Cato's Silly Premature Obituary for Obamacare

Imagine that it is late July 1966, and President Johnson's signature domestic initiative, Medicare, has been fully up and running for just a few weeks. But a think tank is so sure that it's a failure that it publishes a study saying that by "imposing a bureaucratic, centralized, top-down approach to health care reform, Medicare has created far more problems than it solved." 

How accurate are the findings of this study likely to be a few decades later? Or even a few years later? Probably not so accurate. Why? Because it tends to be a long while before you see the full effects of any gigantic government program -- but especially one like Obamacare that touches on 18 percent of the economy and is insanely complicated thanks to conservative and industry resistance to simpler systems of the kind used in most other advanced countries. Predictions at this juncture are also problematic because they can't take into account future efforts to fix problems and make improvements. Nearly all big government programs evolve substantially over time, and Obamacare as we know it today might be quite different after President Hillary Clinton makes big improvements to the ACA in 2017. 
 
On the other hand, there are plenty of political reasons to condemn Obamacare now as a total and permanent failure -- like, for instance, the 2014 elections. 
 
All this may explain why Cato's new study on Obamacare by Michael Tanner is such a weak piece of policy analysis. It's just too early for the kind of sweeping negative judgments that Tanner offers up -- even if you're inclined to think he may be proven right (which I'm not). 
 
Take a stroll through each of the study's main points and you'll see what I'm talking about.
 
Millions of Americans who are happy with their current health insurance will not be able to keep it
      Well, yes, that's true. We've all read the news stories about the upending of the individual market -- a market so crazily expensive that many people bought the only lousy policies they could afford, policies now barred by law. But these Americans are likely to end up with better insurance policies that they may end up liking more. Just because somebody is unhappy right now about something, doesn't mean they'll still be unhappy a year from now. If in a few years all these people are still mourning the loss of their substandard health insurance, Tanner will have a valid point. But it's too early to predict that outcome. 
 
Americans may find it difficult to keep their current doctor unless they are willing to pay more
       The operative word here is "may" and it would be far more accurate to say "some Americans." In fact, there's tremendous flux right now in the health insurance market. Tanner cites a study that found that 40 percent of doctors "are uncertain" whether they will be included in networks of plans being sold through the new health exchanges. Those doctors will probably have a better fix on things a few months or a year from now, at which point consumer choices will be much clearer. Anyway, Tanner's main point is that if you change to a plan that doesn't cover your doctor, you'll have to go out network to see that doctor. That point is well taken and surely disconcerting to those people affected. But a lot of Americans, like myself, actually don't have strong allegiance to "their current doctor" because they don't go to the doctor very often. One of my few longstanding relationships with a doctor is with my eye doctor. I like him just fine, but wouldn't especially care if I had to shift to a different eye doctor -- especially if that inconvenience were part of a big national effort to make sure that every American could have any doctor at all. As the Times noted in 2012, writing about government data: "People lacking insurance were far less likely to go to doctors. Just 24 percent of the uninsured went to a doctor at least once in 2010, compared with 72 percent of the general population of working age adults, the report found." Now that's an urgent and serious  problem, more so than some people not wanting to switch doctors. 
       
While there will be both winners and losers when it comes to the cost of insurance, millions of Americans will find themselves paying higher premiums or facing higher out-of-pocket expenses
       This is likely true in the short run, as people are forced to buy better health insurance policies and other changes, but what about the long run? What if Obamacare succeeds in slowing the murderous rise in premiums, as some suggest it is already doing -- so that we're all paying less five years from now than would otherwise have been the case? That's definitely a scenario that's worth considering here, and Tanner himself acknowledges about future premiums that "there is no way to know what will happen. . . . " Exactly my point with the ACA still in the maternity wing -- or the incubator, really. Anyway, the first part of the sentence is key. Nearly every big national reform of anything ever has resulted in winners and losers, and probably the better question to ask is whether the gain to losers offsets the pain for the winners. Tanner never asks that question. 
 
The law’s final cost is difficult to predict, but is likely to exceed early projections
      Tanner makes some good, although familiar, points about how the law's real ten-year costs were obscured by its slow phase in. But here again, we need to wait and see what the "final" cost is of a law is that could be on the books for decades and will certainly be amended by future political leaders. If some of the many cost containment experiments that are part of Obamacare bear fruit, and this nation finally gets healthcare costs under control -- with huge implications for future Medicare outlays -- we may later look back on passage of the ACA as a historic turning point when the United States began to steer away from the shoals of healthcare-induced national bankruptcy. Better yet, if the law becomes a stepping stone to genuine government domination of the healthcare marketplace -- which is the only proven way worldwide to contain healthcare costs -- than the right prediction now would be that "the law's cost savings were wildly underestimated."
 
Far fewer Americans will be covered than expected, leaving millions still uninsured
      No kidding. But what do you expect when legislators in two dozen states would rather placate the far right than expand Medicaid to cover millions of poor people and bring thousands of healthcare jobs to their states. I predict, along with others, that many of those states will eventually come around when Tea Party strength has waned and business and healthcare interests are more fully heard. As for all the people not signing up, let's talk in a few years. Or just look at Massachusetts now, where 98 percent people are covered eight years after Romneycare was enacted. 
 
The law is already having serious economic consequences and will likely lead to a loss of jobs and slower economic growth
      Tanner's argument here is very much in the here and now, citing a blizzard of facts that are vigorously contested by the law's advocates. Whatever. Again, it's more interesting to think long term: In fact, the law could lead to major economic benefits by helping the United States control healthcare costs in coming decades and compete more effectively with industrial powers that spend half as much national wealth on healthcare as we do. Indeed, many of the advanced world's most economically free and and dynamic economies, by Cato's analysis, are also countries where government dominates the healthcare marketplace and some form of universal coverage has long been in place. As I have argued earlier, "If CATO Read Its Own Study on Global Economic Freedom, It Would Stop Bashing Obamacare." I've also pointed out here that universal coverage is the key to a dynamic economy because it makes it easier for entrepreneurs to quit their day jobs and start new businesses. 
 
There is a significant danger that young and healthy people will not enroll, leading to an "adverse selection death spiral"
      Or maybe plenty will ultimately enroll. We'll know a lot more in a few months, and certainly in a year or two. Meanwhile, let's hold off on "death spiral" talk. 
 
Advice to my fellow policy wonks: Don't get into writing history, especially years before you know how things are really going to play out. 

 

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