When the Patient Protection and Affordable Care Act, otherwise known as Obamacare, passed in 2010, it wasn’t because anyone thought it was a particularly good idea. It was just the plan that was left after most of the parts that would make various interest groups mad got sanded off. It wasn’t a good plan—it was just the plan that Congress could pass.
Obamacare was written and developed in the shadow of Hillarycare, the ’90s-era Democratic plan to expand health coverage. The main knocks on Hillarycare were that it was too complicated and too disruptive. The plan, which never received a congressional floor vote, stalled after a series of articles, attack ads, and even a flow chart displayed on the floor of Congress turned public sentiment strongly against it. In the public imagination, Hillarycare was a confusing bureaucratic mess, not a salve for America’s health care woes.
Critics also zeroed in on another point: Hillarycare would not safeguard existing health care plans. If you liked your health insurance or your doctor, you couldn’t keep your health insurance or your doctor.
What Democratic politicians and policy wonks took from this was that Hillarycare failed because it was too byzantine and too much of a headache. No one understood how it worked, and no one with health coverage wanted to jeopardize their own insurance.
So after President Barack Obama was elected in 2008, they began working on a health care law that was constructed entirely defensively. They wanted something that people could easily understand, and they wanted something that wouldn’t upset existing arrangements that people liked.
That meant writing legislation that left most of the existing health care system in place. Aside from some cost changes that were used to help foot the bill for the law, Medicare, the health care entitlement for seniors, was mostly left alone, despite its looming long-term fiscal challenges. Medicaid, the jointly financed federal-state program for the poor and disabled, was expanded despite its poor track record on health outcomes. Employer-provided health coverage, which had been subsidized through the tax code since World War II, leading to vast distortions in the market and headaches when changing jobs, was left largely untouched, aside from a new tax on very expensive “gold-plated” plans—a tax that was to be phased in over years, and which was delayed even further because it was too disruptive.
Democrats and backers of the health law, including Obama, frequently referred to Obamacare as a “starter home,” the idea being that it would be renovated and expanded over time. A more apt metaphor would have been a new addition on an old and creaking house—an addition that left the shaky foundation in place.
In their quest to write legislation that wouldn’t disrupt anything, Democrats ended up writing a law that didn’t fix anything.
Obamacare’s backers were right about one thing: The law would be expanded. One of the chief complaints about American health care before Obamacare was that insurance was too expensive. This gripe was so widespread that the idea was embedded in the law’s name—the Affordable Care Act. About half of the law’s $940 billion first-decade cost was devoted to subsidizing private coverage for families making up to 400 percent of the federal poverty line, or a little more than $100,000 annually in today’s dollars. The federal government would spend hundreds of billions of dollars to help foot the bill for individual health insurance.
And yet a decade after the law passed, one of the chief complaints about the American health care system was still that it was too expensive. In particular, it was too expensive for households buying private coverage under the law’s auspices but making just a little more than 400 percent of the poverty line and thus qualifying for no subsidies.
One reason for the high cost of insurance under the law was that it required coverage of a slew of federally mandated essential health benefits, regardless of whether those benefits were needed or wanted. But instead of paring back the law’s mandates, Democrats chose to address the problem by uncapping the subsidies, allowing households making up to $350,000 a year, in some cases, to obtain subsidized coverage, at a cost of about $30 billion to $40 billion annually. The subsidy boost was initially passed as a temporary patch during the pandemic, but it has since been extended. Like so much supposedly temporary legislation, it’s widely expected to become a permanent policy fixture.
Yes, Obamacare has expanded health coverage, but one of the biggest cohorts of beneficiaries are childless, able-bodied adults of working age. Rather than targeted aid for the desperate and needy, it’s become a rickety welfare program for those who least need it. Meanwhile, its permanence in the superstructure of American health policy has made real reforms more difficult: Building a new wing onto the old house just means there’s even more to demolish. It’s long past time to abolish Obamacare and start over on health care reform.
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