Healthcare

 The political struggle over Obamacare has reached a critical inflection point as real events have overtaken its opponents’ basic arguments.  That opposition has always drawn on, and encouraged, doubts about the public’s real interest in a federal guarantee to health insurance and their tolerance for a mandate to enforce it.  After the program’s fitful start, it is now clear that large numbers of Americans are prepared to spend the considerable time and money required to sign on. The Rand Corporation estimates that 9.5 million people who had no coverage a month or a year ago now do, thanks to the Affordable Care Act (ACA).  I also analyzed the data and found that the newly-insured number at least 7.8 million and as many as 10.9 million.  And if the governors and legislatures in 24 states had not inexplicably turned down the ACA’s Medicaid expansion – a decision three of those states are reconsidering -- the total number of newly-insured today would range from 11 million to 14 million.

            These numbers create a political inflection point, because the program’s demonstrated appeal renders it virtually impossible to repeal.  Arguing against a new federal benefit is an easy political challenge for conservatives.  By contrast, withdrawing a benefit that millions already depend on is, at best, a herculean task.  Just try to imagine any future Congress or President actually withdrawing practical access to medical coverage from millions of moderate-income families, millions of young adults covered by their parents’ policies, and millions of more people with preexisting medical conditions. 

            This political inflection point will strengthen not only as more people enroll, but also, and even more important politically, as Obamacare generates benefits for everyone else.  To begin, surveys show that several million people would like to change jobs but stay where they are, out of concerns about losing their healthcare coverage.  Now, they can do as they like – and the enhanced labor mobility should help the economy.

            More important, by enrolling large numbers of previously-uninsured people, Obamacare should slow increases in everyone’s insurance premiums -- or even lower premiums.  As countless studies have shown, most people without coverage get their medical care in emergency rooms.  Since they usually cannot pay the bills for that care, hospitals pass along those costs through higher charges on everyone else, which in turn leads to higher insurance premiums.  The ACA will not only relieve some of those direct pressures on premiums; its mandated coverage also will generate more income for insurers, further easing upward pressures on premiums.

            This would be very good news for the American economy.  Over the last decade, healthcare coverage has been the single, fastest-rising cost for most U.S employers.  But as globalization intensifies competition, many of those employers find themselves unable to pass along their higher healthcare costs by simply raising their prices.  Their only recourse, as I have written many times, has been to cut other costs – beginning with jobs and wages.  In the end, therefore, the ACA could contribute to broader gains in employment and incomes – and that could produce a political inflection point that could support political realignment.

This post was originally published on Dr. Shapiro's blog  

Note:  Ordinarily, I write about clean technology matters, but the Senate health care vote today is so important to the country's future that I want to weigh in on the issue.  In my view, certain provisions of the bill raise grave issues. There is still time, however, by fixing key provisions, to make a better bill and prevent political disaster.  In casting their votes today, members of the Senate should make it clear that they reserve the right to modify this version of the bill in the final House and Senate package.

This morning, Christmas Eve, at 7AM, the Senate is expected to vote on party lines to pass a Health Care bill. All Democrats and two independents will vote for.  All Republicans will vote against.  The bill will pass but not in the way that anyone likes to see important legislation advance.

It is no secret that opponents of the bill have been virtually on the point of taking up arms. Supporters from Democratic leaders to Paul Krugman in the New York Times have generally argued that the bill has issues but contains more good than bad.  It caps a period that has been among the worst for any political party in recent history, sending President Obama's approval ratings plummeting from overwhelming positive to below 50%, the generic Democratic Republican matchup from about +10 to -9 and Congressional approval ratings lower.  Harry Reid is now trailing in polls in his home state.  In short, the bill has already exacted a high price from Democrats but is likely to exact an even greater price this fall. 

Here is how to improve the bill and stave off a political and policy disaster.

First, the bill has some features that enjoy broad support, notably a Patient's Bill of Rights that prevents exclusion for pre-existing medical conditions.  This is good policy and good politics.  This alone would have been a major accomplishment and political winner for the Obama Administration.  Unfortunately, this positive element has been lost in discussion of other elements of the bill. Two provisions, both of which punish key progressive constituencies, stand out as so deeply flawed they should be deal killers.  If the majority party is to recover from this chapter in political history, it must remove these provisions from the final House Senate version of the bill.

First, both the House and Senate bills force all Americans to purchase insurance from a private company or face the legal consequences.  President Obama campaigned against this idea, the so called individual mandate, which owes its existence in both the House and Senate bills to the relentless pressure of insurance company lobbyists.  The impact of this provision will fall most heavily on the young, poor and minority who have the least money to purchase health insurance and the least organizational skills to comply with a federal mandate.  Bruce Western at Harvard University who studies criminal justice has shown that the huge expansion of prison population in recent years has occurred among minorities locked up for the most part for administrative crimes like missing court dates not traditional common law offenses.  Once in the system, they no longer have a shot at upward mobility and often see their lives spiral downwards.  The health mandate will create a new category of offense that will disproportionately impact the young and poor.  More fundamentally, however, forcing American citizens to write a check every month to the Aetna corporation for the privelege of turning 18 runs deeply counter to the American tradition of freedom.   The provision which has so deeply troubled liberals like Howard Dean must be dropped from the final bill.

Second, the bill imposes a tax on good quality health care plans.  This is baffling politically as it targets union workers, a mainstay of the Democratic party--as well as anyone who has what the bill is supposed to provide.  The union struggle for quality health care has been at the center of the fight for social equality for more than a Century.  Taxing union benefits is deeply punitive to the labor cause as it will not only take money away from members but have the secondary effect of making it harder to organize.  Anyone with quality healthcare will instantly see a decline in their welfare from the bill.  More fundamentally, however, normally, one levies excise taxes on undesirable things, for example, cigarettes and alcohol.  Indeed, taxes on "bads" impacting health such as tanning salons which subject people to UV rays make sense in a healthcare package.  Taxing quality health care plans, in contrast, as the Senate has done in a bill designed to provide just that is not only counter-intuitive but imposed in place of a general tax or one on the wealthy, deeply regressive.  This provision, not present in the House bill, must be dropped in any final bill.

One can debate the political wisdom of pushing ahead with a bill that the American public so disklikes.  However, that debate is over.  The task now is to change the bill so that there is less to dislike, allowing the parts that do work to stand on their own and make the bill better as a result. 

In short, it is late in the game but not too late to fix these two flawed provisions. Failure to do so will have steep policy and political consequences.  Fixing them is not only good policy but good politics.