Brief Thoughts on PPACA Coverage

by Reihan Salam

Trudy Lieberman of the Columbia Journalism Review has an article lamenting the fact that voters don’t seem to understand the Affordable Care Act very well, a problem that she attributes (it seems) to Republicans, to the failure of the president and his allies to describe its provisions in sufficient detail, and a media that takes its cues from politicians. 

There are a few red flags in the piece, e.g.:

During the peak of debate in 2009 and 2010, CJR observed that there was a dearth of stories about the individual mandate—and repeatedly urged the press to ask questions about its rationale and how it would supposedly work. Such comprehensive stories were rare—and remain rare now. As a result, when the public hears about the mandate, it tends to hear about it from the perspective of those who oppose it, rather than getting neutral explanations.

The upshot? The public had a vague sense that it was wrong for insurance companies to deny coverage to sick people, but explanations of why the law was necessary to stop that practice flew over a lot of heads, if they few at all. To many, the idea of a mandate—with penalties for failing to buy insurance—made no sense. In another CJR Town Hall, a worker at a Pennsylvania Walmart told me, “If you can’t afford healthcare, how are you going to afford the penalties? Why punish them?” The president—and therefore the press—failed to address the “why” in terms people could understand. [Emphasis added]

Notice the assumption embedded in the above passage. The public’s vague sense that insurance companies shouldn’t be permitted to deny coverage to sick people might actually be rooted in problematic assumptions regarding current law, as James Capretta and Thomas Miller have explained. Consider the following from Mark Pauly of the Wharton School, one of the leading experts on the economics of insurance:

From the viewpoint of economic efficiency, subsidizing high risks is often desirable, but paying for that subsidy by taxing low risks never is. Nor is there an obvious equity reason why low risks should pay. The reason for the political appeal of this policy is that the tax on low risks is not counted as a tax, does not show up on any budget, and is opaque for all, even to low risks who are likely to blame the insurers, not theregulators, for their high premiums. [Emphasis added]

Lieberman doesn’t consider that if the public understood the mandate in greater detail — that it is based on the premise that we should tax low risks to subsidize high risks — they may well like it even less than they do at present. (Indeed, I suspect that much of the opposition to the mandate comes from people who understand it reasonably well.) The public might instead embrace a more targeted approach focused on the needs of high risks.

At the end of the piece, Lieberman notes that there has been an effort to attack the various taxes and fees associated with PPACA:

Even so, how much the subsidies would be, and who actually would get them, is not clear—given a not-so-secret assault on the funding mechanisms in the law from employers, insurers, and manufacturers of medical devices. They are waging fierce campaigns in Congress to rid themselves of taxes imposed by the Affordable Care Act to help pay for those subsidies.

Yet the U.S. Department of Health and Human Services has also declared that the CLASS provisions of the health law are essentially unviable and the Obama administration has reversed some of its scheduled cuts to the Medicare Advantage program. These are developments that badly undermine the notion that PPACA will prove significantly deficit-improving, and they’ve also been undercovered. Is this a problem as well? I should think so. 

The Agenda

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