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Obamacare's Strategic Sense

Megan McArdle wonders whether Obamacare will ever get much more popular than it is now.  I'm not sure that is the right way to look at it.  The idea that Obamacare was going to become much more popular by November 2010 was always some combination of self-delusion and a cynical attempt to gull wavering congressional Democrats from marginal or right-leaning constituencies.  The more important issue is how Obamacare changes the structure of the health care market and how these structural changes will influence the politics of Obamacare in the next 2-6 years.  People don't have to learn to love Obamacare.  They only need to have their interests structured in such a way that repealing Obamacare seems like a change for the worse and (eventually) that single-payer health care is the most obvious solution to the problems produced by Obamacare.  The way different elements of Obamacare will play out will be uncertain.

   1.  Prices - If the experience of Massachusetts with insurance mandate/coverage mandate/government subsidy is anything to go by, Obamacare will lead to an even faster rise in insurance premiums.  This sounds like a major weakness for Obamacare, but, if conservatives are not careful and articulate, it could actually strengthen the political case for even more government-run health care.  For one thing, it won't be obvious to everybody that Obamacare is the reason for rising premiums.  The politics of rising premiums will be a jump ball.  Obama supporters and liberals generally will argue that the premium increases are the result of mean, fat cat, greedy insurance companies that will benefit from Republican attempts to liberalize the health insurance market.  The argument will be that the insurance companies are already bleeding you dry and that if the Republicans get their way, the insurance companies will charge you even more or even deny you coverage altogether.  They will say that it is better to go with the next iteration of Obamacare (or Bidencare or Pelosicare or whatever) and crack down on those mean insurance companies with some combination of price controls and expanding programs of government-provided health insurance.  Rising health care premiums will also create urgency for Obamacare's forthcoming premium subsidies to middle-class families.  Rising premiums will make people feel vulnerable and suspicious of any health care reform that seems to leave them on their own to pay for coverage that only barely seems affordable even with 'help" from their employers and the federal government.  Supporters of market-oriented health care reforms will have to offer policies that promise lower prices, but also policies that address what is reasonable about people's feelings of vulnerability.

2.  Guaranteed Issue - This provision will force insurance companies to offer policies to people with preexisting conditions (so far only for children but eventually everybody)a nd seemingly at about the same premium rate as everyone else.  This will tend to increase premiums on everybody, but as people with preexisting conditions are guaranteed coverage (it is complicated now, but if you develop a condition while insured, it becomes a disincentive from leaving your job and possibly losing coverage), they become a constituency against repeal. 

3.  Medicaid expansion - Obamacare is estimated to increase the population on Medicaid by as much as twenty million by 2014.  I'm not sure it will be that much, but even if it is half that, it is still a sizeable constituency against repeal of Obamacare.  And it isn't just the people on Medicaid.  People who aren't on Medicaid will worry about what happens to people who lose coverage.  It will seem awfully cruel to take people off Medicaid in an environment in which premiums are rising very fast. 

There are counters to all of these concerns.  Support for the guaranteed issue element of Obamacare can be reduced by coming out for well funded and well designed reinsurance pools that would reassure people with preexisting conditions. Medicaid offers an opportunity for some conservative jujitsu as conservative can offer a better deal for Medicaid recipients and allay the fears of middle-class Americans who worry about how market-driven health care will impact the poor.  Medicaid is a truly lousy program that needs to be reformed in a market-driven direction for the sake of the program's recipients.  I prefer something like adding a federal version of Mitch Daniels Health Indiana Plan as a choice for Medicaid recipients, but there are many ways to improve Medicaid and there is no one right answer.  But any answer given will have to be defended in detail. People don't have to like Obamacare in order to start feeling dependent on it.  As Obamacare is institutionalized, repeal of Obamacare and reform of health care policy will involve allaying people's concerns about what will happen to them (and what will happen to the poor and what will happen to them if they develop a condition) in an environment where prices seem to be rising too fast and Obamacare seems like their only life raft.      

Personal note - The Spiliakos familly is still  moving, so I won't be around much until after Labor Day. 

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