Thomas Edsall used his column today to agree with Charles Schumer that the Democrats made a mistake by pushing through Obamacare and should have instead focused on the economy. As I've noted previously, this is wrong on both sides.

On the economy side, what does Schumer think the Democrats would have accomplished if they had never said a word about health care? Would they have gotten another $20 billion a year in stimulus spending, $30 billion, $40 billion? Plug in your number, but it doesn't have to get too high before it doesn't pass the laugh test. Of course any additional spending would have been good both for creating jobs and the longer term benefits, but if Schumer is claiming that barring a whole different political world (i.e. doing a lot more than skipping health care reform) we would have seen enough stimulus to make a qualitative difference in the state of economy, and the public's view of the economy, then he's been smoking something strong.

There is a plausible alternative economic story, but it has nothing to do with Obamacare. Instead of using Big Government to protect the Wall Street gang from their own greed and incompetence, Obama could have let the market work its magic and put most of the Wall Streeters out of business. (Left to the market, Goldman Sachs, Morgan Stanley, Bank of America and Citigroup certainly would have gone bankrupt.) He could have used the Justice Department to put the Wall Street felons behind bars. (Knowingly putting fraudulent loans in a mortgage backed security is fraud. Selling an investment grade rating for a mortgage backed security is fraud.)  And, he could have tapped into populist sentiment to impose a Wall Street sales tax that would tax financial speculation. Even the I.M.F. has recommended increasing taxes on the financial industry, recognizing it as an undertaxed sector. 

In short, there is a populist economic path that Obama could have pursued that would have put the economy and the Democrats in a very different position. But nothing about the Affordable Care Act (ACA) prevented them from going this route. Furthermore, it's unlikely that Senator Schumer has any interest in following this path, unless the NYT neglected to cover his endorsement of a financial transaction tax and the jailing of Wall Street bankers.

 

On the insurance side, Edsall makes the same mistake as Schumer in discussing the uninsured. The uninsured are not a fixed group of people. The number of people who become uninsured over the course of a year are roughly 50 percent more than the number of uninsured at a point in time. This means that if the number of uninsured are 50 million at a point in time, the number of people who will be uninsured over the course of a year will be around 75 million. Over the course of two years, it is likely that close to 100 million people will be uninsured at some point in time.

If we take this 100 million figure, it is likely that the overwhelming majority of the electorate will either themselves face a stretch of uninsurance or have an immediate family member or close friend who has been uninsured over a two year period. (If you consider that 4.7 million leave or lose their job every month, this makes sense.) And, to deal with the racial overtones in the Schumer speech, most of these short-term uninsured are likely to be middle class and white.

In this vein, Edsall compounds this confusion by including a graph from a Brookings study showing the winners and losers from ACA by income decile. The graph shows the bottom two deciles are big winners and every other income group as losers, with the top decile losing least.

There are two problems with the graph used by Edsall. First, it does not break out the impact on the top one percent separately. The increase in the Medicare tax and its imposition on capital gains only applies to people in the top one percent. While this would have a trivial impact on the income of the whole decile, these taxes would notably impact the top one percent. In other words, the top one percent paid the biggest price as a share of their income from the ACA. This fact does not come out in this graph.

The other problem is that it is only showing the impact on after-tax income. A cancer survival earning $50,000 a year who can buy a gold insurance plan in the exchanges for $6,000 a year is a loser in the Brookings analysis. It doesn't take account of access to insurance. Nor does it take account of any benefit from the sharp slowdown in health care cost growth. (Costs are now more than 10 percent lower than had been projected back in 2008 for 2014.) While Obamacare is not responsible for all of the slowdown in cost growth, it surely is part of the explanation.

Of course if people don't understand that their ability to get affordable insurance during a stretch of unemployment (or employment at a job that doesn't provide insurance) is due to the ACA, and that cost growth has slowed sharply, then they are unlikely to give the Democrats much credit. The public might not be as stupid as Jonathan Gruber claimed, but they are probably not that much better informed on major policy issues than Senator Schumer and Thomas Edsall.