What’s Next For Health Care Policy?

Published October 24, 2013

Over the past few days we’ve seen an ever-increasing number of voices on the Left, most of whom laughed at the prospects of Obamacare as a train wreck a few months ago, gradually opening up about their concerns on the future of the law.  They aren’t saying it’s going to fail now, mind you – but they are gaming out a future where things just don’t work out as they had intended, where the combination of implementation failures and unfixable policy come together to make a real mess of things. It raises the possibility of the post-Obamacare era, with policy writers on the left finally recognizing that there will be another round of health care reform in the near future.

What might post-Obamacare health care policy look like?

I think it’s a getting a bit ahead of ourselves to have strong opinions about this, before we have more clarity on the outcome of the tech surge, the functionality of the large majority of the exchanges, the size of the Medicaid population, and other key metrics of Obamacare’s success. But this is a conversation that has been a long time coming, and indicates the positioning which candidates on both sides will adopt in the 2016 presidential primaries. So it’s useful to consider what the three general policy camps will look like in this post-Obamacare landscape, as they’re illustrative of the way Washington’s policy community doesn’t necessarily reflect the political realities of this issue.

It’s easy to say that Obamacare was a policy which pleased no one when it passed. But for both policy wonks right and left, Republicans and Democrats, a significant portion viewed Obamacare as not the stepping stone to a future plan, but as the policy reality for the foreseeable future. In the wake of the 2012 election, a significant portion of the health policy-focused staffers – whether within the think tank space, or on the Hill for Republican offices – accepted the idea that Obamacare was here to stay.

That’s one reason I disagree strongly with Heather Higgins’ description of the various factions on the right, though the rest of her piece is well worth a read. Far from disappearing (and despite the numerous repeal votes and other steps taken under the current House leadership), at the staff level, and for many external policy experts, the conversation shifted to what could be done to “fix” Obamacare, or adapt it into a more market-oriented policy proposal in the future. Prominent conservative-leaning policy figures met to discuss what could be done to transform the exchanges into something approximating Paul Ryan’s plan for Medicare, or tweaks that could be done to regulations or the exchange subsidies. Indeed, it was the quietly held common opinion among many in senior staff and policy positions that the biggest challenge of 2016 was going to be shifting the base away from the “repeal and replace” language that had been repeated so often in 2012.

What’s the scenario if this view carries the day? If a candidate who agrees with The Fixers prevails in the 2016 stakes, they could partner with their equivalent technocrats on the opposite side of the aisle to achieve an even trade. It’s relatively easy to see President Hillary Clinton or President Chris Christie pushing for legislation which would include policy fixes for the exchanges and the Medicaid donut hole, while rolling back regulatory requirements for exchange plans in ways Republicans would like, opening up the exchange to more competition and more inexpensive high deductible + HSA insurance plans, and perhaps throw in premium support for Medicare if you really want to go full grand bargain.

These general outlines for reform have been taking shape for much of the past year, and they would likely have become the consensus Republican position – and likely the position of the 2016 nominee – had Obamacare’s launch been successful and the law become enormously popular. It still could.

Changing the dynamics of the debate

What Obamacare’s failure to launch has done, however, is dramatically undermine the more technocratic factions of the right and left, whose solutions come from the same Stuart Butler/Mitt Romney Jonathan Gruber/Barack Obama school of thought. When Ezra Klein and Ross Douthat talk about the negative side of the failure of Obamacare for Republicans, this is what they’re talking about: a serious ding to the Douglas Holtz-Eakin approach to the next round of health care reform.  It turns out that Romney was right about one thing: his plan fit Massachusetts a great deal better than the nation. And that has created an opening for two alternate schools of thought: ideologues on the left and the right.

For the Single Payer advocates, the troubles of Obamacare have vindicated their position, held for years but quiet since 2008: that you cannot deal with the private insurance industry at all, and that the enticement of the individual mandate really won’t work (it’s from this perspective, universal coverage without a mandate, that Obama actually spoke to within his own campaign). Whether you’re a Krugmanite “Medicaid is the future” believer or not, the left has largely bought into the idea that Obamacare’s real problem is that it doesn’t go far enough. The simmering distrust of this approach has finally boiled over now that the exchange launch has been botched, and there is no question in my mind that a major 2016 Democratic challenger – hopefully, Elizabeth Warren, with clear eyes and a full heart – will make the centerpiece of her campaign.

Obamacare’s struggles have obviously vindicated the positioning of the free-market advocates, too – particularly the ones who have been most vociferous in their distrust of the manageability of Obamacare and Romneycare over the past decade and a half. Conservative and libertarian health policy experts like NCPA’s John Goodman, Cato’s Michael Cannon, Heritage’s Chris Jacobs, Heartland’s Peter Ferrara, and FreedomWorks’ Dean Clancy, who have held to that “this is going to be a train wreck” position despite the efforts of The Fixers, are the victors here. All have their favored alternative approaches to national health care policy reform, whether it be through tax credits, deductions, or full deductibility combined with a bigger investment in the safety net or risk pools. But they all share certain aspects in common: they ditch the mandate and exchange-based approach to health reform, and instead rely on individual responsibility and carrots to achieve universal access to care. And, more fundamentally, they all understood that no group of “experts,” no matter how wise, could possibly predict and control one-fifth of the American economy – particularly one already so distorted by decades of misguided government intervention.

The 2016 Debate

In advance of Obamacare’s launch, my expectation was that The Fixers had the best shot at taking the presidency in 2016, from the right or from the left. While Obamacare would still be anathema to the Republican base, and no candidate in his right mind (except perhaps the next Jon Huntsman) would talk of fixing it while running for the GOP nomination, if the policy worked at least well enough to not be a disaster, it would remain in force for the foreseeable future. The post-Obama conversation on the right or left would shift to the components of the measure, and long-delayed negotiations over gradualist fixes and tweaks could finally begin.

This expectation has proven, to this point, completely wrong. The likelihood of exemption and extension – of the mandate and open enrollment – on a major scale rises every week. If Obamacare effectively ends up turning into an expansion of Medicaid for about half the states, it will be far easier to repeal, and the political debate about health policy will shift dramatically away from such approaches.

Should Obamacare’s tech surge fail and lead to these types of delays, 2016 could very well turn into a three way debate: between those who think Obamacare can be fixed; those who think the problem with Obamacare was that it went too far; and those who think the problem with Obamacare was that it didn’t go far enough. In a sense, such a debate would make for a more honest depiction of the factions within health care policy and a more clear-eyed view of the unacceptable status quo. At the moment in the United States, we have the worst of both worlds: a partially single payer and partially third party payer system which does a lot of things well, but does everything for far too much, since nobody cares what something costs so long as someone else is paying for it.

If this turns out to be the debate we have in 2016, we should be grateful that Obama, Nancy Pelosi, and Harry Reid deployed the approach they did in 2009. Moving beyond the mythical view that we had a free-market health care system in America may have required a failure as spectacular as Obamacare appears to be today – the political and policy equivalent of a “megaphone to rouse a deaf world.”