Bloomberg View) — Kevin Drum of Mother Jones thinks that making Obamacare work could have been a simple task for Democrats. All they needed was two things:
About twice as much funding, and A higher tax penalty for not buying insurance.
More funding would have allowed them to offer higher subsidies to people with incomes above 200 percent of the poverty line, plus lower deductibles, while a mandate equal to the cost of an insurance policy would have left people with little choice other than to buy insurance. Since the people who forgo insurance today tend to be the folks who use little health care, this would have lowered the average cost of insurance for everyone.
Why didn’t they do this? Kevin blames timidity — “Democrats were fixated on Obamacare costing under $1 trillion” — and a “hack gap”:
If this were a Republican plan, and it were something they really wanted, they wouldn’t have bothered with funding. They would have just made up a story about medical inflation coming down (which it is) and broader health coverage leading to improved economic growth blah blah blah. Democrats weren’t willing to do that.
Judging from my interactions with readers and my friends and family who don’t happen to spend their days marinating in health care policy, the view that Obamacare’s problems are due to Democrats not being sufficiently left-wing, or dishonest, is pretty common on the left. That makes it worth refuting, because — with all due respect to Kevin — it’s completely wrong.
I agree that higher subsidies and a stronger mandate would have made Obamacare less of a policy train wreck; we probably wouldn’t be so worried about a death spiral if they had passed. On the other hand, it would have made the program much more of a fiscal train wreck. Kevin suggests that they should have just raised taxes on the rich, but for reference, the total repeal of the Bush tax cuts was projected to raise only about two-thirds of the amount needed. And since they were projected to expire, that was not a source of revenue that Democrats could use to fund Obamacare.
Funding this extra entitlement by tapping the rich would have been, to put it mildly, unpopular with an important part of the Democratic base: urban professionals. They would have, in the course of a few years, seen about 10 percent of their gross income, and a considerably larger fraction of their take-home pay, vanish. Nor would they be excited when politicians came back to them for even more money to pay for little incidentals like our growing entitlement gap.
Nor, as Kevin suggests, could Democrats have simply hand-waved the cost away. Bills have to be scored by the Congressional Budget Office. The Congressional Budget Office would not have scored heartfelt paeans to the economic benefits of broader health coverage (and to the extent that they would have, most of those benefits were already in the score the bill got.) If Democrats had tried to pass a bill that cost $2 trillion over 10 years, the Congressional Budget Office would have scored it as such, and that is the cost that the media would have reported. This — not a tragic surfeit of honesty — is why Democrats didn’t take the-time-honored approach of telling wild lies about what their plans would cost.
In fact, they prevaricated as much as they could, from “If you like your policy, you can keep it” to gaming the CBO forecasting process with dodgy revenue-generating provisions like the CLASS Act long-term care program, and the requirement for people to issue 1099s to anyone who sold them more than $600 worth of stuff — things which were pretty obviously never going to actually take effect, but which helped lower the apparent cost of the bill at the time of the law’s passage, due to quirks in the CBO’s forecasting process . If they could have found more such dodgy mechanisms, they would have used them; the limit was the number of things the CBO would score, not the willingness of Democrats to make absurdly false claims about the bill’s costs.
So “lying” was simply not an option. Neither was “doubling the cost and whacking up the mandate.” Democrats were already having trouble getting their $1 trillion bill passed. This was a bill so unpopular that the state of Massachusetts (!) sent a Republican senator to Congress to stop it.