Political Uncertainty and ObamaCare


Paul Caron points us to a new paper by Cardozo Law's Edward Zelinsky on the tax provisions of the PPACA. The short version? The law may not be as radical a departure from the current system as some critics contend, but it doesn't solve the fundamental cost-control problems of the current system. From the abstract:  

The Patient Protection and Affordable Care Act (PPACA) and the Health Care and Education Reconciliation Act of 2010 (HCERA) do not alter the status quo as much as their advocates and their detractors contend nor do PPACA and HCERA resolve the fundamental challenges confronting the U.S. health care system, including the problem of escalating health care outlays. In important respects, PPACA and HCERA will exacerbate that problem. [bold added -PS]

Four factors underpin this sobering assessment. First, PPACA and HCERA, while significant, are more incremental in nature than either their proponents or their opponents acknowledge. These laws build upon—indeed, extend—the existing systems of private health insurance and employer-provided health care. Second, many provisions of PPACA and HCERA have delayed effective dates. It is an open question whether future Presidents and Congresses will allow these deferred provisions to go into effect as scheduled. Third, key provisions of PPACA and HCERA are enormously complex. By virtue of such complexity, these laws will impose prodigious enforcement burdens upon the Internal Revenue Service (IRS) and equally immense compliance obligations on taxpayers, in particular, small businesses and many individuals of modest means. The prospects for a complexity-induced political backlash to PPACA and HCERA are considerable. Fourth, these acts merely postpone the tough decisions that must be made about health care and about health care costs in particular. These laws' efforts to control health care outlays are tepid and deferred. Moreover, PPACA and HCERA, by expanding access to medical services, will increase demand for such services and thereby stimulate health care expenditures.

I think this is a useful way of understanding the law; although the PPACA adds a number of significant elements to the U.S. health care system (in particular, the exchanges), it's primarily an entrenchment and expansion of the existing system. Given the failures of that system, though, that presents a serious problem.

As for rising costs, Zelinsky is right to frame the difficulty as one of political uncertainty: the biggest fiscal risk is that, in the future, Congress will not follow through on provisions it was clearly afraid and unwilling to implement in the near term. On this point, it's worth singling out what Zelinsky says about the Cadillac tax, which is supposed to hit high-value health care plans starting in 2018:

Equally evident is Congress' reluctance to stimulate this confrontation with health care costs any time soon. If, as Harold Wilson famously said, "a week in politics is an eternity," the decision to delay the "Cadillac" plan excise tax to 2018 evinces a pronounced reluctance to actually require voters to confront health care costs anytime soon….There is a serious question whether the excise tax on high cost plans will ever go into effect: Given the palpable reluctance of President Obama and the members of the 111th Congress to force their constituents to confront the tax on "Cadillac" plans any time soon, why should we expect a future President and the senators and representatives of the 115th Congress to let this tax go into effect in 2018?

The fact that the Cadillac tax was delayed isn't proof that it won't ever be implemented, but it's a strong sign of the political difficulty of allowing it to take effect, and, in general, of the barriers to implementing cost-control mechanisms. It's obviously not possible to know with any certainty how Congress behave years into the future, or what other factors may come into play over the years, but given what we know about both the new health care law and about American politics, skepticism that the PPACA will work as well as advertised seems appropriate.


NEXT: Reason.tv: Steven Greenhut on Public Employee Paychecks, Perks, and Plunder

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

    1. I know that URLs often have problems with apostrophes, but can’t we at least get the spelling correct here?

      1. No, you fool, it’s obviously, “You voted for it, you rout”.

        1. Ah, how silly of me, of course.

        2. Maybe in order to understand mankind, we have to look at the word itself: “Mankind”. Basically, it’s made up of two separate words- “mank” and “ind”. What do these words mean ? It’s a mystery, and that’s why so is mankind.

  1. I think this is a useful way of understanding the law; although the PPACA adds a number of significant elements to the U.S. health care system (in particular, the exchanges), it’s primarily an entrenchment and expansion of the existing system.

    How can this be?
    I want my fucking pony, and I want it now!!!

    1. Sorry, but we have to control the supply of ponies, otherwise, everyone would want one and the system, as designed, can’t support that. We strive for quality, not quantity, of service.

      Please resubmit your request for a pony in the next fiscal year.

  2. So basically, and as usual, the government passed a bunch of legislation that, at best, changes very little, and at worst, makes worse the problems the legislation was intended to fix.

    Sweet. I love politics.

    1. But something had to be done! If we just left things how they were, how could we demonize our opposition?

    2. Feature. Not bug.

      1. The reforms will just keep getting worse until the people demand nationalized health care.

    3. Don’t worry. They’ll understand how it works once it goes into effect.

    4. Yeah. And they get paid a lot better than the average American to do it.

      Moral to the story: you gotta fuck things up if you want to make real money.

  3. A lot of us folks in the detractor camp have understood this all along. We realise that the idea is for this to fail. Said failure will be blamed on the “free market”. Gee, the “only solution”? Single Payer!

    I very much hope that this assessment is too pessimistic. I fear it is too optimistic.

    1. Oh it will fail. And yeah, that is what a lot of liberals are thinking will happen. The problem is that the fiscal constraints will keep them from enacting single payer. This is the high water mark. They don’t have anymore money.

      1. And by “they” you mean “we.”

        1. I have lots of money. I use it to buy Park Place and Boardwalk and railroads and…

      2. My concern is if this thing fails big enough, they will be able to present the cost of “single payer” as being the lesser of two evils.

        (What a ridiculous euphemism, “single payer”. It means “government run” but the liberals would slice out their own tongues before saying it out loud.)

    2. The other problem is that their own histrionics will do them in. Liberals went to such great lengths to pass this thing. And made such a huge deal about how historic and great it was. They are now going to have one hell of a time going back to the public and saying that it failed and they need to do real health care reform now.

      1. The usual strategy in such cases is to claim that there are “loopholes” in the law because of the evil Republicans, and that heartless capitalists are exploiting these loopholes to oppress the poor.

        Granted, it’s not a guaranteed winner. For example, “loopholes” is pretty much how they try to explain away the failure of gun control. From the results I’d say it isn’t working in this case.

        Still, with health care they might be able to pull it off. I suspect we’ll see all too soon.

        1. It won’t work. No Republican reached over the aisle to pass the bill, and therefore, the bill didn’t need to be more palatable for their sakes. This bill was purely an inter-party affair, at a time when Dems had one of the greatest majorities in history.

          1. That should be “intraparty”.

  4. Don’t worry: the Republican majorities coming in will repeal this thing. (Yeah, right).

    1. Those guys could screw up a bowel movement.

  5. “It’s obviously not possible to know with any certainty how Congress (will) behave years into the future…”

    Well, if years in the past is any indication….

  6. Hey, Obama fans, you want to come and defend this? Oh right, you haven’t spoken up in months, because you are fucking morons. Hilarious.

    1. As far as I can tell, no one likes Obama anymore, they just hate TEAM RED.

      1. I look forward to when TEAM BLUE dipshits will disavow voting for Obama.

        “I wanted Hillary to win!”


      2. No one ever liked Obama. They just voted for him because the alternative was so bad. Hillary was always the proper choice. But the archaic Democratic Caucus system prevented her from winning. After Obama stole the inauguration from Hillary, they had no choice but to support him.

        But understand, no one ever claimed that he was going to be a transcendent or great President. And everyone was nervous about his lack of qualifications for the job. And everyone also knew that he faced a virtually ungovernable country thanks to the Right’s racism and refusal to do anything to work with him. Never has an opposition party treated a President with so little respect and tried to hard to undermine his credibility than the Right has with Obama. The Right and the Country’s racism and total war against him combined with his inexperienced combined to ensure his failure as President.

        There you go Warty. There is the first draft of the history of the Obama years. That is what they are going to claim. You watch.

        1. Their fondest wish is for him to be assassinated, so they’ll get their own Camelot mythology.

        2. Clinton was asleep at the switch and didn’t know the rules. http://www.politico.com/news/s…..10249.html

          1. I read within the last week or so that there were a lot of shenanigans at the caucuses. Things like locking out Hillary supports and whatnot.

            If you haven’t been a regular here at HillBuzz, you might not know about Gigi Gaston’s documentary “We Will Not Be Silenced” on the caucus fraud deliberately orchestrated by the Obama campaign during the primaries. Voter intimidation, registration fraud, vandalism, threats of violence, you name it, Obama’s supporters did it. For veterans of the McGovern ’72 campaign who remembered thugs and hooligans engaged in similar tactics in service of their own far left candidate, the actions of Obama’s followers were so bad that even people who’ve lived through the last 36 years of ups and downs in America testified that this is the worst thing they’ve ever seen happen to our democracy.

            Gaston’s documentary continues to gather testimonials from people across the country ? and we have word now that the people behind these efforts to document what Obama did during the primaries are also cooperating with law enforcement in an investigation into the Obama campaign’s efforts to undermine the true will of the people in the general election.


            1. That story was going around at the time. The media just ignored it. Obama never won any or if he did he won few of the Primaries. But he cleaned up in the Caucuses. I actually think the Hillary people have a good case that he stole the nomination from them.

              As Obama buyer’s remorse gets more and more widespread, expect to see more about this story.

                1. Pretty damning.

              1. Hillary and Obama have always been on the same team. Obama was the better nominee because calling detractors racists beats calling them sexists. At least it did up until now.

      3. that I am an asshole?

        1. Yes, AnonoRetard, I did, you obnoxious fucking moron.

          1. Don’t be too hard on the AnonoPussy, Warty. It must take some real courage to anonymously passive-aggressively insult someone with such wit and intelligence. It showed you!

            1. know that I drink pig cum?

  7. The problem is that the fiscal constraints will keep them from enacting single payer. This is the high water mark. They don’t have anymore money.

    It could work out that way. It all depends on how the world economy does, how other currencies do, how the US economy does, how long there is a market for US debt, etc.

    I can see the dollar holding up for another 8 years, maybe 10. This is an incredibly strong country economically, still, and the dollar is still the strongest currency by a lot.

    If the dollar/US debt market holds up for that long, I think we’ll see private health insurance implode and a single payer take its place.

    I have learned by hard, expensive experience that, even when I can call a trend, I can’t time it, so I won’t even guess when the wheels come off. But unless something dramatic, even revolutionary, happens in the next two elections, the wheels will come off.

    1. First, unless they radically change their policies, the economy isn’t coming back in any meaningful way. It will meaner along. Second the deficit as it now stands is not sustainable. No way would the bond markets support the kind of expansion in spending a full socialized system would require.

      It doesn’t matter if the dollar crashes. Nothing short of a miracle boom would create the kind of revenue needed to support socializing the system. Further, the longer time goes the more other countries are going to go away from socialized medicine. Canada and the UK’s systems are going to completely implode and go bankrupt in the next ten years or so. That will take away the whole “everyone else does it” argument.

      Single payer will never happen.

      1. I think its a matter of timing, John – how fast private health insurance implodes versus how fast the dollar/US debt market implodes.

        Single payer will be sold, after all, the same way the current abortion was sold – as a way to control rising costs. Don’t forget, with people piling into Medicaid and subsidized insurance, the costs imposed on the state will be skyrocketing without single-payer.

        When the US debt market implodes, it will happen very fast. I could easily see that market staying liquid, Congress passing single-payer, and single-payer being the straw that broke the camel’s back. The worst of all worlds, IOW.

        1. Single payer wouldn’t be a straw it would be a sledge hammer. And the markets would make no secret about what it would do to the US’s ability to borrow money.

          To get single payer through you would have to have another election like 2008 that gives the Democrats a huge majority in Congress and the Whitehouse. That is not likely to happen. The only way it would is if there was a viable third party that slit the vote in every district and allowed Democrats to win in places they never would or could otherwise.

          And if that happened the the Democrats shoved single payer down the country’s throat and the government went bankrupt, there would be a revolution. Now, that is the worst of all worlds.

          1. It always makes me feel better when you two get together and debate exactly how the world is going to end.

  8. The fact that the Cadillac tax was delayed isn’t proof that it won’t ever be implemented, but it’s a strong sign of the political difficulty of allowing it to take effect, and, in general, of the barriers to implementing cost-control mechanisms.

    Well, not so much so. Unless there is a sunset date, all these provisions automatically take effect unless the courts strike them down, or Congress passes repeal legislation. And, any repeal legislation will require at least 60 Senate votes if some Democrats object, and up to 2/3 of both chambers if the president then vetoes the legislation.

    Getting rid of existing law is hard.

  9. This always cures what ails me:

    Jakarta – Indonesia’s top Islamic body declared on Tuesday that Muslims can drink civet coffee – the world’s most expensive coffee, which is extracted from the dung of civet cats.

    A preacher recently suggested the beverage might not be halaal because its unusual provenance makes it unclean.

    But after a long discussion on Tuesday, the influential Indonesian Ulema Council said that the coffee, known locally as Kopi Luwak, could be consumed as long as the beans were washed.

    Kopi Luwak, which takes it name from the Indonesian word for civets, is made from hard beans that have been eaten by the nocturnal critters and then fermented in their stomachs before being pooped out and roasted. Civet cats are mongoose-like animals.

    It’s highly prized for its smooth flavour and bitterless aftertaste, sometimes fetching well over $440 per kilogram online.

    “Kopi Luwak can be declared halaal after passing through a washing process,” said Maruf Amien, acting head of the council. “Producing, selling and drinking it is allowed.”


    1. Is there a better phrase in this world than “pooped out and roasted”?

      1. I’m glad the copy-editor didn’t insist on that becoming “excreted”.

    2. It’s a bit nutty . . .

  10. Threadjack

    Countrywide probe snares Fannie, Freddie execs
    Employees at Fannie Mae and Freddie Mac ? including top executives ? received more than 170 cut rate loans from Countrywide Financial, according to a congressional probe, the latest accusation that the lender tried to curry influence with people in power. …

    1. The investigation, which is being headed up by Reps. Edolphus Towns (D-N.Y.) and Darrell Issa (R-Calif.), also identifies Fannie Mae CEO Jim Johnson, former CEO Franklin Raines, former Vice Chairman Jamie Gorelick and Mudd as having received loans as part of the “Friends of Angelo” program ? named for former Countrywide CEO Angelo Mozilo. The executives were previously identified as being part of the embattled lender’s loan program but have denied knowing that they were singled out by the lender. Johnson alone received $10 million in loans, according to the letter.

      Read more: http://www.politico.com/news/s…..z0uG0qK0be

      Goerlick is on the list. If that bitch goes to jail, my faith in justice will be restored.

  11. What a ridiculous euphemism, “single payer”. It means “government run” but the liberals would slice out their own tongues before saying it out loud.

    They just don’t know the word “monopsony,” because that’s a word from inside books, so they made up one that means the same thing. S-m-r-t.

    1. I’ll give them credit for being brighter than that. I think the left is fully aware of “monopsony” but realize it is too close to “monopoly” which they deride as evil to be useful to them.

  12. Single payer will be sold, after all, the same way the current abortion was sold – as a way to control rising costs.

    Was there anybody who actually believed this was about controlling costs?

    1. To those who believe, no explanation is necessary.

  13. “[PPAPCA’s] primarily an entrenchment and expansion of the existing system. ”

    I dunno. It seems to be severing the employer/insurance nexus, which is a good thing. Every small employer will stop offering insurance and the penalty/benefit analysis will favor dropping coverage by big companies too.

    The problem arises because the government is assuming so much of the cost, instead of leaving it with individuals.

Please to post comments

Comments are closed.