David R. Henderson  

Obamacare Spent A Lot to Get More Coverage

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And it could have been a lot less intrusive.

There's never been any secret that if the US [government] was willing to spend an extra $100 billion or more, it could subsidize health insurance for a lot more people.

This pithy statement is from Timothy Taylor, "Affordable Care Act: Costs of Expanding Coverage," March 28.

In his piece, he works his way through a Congressional Budget Office (CBO) report, "Federal Subsidies for Health Insurance Coverage for People Under Age 65: 2016 to 2026."

The CBO report states:

To separate the effects of the ACA's [Affordable Care Act's] coverage provisions from those broader estimates, CBO and JCT [Joint Committee on Taxation] compared their current projections with estimates of what would have occurred if the ACA had never been enacted. In 2016, those provisions are estimated to reduce the number of uninsured people by 22 million and to result in a net cost to the federal government of $110 billion.

Notice that that's $5,000 per person, not per household. It would have been much more straightforward simply to expand the number of people subsidized rather than to make the majority of people under age 65 go through hoops and lose insurance they liked, and have a paternalistic (and not a nice parent, either) government design health insurance plans, screw younger medium- and high-income people, and take the insurance component out of health insurance.


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COMMENTS (11 to date)
ThaomasH writes:

Isn't it odd that not .1% of the effort going into "repealing" ACA after it was enacted went into advocating "just subsidizing" health insurance while it was under consideration? Is it surprising that when efficient and transparent methods of income distribution are not feasible that we wind up with less efficient and less transparent ways? Is there a parallel here with the EITC/Child tax credit (which the House Budget bill proposes to further restrict) and the minimum wage?

BC writes:

ThomasH: "Is it surprising that when efficient and transparent methods of income distribution are not feasible that we wind up with less efficient and less transparent ways?"

That's a strange argument. I'm not sure what's infeasible about efficiently and transparently distributing income. It seems like a direct cash transfer or voucher is just about as feasible to implement as one could imagine, certainly easier than implementing Obamacare has been. Perhaps, you mean politically infeasible? I have no idea what the political support for just subsidizing health insurance would be, but it's a strange argument to say that, if voters don't want something, then we should use less transparent ways to implement that thing that voters don't want. Why not just make the best humanitarian case possible for subsidizing someone's health insurance and let the democratic process work as intended? If it's the right thing to do, then why hide it?

Charlie writes:

I think it is important to keep in mind that this is just the spending side, without the off-setting revenues factored in. I was confused about that point when I first read the post, perhaps others were too.

"In 2016, those provisions are estimated to reduce the number of uninsured people by 22 million and to result in a net cost to the federal government of $110 billion. For the 2017–2026 period, the projected net cost of those provisions is $1.4 trillion.
Those estimates address only the insurance coverage provisions of the ACA, which do not generate all of the law’s budgetary effects. Many other provisions—such as various tax provisions that increase revenues and reductions in Medicare payments to hospitals, to other providers of care, and to private insurance plans delivering Medicare’s benefits—are, on net, expected to reduce budget deficits. "

Michael Byrnes writes:

BC wrote:

I'm not sure what's infeasible about efficiently and transparently distributing income.

You are talking about technical feasibility. Thomas H was writing about political feasibility. Two very different things.

TMC writes:

It's almost like ACA wasn't really about extending health care insurance to more people.

R Richard Schweitzer writes:

I follow Mr. Taylor's blog and was stirred at the time by the use of the phrases "more coverage"
and health "insurance."

If we consider the increases in deductibles (and some co-pays) there is less "coverage" in insurance terms (less risk is transferred).

If we examine the contracts they are healthcare services contracts (which do require some risk bearing - but) whose major costs are for services and goods.

Now more individuals may have health care contracts but that does not mean that more people have more insurance coverage.

TravisV writes:

Could someone enlighten me?

Was it ever feasible that a "straightforward" subsidy Henderson proposes could have ever gotten 60 votes in the Senate?

MikeP writes:

Was it ever feasible that a "straightforward" subsidy Henderson proposes could have ever gotten 60 votes in the Senate?

Very good point.

It was evident from the beginning that a key goal of ACA was greater government control over people's insurance choices. The obvious solution of adding subsidies without adding mandates was not on the table for the Democrats, and such approaches would not have garnered the votes needed to pass.

ThaomasH writes:

@ Mike P

It was evident from the beginning that a key goal of ACA was greater government control over people's insurance choices

That certainly was not obvious to me. If that was a covert goal of some legislators, a "straightforward" subsidy counter proposal would have exposed the subterfuge. To the outsiders it looked like one group of people who wanted to extend health insurance to people who did not have it and another group that did not. [And neither group was very much interested in making health care provision more efficient]

ColoComment writes:

"a "straightforward" subsidy counter proposal would have exposed the subterfuge"

You may not recall the political environment at the time, but Obama, Pelosi and Reid ramrodded the law through the legislative process without entertaining any counter proposals whatsoever (except to revise the Cornhusker Kickback and the Louisiana Purchase when those two blatant bribes-for-votes were exposed and the targets shamed.)

There was much discussion in non-mainstream media at the time the law was in preparation and passed about the likely "unintended" adverse consequences of the law's economics, proposals for various more consumer-oriented alternatives, and the fact that no Republican input was desired or accepted.

TravisV writes:

Another question to consider: would Obamacare have been better or worse if it had only required 50 votes in the Senate rather than 60 (due to the filibuster)?

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