A ‘Tweak’ to Fix Obamacare? That’s a Red Flag
Here’s a little diversion to pass the time as you endure Washington’s policy debates. Listen for phrases like “All we have to do” or “We need just a small tweak” or “There’s a really simple fix.” Then watch to see what happens. Whatever that person is proposing will prove to be really, really costly -- politically or fiscally or both.
On some endless panel discussion, I once pointed out that fixing Social Security’s funding problem would probably involve some combination of tax increases and benefit cuts for future recipients. A very indignant left-wing commentator of some note got up and lambasted me, saying “All we have to do is raise the payroll tax cap.”
I was a trifle astonished. Mathematically, he was correct. But to say that’s “all” we have to do? He made it sound as if this were a minor technical correction on par with getting the wheels realigned on your car. In fact, this amounts to slapping a 12 percent surtax on all income above $118,500 a year. This would pretty much exhaust our fiscal capacity to tax the more affluent to fund new spending or existing programs, and it would all be funneled to a single program that is not even our biggest underfunded entitlement (that honor goes to Medicare). Doing this would be extremely politically costly (it would hit affluent professionals, who tend to both support the Democratic Party and run it), and it would also be the biggest single tax increase in living memory. This is rather like saying that “all we have to do to fix climate change is perfect cold fusion.”
But of course he was hardly the only offender. All we have to do to fix American health care is to pay our providers and suppliers low European prices instead of high American ones. All we need to do to make Republican tax plans work is to get economic growth up to 4 percent. All that was needed to make Iraq a better place was for America to depose Saddam Hussein and for Iraqis create a liberal democracy. There is always a devil in the details behind those innocuous “all” statements, and he has his pitchfork ready.
So beware when liberals today start saying that maybe Obamacare has a few problems, but all we need to do is …
They’re saying it a lot.
- President Barack Obama in Florida last week: “If we tweak the program to reach those people who are not currently benefiting from the law, it will be good for them and it will be good for the country. … All it requires is putting aside ideology, and in good faith trying to implement the law of the land.” The “tweaks” he envisions involve spending tens of billions more a year on subsidies and creating a public insurer. And, of course, for Republicans to put aside ideology. Because political parties find that so easy. That’s all.
- Jacob Hacker writes that there’s “a simple fix for Obamacare’s current woes” -- the public option. That’s the public insurer that President Obama was talking about in his Florida speech. As I’ve noted, a public option doesn’t fix any of the problems we have, and it would be hard as heck to set up. If you construct it along the lines that it was originally envisioned (which is to say, a self-funding and market-competitive insurer), it will have the same problems as other insurers, while addressing none of the woes in the market for individual insurance. If you allow it to run at a loss, it’s essentially an enormous, open-ended subsidy that would be politically unpopular and fiscally reckless. And if you don’t subsidize it, but do give it the ability to slap price controls on providers, you will face a political rebellion from a very active and influential group of voters.
- Kevin Drum of Mother Jones offers an “11-Word, 1-Chart Plan for Fixing Obamacare” which boils down to: Either jack up the individual mandate by 250 percent, or increase the subsidies by 100 percent, or do some combination of lesser increases in both. Okay, but a 100 percent increase in the subsidies would have a headline cost of roughly a half trillion dollars over the next 10 years. And raising the individual mandate by 250 percent would be extremely politically difficult. It might also run afoul of the Supreme Court’s 2012 decision in NFIB v. Sebelius, in which the court held that Congress did not have the authority under the Commerce Clause to levy a penalty on those who fail to buy insurance, but could levy a tax on those people, as long as the tax wasn’t unduly burdensome. Which is to say: The mandate is constitutional as a tax, but not as a penalty -- and only if it’s not too expensive.
- “You could make the individual mandate stronger, you could make the subsidies better … you could add national health insurance plans or a public option to put in more competition. Mechanically what you would do here is not actually that complicated, but without a political party that wants to fix it, it won’t get fixed,” Vox’s Ezra Klein said recently.
These things are not easy, simple fixes. Do you know how we know this? They weren’t done when the law was passed.
Why? Because Democrats couldn’t assemble a political coalition to do this. Mind you, at the time they had 60 votes in the Senate, and control of the House, and the presidency -- a level of historical dominance they hadn’t managed in decades. Either these simple fixes would have pushed the price tag of the bill too high, making it difficult to find even more taxes or program cuts to pay for it, or they would have damaged the popularity of a bill that was already really unpopular.
And this is true of every idea that starts with “All we need to do.” If “All we need to do” to fix some substantial problem were cheap and politically popular, it would already have been done, and we wouldn’t be talking about it. The stuff we argue about is, almost by definition, the stuff that’s hard.
Needless to say, Republicans are not going to be eager to do something hard and unpopular largely in order to save a program that was passed over their strenuous objections and is now hurting their political opponents. So if all we need to do is persuade Republicans to abandon their objections to Obamacare, and possibly their own electoral futures, in order to bail Democrats out of the mess they created, then we’re all going to be living with these problems for a very long time.
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