Economics

How I Learned to Stop Worrying and Love Obamacare

There is an ancient Arabic proverb: “The enemy of my enemy is my friend.” With this in mind, I can’t help but think that whatever Senator and leading Tea Party blowhard Ted Cruz opposes must be good. When Cruz decided to try to shut down America because he opposes Obamacare , well that sealed the deal for me. I say “Obamacare forever.”

Readers know that I think Obamacare has too many rules that create problems for payers and providers alike, and relies on some questionable practices for funding. I don’t like the rush to form ACOs or the lack of serious cost-effectiveness analysis (admittedly a concession to Republicans.) But Obamacare beats the hell (sorry Ted) out of Cruzcare, which, as far as I can tell, goes something like this: “Didn’t put aside enough money for that life-saving operation? Here is a prayer that might help.”

I used to sort of be a Republican. I voted for Bush (I won’t say which one in order to avoid embarrassment) and voted against Obama more than once (living in Illinois I had several opportunities.) And I hate that Obama is playing at President like someone playing poker with a winning hand.

This isn’t supposed to be about which politician claims the biggest pot for himself. But I will take a selfish and somewhat scornful Obama over Ted Cruz and the Tea Cozies any and every day of the week. And I will work to find the best Democratic leaders if all the Republicans can offer is Cruz and his TCs.

Shut down the government to finally fund Medicare and Social Security? Maybe. Shut down the government to achieve a rational tax code? Sure. Shut down the government to balance the budget? Now we are talking. But shut down the government to block the opening of the health insurance exchanges? How absurd!


This may be the most pro-market thing to emerge from this administration. Maybe the Tea Cozies think that if God had wanted exchanges He would have given CMS sufficient computer capacity to handle the opening rush of enrollees. More likely the TCs are afraid that the exchanges might work. (Speaking of computers, I can’t help but wonder if some savvy TC programmer – an oxymoron? – is sabotaging the open enrollment period.)

The shame of it is that there are plenty of ways to tweak Obamacare for the better. Changes to enhance market forces and promote alternative delivery systems would please everyone to the left of the TCs; i.e., most Americans. But thanks to Cruz and the TCs, any chance for debating how to improve Obamacare has been lost, at least for now.

Obamacare is not going away. I admit that I have gotten used to the idea and think it might not be such a bad thing after all. With luck, many of the TCs are going away; I am actually rooting for the Democrats to retake the House. When they do, I hope that Congress tries its hand at Obamacare 2.0 and takes this flawed but promising program to the next level.

David Dranove, PhD, is the Walter McNerney Distinguished Professor of Health Industry Management at Northwestern University’s Kellogg Graduate School of Management, where he is also Professor of Management and Strategy and Director of the Health Enterprise Management Program. He has published over 80 research articles and book chapters and written five books, including “The Economic Evolution of American Healthcare and Code Red.” This post first appeared at Code Red.

Spread the love

15 replies »

  1. Nice deferring the biggest tech boondoggle in the history of the internet. This will need a complete platform rewrite then redevelopment of the applications. There is zero molecular whiff of scalability or interoperability. This frontend is technical baby food and you say Cruz is bad……ooookay then.

  2. Just dont pay for it and find out whats going to happen, yes they can take away property, etc…. if you dont .

  3. I do have to admit that Obamacare is a perfect excuse for any and everything. It’s particularly useful for Principles of Economics students when they under perform on their test or the server provides bad service or the bartender brings you the wrong adult beverage…:”It’s Obamacare’s fault, repeal it and off with his head.” Says the Red Queen.

  4. “the message of intolerance and indifference to human suffering”…as in my way or the highway, I not only won’t compromise or negotiate; I won’t even talk to you or provide you answers or any information. I will, however, “inflict maximum pain”

  5. Item C…Check that, it’s the household income, so it includes anybody residing in the house, like crazy uncle Billy or Grand Moocher Marian Gail Robinson. Also, just because you publicly portray yourself as a single mom does not allow you to exclude the earnings of your shiftless, lazy, radical husband, even if he is the potus.

  6. On the political substance of David’s post, I’m with him. This episode has been an embarrassing nihilist freakout on the part of the Republicans that could not only damage the economy, but accelerate international search for a substitute for the dollars as the world’s reserve currency.Bobby Jindal’s comment about “We’ve got to stop being the stupid party” was prescient, as was Bob Dole’s post 2012 election comment about the need to put out a “closed for repairs” sign.

    Obama was eminently beatable in 2012, and the Repubs managed to blow it. It wasn’t just nominating Richie RIch, but the message of intolerance and indifference to human suffering that sealed the deal. It’s going to take about three elections to get it thru their thick skulls that this is a center-right country, with an emphasis on the “center” part.

    I’ve never been a Republican, but these guys are going to make it a lot easier for many of us profoundly disaffected Democrats to return home to a deeply troubled but still sane party.

  7. As to the glitches in ObamaCare enrollment, here are three quick observations:

    a. Part D has at least three momths of glitches in 2005;

    b. The Federal government has never hired the best programmers for any of its functions;

    c. No private insurance company or private exchange in history has ever had to factor in the family income of enrollees before confirming coverage.

  8. You clearly find a LOT of stuff “despicable.” Your comment was hyperbolic. Yahoo board stuff.

    e.g., Shall I cite for you the verbatim section of the ACA setting forth the IRS’s narrowly circumscribed authority with respect to people failing to obtain coverage under the individual mandate? Page 131?

    (g) ADMINISTRATION AND PROCEDURE.—
    ‘‘(1) IN GENERAL.—The penalty provided by this section shall be paid upon notice and demand by the Secretary, and except as provided in paragraph (2), shall be assessed and collected in the same manner as an assessable penalty under subchapter B of chapter 68.
    ‘‘(2) SPECIAL RULES.—Notwithstanding any other provision of law—
    ‘‘(A) WAIVER OF CRIMINAL PENALTIES.—In the case of any failure by a taxpayer to timely pay any penalty imposed by this section, such taxpayer shall not be subject to any criminal prosecution or penalty with respect to such failure.
    ‘‘(B) LIMITATIONS ON LIENS AND LEVIES.—The Secretary shall not—
    ‘‘(i) file notice of lien with respect to any property of a taxpayer by reason of any failure to pay the penalty imposed by this section, or
    ‘‘(ii) levy on any such property with respect to such failure.’’.

    “violence”? “incarceration”? It helps to actually READ the law.

    http://www.gpo.gov/fdsys/pkg/BILLS-111hr3590enr/pdf/BILLS-111hr3590enr.pdf

    The “Individual Responsibility” section is only 11 pages long (124 -134) “SEC. 1501. REQUIREMENT TO MAINTAIN MINIMUM ESSENTIAL COVERAGE.”

  9. I think Randians are despicable. I don’t know where you find Ayn Rand in my comment. I deliberately define coercion to avoid the usual comments on how advertising, or cultural norms or whatever are coercive.

  10. CHIEF JUSTICE ROBERTS concluded in Part III–B that the individual mandate must be construed as imposing a tax on those who do not have health insurance, if such a construction is reasonable.

    The most straightforward reading of the individual mandate is that it commands individuals to purchase insurance. But, for the reasons explained, the Commerce Clause does not give Congress that power. It is therefore necessary to turn to the Government’s alternative argument: that the mandate may be upheld as within Congress’s power to “lay and collect Taxes.” Art. I, §8, cl. 1. In pressing its taxing power argument, the Government asks the Court to view the mandate as imposing a tax on those who do not buy that product. Because “every reasonable construction must be resorted to, in order to save a statute from unconstitutionality,” Hooper v. California, 155 U. S. 648, 657, the question is whether it is “fairly possible” to interpret the mandate as imposing such a tax, Crowell v. Benson, 285 U. S. 22, 62. Pp. 31–32.

    4. CHIEF JUSTICE ROBERTS delivered the opinion of the Court with respect to Part III–C, concluding that the individual mandate may be upheld as within Congress’s power under the Taxing Clause. Pp. 33– 44.

    (a) The Affordable Care Act describes the “[s]hared responsibility payment” as a “penalty,” not a “tax.” That label is fatal to the application of the Anti-Injunction Act. It does not, however, control whether an exaction is within Congress’s power to tax. In answering that constitutional question, this Court follows a functional approach, “[d]isregarding the designation of the exaction, and viewing its substance and application.” United States v. Constantine, 296 U. S. 287, 294. Pp. 33–35.

    (b) Such an analysis suggests that the shared responsibility payment may for constitutional purposes be considered a tax. The payment is not so high that there is really no choice but to buy health insurance; the payment is not limited to willful violations, as penal- ties for unlawful acts often are; and the payment is collected solely by the IRS through the normal means of taxation. Cf. Bailey v. Drexel Furniture Co., 259 U. S. 20, 36–37. None of this is to say that payment is not intended to induce the purchase of health insurance. But the mandate need not be read to declare that failing to do so is unlawful. Neither the Affordable Care Act nor any other law attaches negative legal consequences to not buying health insurance, beyond requiring a payment to the IRS. And Congress’s choice of language— stating that individuals “shall” obtain insurance or pay a “penalty”— does not require reading §5000A as punishing unlawful conduct. It may also be read as imposing a tax on those who go without insurance. See New York v. United States, 505 U. S. 144, 169–174. Pp. 35–40.

    (c) Even if the mandate may reasonably be characterized as a tax, it must still comply with the Direct Tax Clause, which provides: “No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken.” Art. I, §9, cl. 4. A tax on going without health insurance is not like a capitation or other direct tax under this Court’s precedents. It therefore need not be apportioned so that each State pays in proportion to its population.

  11. Boy, and people crack on ME for assertedly being pedantic.

    “I refer to the threat of violence, loss of freedom (incarceration), or involuntary loss of property(extortion, taxes, fines) under pain of violence or the loss of freedom.”

    None of which characterizes the Health Insurance Exchange as set forth in the PPACA.

    “pain of violence” — oh,PULEEZE, hand me the Kleenex.

    You’re one of those Ayn Randians, ‘eh?

  12. There is a great deal to work out, and I’m afraid it will take many years to have a definitive answer on what types of unintended consequences occur despite everyone’s best intentions.

  13. I accept your feelings about the ACA, Ted Cruz and the ACA but the exchanges are not “the most pro-market thing to emerge from this administration.” They do not fit the definition of markets.

    Markets are where willing sellers and willing buyers meet without coercion. In the absence of coercion, willing sellers and willing buyers agree on the quality of the good and the price or they agree to walk away from one another.

    The ACA’s health Insurance exchanges have none of those features. Health insurance exchanges are a state created medium where coerced buyers are forced to buy a product assembled via government edict from a cartel of sellers established by government edict. You could be partially correct if you assert that the state mandated exchange have elements of fascism, state capitalism, or crony capitalism. But call it market based and you are almost wholly incorrect.

    By coercion, I refer to the threat of violence, loss of freedom (incarceration), or involuntary loss of property(extortion, taxes, fines) under pain of violence or the loss of freedom. Coercion is unique to state mandated activities and organized crime. Free markets are about willing buyers and willing sellers. Forcing people into a room and telling them they have to deal or face the coercion I describe is not a market and not even a market principle

Leave a Reply

Your email address will not be published. Required fields are marked *