Obamacare fever is masking the differences that matter

hcrnow

So much great writing exists on the current kerfuffle over whether the president lied at numerous times by saying, cumulatively paraphrased, “If you like your insurance plan, you can keep it.” From several points of examination this isn’t exactly accurate. That being said, if you’re actually interested in the context for that statement and why many people who have individual insurance policies are receiving “cancellation letters,” those explanations exist — Sarah Kliff, Igor Volsky, Jared Bernstein, Jonathan Cohn, among others.

You won’t find a defense of President Obama’s repeated statements here. Like Austin Frakt wrote yesterday, as a supporter of the law I believe the trade-offs in the legislation are worth it, but that doesn’t mean I own any ill-advised political promises made on its behalf. I also don’t judge, and neither should you, the efficacy of any policy based on such statements. If all you’re interested in is passing political judgement on a second-term president, well, have at I suppose. On the other hand, if you’re truthfully worried about the real challenges moving forward, we really do “have to get past this.

One thing to keep in mind, though, is this masterfully-made point by Josh Barro; that your private insurance is “already a big government program.” The context for this is a seemingly new realization from some folks that the Affordable Care Act redistributes health care spending from the sick to the healthy — as if that were any different than the health insurance you get from your employer. Of course the basic functionality is the same, but Barro elucidates that even your private insurance is effectively “a kind of shadow fiscal policy.”

Here is one reason why (my emphasis in bold):

Redistributive public policy is even more of a theme in the group health insurance market, which is nine times larger than the individual market and the dominant source of “private” health coverage. The government massively subsidizes this market by excluding employer-provided health benefits from income and payroll taxes. Federal tax advantages for health insurance add up to $300 billion a year.

These tax subsidies are highly coercive. Take a family with salary income of $60,000 and a health plan worth $15,000. If this family instead took all of its income as $75,000 in cash salary, it would face an income and payroll tax hit of around $4,500, or about 6% of their income. For comparison, the individual mandate penalty in Obamacare will be limited to 2.5% of income.

This basic fact of our health care system leads to unintended false comparisons, like a claim from Texas Senator Ted Cruz’s spokesman that his employer-provided health insurance (via his wife) “comes at no cost to the taxpayer.” On the contrary, it’s actually more likely that Cruz’s insurance is subsidized more by the taxpayers than the “typical, able-bodied, adult Medicaid beneficiary.”

Insomuch as this is important for how we’re framing the implementation of the ACA it speaks to, as Bill Gardner asserts, the issue of fairness in health care policy-making. It may be flirting with excessive snark to write that conservatives and elected Republicans simply aren’t interested in spending public money on the poor. Yet, again as Gardner notes, this essentially is the disagreement in principle as to how a ‘just’ society provides health care. For the elected left this means using transparent government transfers to ensure access, even if it will continue to leave too many behind. For the elected right this means preventing it to preserve a submerged public system creating the greatest amount of choice — but only for those who can afford it.

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