Obamacare is Bad for Health Care Socialism

The federal health law makes it more difficult for states to pursue their own goals.



Obamacare is bad for health care socialism. That's one takeaway from this big New York Times write-up of the ongoing problems and frustrations in Vermont, which set up its own exchange under the law, and initially viewed the Affordable Care Act as a bridge to the nation's first state-based single-payer system.

The state's residents and policymakers are both increasingly frustrated, however, because the single-payer plans have been scrapped, and serious technical and administrative problems remain with the exchange.

The state's single-payer plan was stopped in its tracks by cost estimates indicating that the taxes it would require would be far too high—the hikes would be "enormous" in the words of Gov. Pete Shumlin, who had backed the plan. But the exchange struggles, the article suggests, also helped kill public confidence in the plan. Meanwhile, Obamacare forced the state to build out the health care system that the federal government required it to have instead of the one that its residents and elected officials actually wanted. "This law, by preserving the private insurance system and treating health care as a commodity, made us do things that Vermont otherwise wouldn't have done," an official at group that advocates for single-payer health care told the Times.

Another way of thinking about this, then, is that Obamacare is not only bad for health care socialists, it's bad for all forms of local experimentation and control.

Yes, the law does allow for states to apply for waivers that would go into effect in 2017—that's how Vermont was planning to implement its single-payer plan—but in the meantime, it pushes states into building systems that meet federal criteria, and in the process makes it more difficult for them to pursue their own goals.

And the states that participated most fully, by building and running their own exchanges, are now struggling to maintain the systems that they built under Obamacare. As the Times points out, it's not just Vermont that's struggling: Hawaii looks increasingly likely to shut down its exchange due to its inability to raise operational funds. Massachusetts, Maryland, and Oregon created exchanges that essentially didn't work at all. California's exchange is already running an $80 million deficit. Some of the states are reportedly looking at ways to cut costs by integrating systems.

I think Vermont's single-payer plan was almost certainly doomed to failure no matter what. But it might have been an interesting experiment, and it would have been instructive to see how it compared with, say, the Massachusetts system—a system that was also derailed by Obamacare. And it would be even better if we could compare those more liberal, coverage-expansion-driven systems with other types of experiments in more conservative states like Indiana, Texas, or Florida.

But that sort of experimentation and comparison is extremely difficult, if not impossible, at this point, even with Obamacare's waiver system, which would only allow for liberal forms of experimentation, and then only under strict guidelines. Rather than allowing states to test their own ideas and succeed or fail on their own, Obamacare has encouraged failure across the board.