtues of state interference.

REPLACE THE GREAT SOCIETY

Another thing is important to remember: The fact that Obamacare is our most recent health-care entitlement doesn’t make it our worst health-care entitlement. That title belongs to the twin towers of the Great Society, Medicare and Medicaid, which will soon be spending $1.5 trillion a year of taxpayer money. That compares to $200 billion a year for Obamacare when it’s fully implemented.

Obamacare’s exchanges, for all their flaws, are rather similar to what Paul Ryan has proposed for Medicare reform. Unlike Ryan’s plan, however, the Obamacare exchanges are aggressively means-tested and contain no "public option" of a government-run plan. If we do end up stuck with Obamacare, therefore, conservatives can work to gradually move the Medicare and Medicaid populations into these exchanges, saving trillions of dollars over time. All we’d have to do is reform the exchanges in politically popular ways, raise Medicare’s enrollment age, and gradually reduce the income thresholds for exchange eligibility.

Some pessimists believe that these incremental conservative reforms won’t fly, because they will be opposed by the same Democrats who oppose full repeal. But this pessimism misunderstands Democrats’ policy priorities. Democrats are much more concerned with achieving universal coverage than they are with the details of how that coverage is achieved. Conservatives will face steep resistance from Democrats if the effect of their policies is to reduce coverage. They will face much less resistance on the issue of affordability. And Democrats who oppose expanding the role of private-insurance exchanges would have to explain why they voted for them in the first place.

It isn’t fun to assess soberly the likelihood that Obamacare can still be repealed in full. It’s psychologically easier to convince ourselves that nothing has changed since Obama’s reelection, and that repeal will be just as achievable in 2017 as it would have been with a Romney victory in 2012.

But repeal is not the only possibility for a substantive and viable conservative health-care agenda. Indeed, replacing the Great Society with a cost-effective, means-tested, market-oriented insurance system would represent an even greater victory for limited government. All hope is not lost. Indeed, there is as much cause for optimism as ever.

Original Source: http://www.nationalreview.com/articles/344010/year-four-obamacare-era-avik-roy

 

 
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