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The Agenda

NRO’s domestic-policy blog, by Reihan Salam.

David Leonhardt on Opposition to the Health Law



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In “Opposition to the Health Law is Steeped in Tradition,” David Leonhardt draws on the fairly familiar argument that opposition to the new health law is part of pattern of right-wing overreaction to modest expansions of the welfare state. He begins by citing conservative opposition to Medicare, implicitly suggesting that opponents who saw Medicare as the entering wedge of socialism were wrong. Yet he doesn’t cite the cost projections made by Medicare advocates at the time the program was established, and he makes no reference to the role of Medicare in transforming the larger U.S. health system. I’ll remind you of one of my favorite Capretta passages from National Affairs:

Employers have been trying for years to move away from Medicare-style FFS in favor of steering patients to higher-quality, lower-cost networks of service suppliers. The private sector is also well ahead of the federal government when it comes to disease management and wellness efforts. But employers can only do so much when Medicare, the dominant payer in most health-care markets, pushes in exactly the opposite direction. Because Medicare will finance unlimited use, many individual practitioners and institutions see no reason to give up their autonomy and join an organized delivery model. All manner of ancillary service providers — labs, home health agencies, hospices, and others — also survive as stand-alone operations because of Medicare’s open network and provider-centric payment systems. [Emphasis added.]

One could argue that Ronald Reagan was wrong to be quite so apocalyptic, e.g., “you and I are going to spend our sunset years telling our children, and our children’s children, what it once was like in America when men were free.” But it is certainly true that Medicare has transformed our economic landscape. Peter Suderman writes:

Cost estimates prepared by the House Ways and Means Committee assumed that if 95 percent of eligible seniors signed up in the first year, the maximum total cost would be about $1.3 billion. They were right about the high enrollment figure. But total cost? Not so much. The program’s first year cost was $4.6 billion –nearly four times as high as projected. That wasn’t a one-time spike either; from there on out, total spending continued to pull away from the estimates. In 1970, for example, the committee had projected that hospital spending alone would amount to just $3.1 billion. Instead, the tally came in at $7.1 billion. In 1975, hospital spending was expected to come in around $4.2 billion. The actual price? $15.6 billion.

Incredibly, Leonhardt makes no mention of this extraordinary growth, which has continued. Had Medicare remained in line with the cost projections made at its finding, might the public spending gone to other purposes — to early childhood education, to better roads, and much else besides? And if public spending levels had been lower, might we enjoy more cost-effective medical care that would buy more gains to health and more disposable income that families could use in the way they see fit? Granted, more disposable income doesn’t necessarily make people “freer” in some profound sense, but it certainly doesn’t hurt. 

When people criticize Medicare, they’re not suggesting that it is Medicare or nothing. And when people criticize PPACA, they’re not suggesting that it’s PPACA or nothing. Rather, they are almost always calling for another, more transparent, more cost-effective approach to achieving the same broad goal of making high-quality medical care more accessible and affordable. That is the central misconception that Leonhardt advances in his column.

There are other misconceptions, e.g.:

In truth, the law is quite moderate. It is more conservative than President Bill Clinton’s 1993 plan or President Richard Nixon’s 1974 plan (in which the federal government would have covered anyone who wasn’t insured through an employer). It’s much more conservative than expanding Medicare to cover everyone. It is clearly one of the least radical ways for the United States to end its status as the only rich country with millions and millions of uninsured.

I have to assume that Leonhardt is characterizing PPACA as “more conservative” than Clinton’s Health Security Act because it received a more modest score. But that is simply because, as Michael Cannon has explained, Bob Reischauer’s CBO counted mandatory payments to private insurers as federal revenues, while Douglas Elmendorf did not treat mandatory payments to private insurers in the same way. 

Crafting the private-sector mandates such that they fall just a hair short of CBO’s criteria for inclusion in the federal budget does not reduce their cost, nor does it make those mandates any less binding.  But it dramatically reduces the apparent cost of the legislation.  It is the reason we’re all talking about an $848 billion Reid bill, rather than a $2.1 trillion Reid bill.

It could be that David Leonhardt believes that this effort to reduce the apparent cost of the legislation reflects deep conservative insights drawn from Edmund Burke or Ronald Reagan. But I’ve seen no good reason to believe that this is the case. 

It could be that Leonhardt is using “conservative” to mean incremental or modest, though of course that’s not a plausible characterization of the legislation either. Even President Nixon’s proposal was more “conservative” in that it created a large new dedicated revenue stream rather than rely on deep cuts to Medicare spending growth that might or might not materialize.  

It’s easy to look at the current debate and see an unavoidable trade-off between this country’s two economic traditions — risk-taking and security. But I don’t think that’s quite right. I think it is ultimately as misplaced as those worries about Social Security and Medicare equaling Bolshevism.

And what about concerns that property tax caps would destroy education in Massachusetts, where per pupil spending is far lower than in New Jersey yet educational outcomes are superior across all demographic groups? This sounds less dramatic than railing against Bolshevism. But it is this kind of claim that has actually proved far more pernicious. Hysteria about efforts to increase the effectiveness of the U.S. public sector is a far more potent threat to our collective well-being than the (correct) suggestion that opaque, kludgy expansions of the welfare state will make us poorer and less free than we need to be. 



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