May 10, 2021
Jonathan Cohn is one the country’s best health care reporters. I’ve learned much over the years from reading his work in the New Republic and the Huffington Post, as well as Sick, his earlier book on the health care system.
For this reason, I was somewhat disappointed by his book on the passage of Obamacare and the subsequent effort by the Republicans to destroy it. The main reason is that Cohn wrote a different book than what I had expected. The overwhelming focus of the book is on the politics of the Affordable Care Act (ACA). Relatively little space is given to the substantive impact of the reforms and the debates around them.
I suppose you can’t blame an author for writing the book they wanted to write as opposed to the one I wanted them to write, so I will make a few comments about the book Cohn wrote and then get to some of the things I would have liked to see him discuss more.
The Book Cohn Wrote
First off, to be clear, Cohn has done an outstanding job of profiling the key players and describing their impact on the ACA, both in terms of their personal perspectives and their political agenda. He also tries hard to be fair to all involved, something which is difficult when many of the actors make it clear that their agenda is simply sabotage.
He also does a very good job of conveying the drama around the bill’s passage, a passage with no votes to spare in the Senate and perhaps one in the House. The period leading up to the passage of the bill also included the death of Senator Ted Kennedy, for decades one of the leaders of the fight for national health care insurance, and then his replacement in the Senate by a Republican, who managed to catch the Massachusetts Democratic Party by surprise.
This resulted in the absurd situation where this massive bill never had a conference committee to hammer out differences between the House and Senate versions. Since the Democrats had lost their filibuster proof majority in the Senate, the only way that they could get the bill through Congress was to have the House pass the Senate bill unchanged. This situation made a far from perfect bill even less perfect, and it also created some of the legal issues that had to be battled out in several court cases.
In the news to me category, Cohn reports that several of Obama’s top advisers wanted him to abandon the ACA when the route to passage looked difficult. It is to Obama’s credit that he insisted on pushing forward. House Speaker Nancy Pelosi also comes off very well in the book. Her skills as a vote counter and arm-twister are well-known, but Cohn recounts in some detail the various deals she had to put together to get her majority in the House.
However, this is also an area where I will express some skepticism. When a member of the House faces a vote that would be politically difficult in their district, it’s common for them to tell the leadership that they will have their vote if it is needed, but would rather vote against the measure.
There were 39 Democrats that voted against the bill on the key House vote. It is certainly possible that some of these had pledged to be yes votes if Pelosi needed them. I have no idea if that was the case, but Pelosi would certainly not force one of her members to take a politically dangerous vote if it were not needed. Cohn doesn’t raise this question. It would not hugely change the picture if Pelosi had four or five potential votes in reserve, but it would mean that the passage wasn’t quite as much of a nail biter as it appeared.
There are some other places where more questions like this could be asked. For example, Obama’s chief of staff Rahm Emanuel struck a deal that was very favorable to the pharmaceutical industry. Was the issue that he could not have gotten more concessions out of them on pricing or that he did not want to?
There is also a question of whether he could not have secured some funding, say a few billion a year from the National Institutes of Health (NIH) budget, to support the actual development of new drugs, not just the more basic research typically funded by NIH. This funding would be comparable to the funding that Moderna received to develop a vaccine through Operation Warp Speed, except instead of giving companies a patent in addition to the government funding, the drugs developed would be in the public domain, and all the research would be fully open-source. This means that we might get some new breakthrough cancer drug selling for a few hundred dollars, instead of tens of thousands.
Okay, I realize that the question of experimenting with alternative research funding for prescription drugs and medical equipment was on no one’s agenda, but it is reasonable to ask “why not?” If we can’t talk about reallocating 0.1 percent of the country’s health care budget to a once in a generation health care reform, when can we talk about it?
It’s also worth pressing the issue of the $1 trillion ten year cost limit (less than 0.6 percent of GDP) that Obama imposed on the bill, which he later lowered to $900 billion. Obama seemed to believe that this limit would win him goodwill for his fiscal prudence from Republicans or at least the media. It seems to have gained him nothing.
If there were another $100 billion in the bill, it could have been used to have larger subsidies in the exchange. With roughly 12 million people in the exchanges, an extra $10 billion a year would allow for a boost to subsidies that averaged $850 a person. This would have made insurance in the exchanges considerably more affordable.
Cohn does raise this issue, but it certainly could have been given more extensive treatment. It was perhaps the biggest unforced error the Obama administration made in pushing the bill.
The Book I Wish Cohn Had Written
The focus of The Ten Year War is clearly on the politics around the passage of the ACA and the subsequent effort to repeal it. I would have liked to see more attention to the policy questions around the bill and some of the resulting debate.
What Happened to the Young Invincibles?
I recall a painful debate over the “young invincibles,” the question of whether young healthy people would buy insurance in the exchanges. By some accounts, the whole future of the program depended on the decision of healthy people in their twenties and thirties.
This debate was painful, because it was nonsense. The key issue for the exchanges was whether healthy people would buy into the exchanges, it didn’t matter whether they were young or not. The basic point here is straightforward: we can think of the premiums people pay effectively as a tax. The oldest pre-Medicare age group (ages 55 to 64) pay premiums that were three times as much as the youngest group.
Younger people on average have health care costs that are less than one third as high as this older group, meaning that they did face somewhat of a penalty. But, the fact is that most people in this older age group, like most young people, are healthy and have low medical expenses. This means that for every healthy older person in the exchanges, insurers collect three times as much as they do for healthy younger people, and they pay out the same in benefits – little or nothing.
What mattered for the program was skewing by health, not by age. This point was demonstrated in a simple analysis by the Kaiser Family Foundation. This analysis showed that even an extreme skewing by age would only raise costs by 2.4 percent. A more plausible skewing was unlikely to raise costs of the program by even one percent.
The question of what the young invincibles would do was highlighted endlessly as the exchanges were becoming operational in 2014. The Heritage Foundation sponsored an Obamacare card burning, where young people were burning mock Obamacare cards to show their contempt for the exchanges. (This was a takeoff of draft card burning during the Vietnam War years. Also, there were no Obamacare cards.)
I remember once being in an e-mail exchange with a group of young lefty Medicare for All supporters. They were threatening that they would not sign up for the exchanges. I explained the arithmetic to them and said I really didn’t care from the standpoint of the program, but it was probably a good idea for them to get insurance. Anyhow, I think it would have been worth spending a page or two on this silliness that played such an important role in the debate at the time.
Where’s the Skin in the Game?
In the same vein, I don’t recall the expression “skin in the game” appearing anywhere in the book. There were certainly many on the Obama team who felt that it was important for patients to pick up a portion of the tab in order to control costs. The idea was that if insurers, or the government, paid the full bill, then people would use too much health care. On the other hand, if we could make patients pay 20 percent, or some significant share, they would be good “consumers” of health care and shop for better prices.
There was a great study a few years back that looked at people’s decisions on where to get non-emergency lower body MRIs. The reason this was a good test, is that lower body MRIs are a standardized product. This isn’t like looking for a cardiologist or a brain surgeon, who may have a range of skills for specific conditions. The study found that almost no one did comparative shopping, they went with referrals from their doctors.
If people aren’t going to comparison shop for lower body MRIs, it’s hard to believe that they will do comparison shopping for any other medical need they face. In other words, there is very little value in forcing people to have skin in the game.
I will qualify this view slightly. I know many people pushing for Medicare for All believe it is important that people not pay anything for their care, that money should not be an obstacle to seeing a doctor.
A doctor, or any health professional’s time, is valuable. We should not want people using it frivolously. To my view, it makes sense to require modest payments to encourage people to think twice before going to the doctor.
The model I envision is something along the lines of the five cent fee that is required in many states to get a plastic bag at the grocery store. This is not going to discourage anyone from getting a bag when they really need it for their groceries, but the evidence shows that it enormously reduces the demand for plastic bags.
Similarly, if we charged a ten or fifteen dollar fee to see a doctor, as opposed to having it be completely free, it will likely get people to think twice before going, without preventing people with serious health issues from getting the care they need. That isn’t really a skin in the game story; it’s just asking people to think twice.
Okay, that’s all a sidebar, but this is another case where a big item in the policy debate turned out to be largely silly. Skin in the game is not an effective way to control costs.
Slowing Health Care Cost Growth Can Pay for Biden’s Big Agenda
There is an incredibly important story on costs that has gone largely unnoticed. Health care cost growth has slowed dramatically in the years since Obamacare passed. In 2009, the Centers for Medicare and Medicaid Services projected that in 2019 we would spend $4.5 trillion, or 19.3 percent of GDP, on health care. In fact, we spent $3.8 trillion, or 17.7 percent of GDP, on health care in 2019. The difference of 1.6 percent of GDP is almost half of the military budget. It is roughly equal to the combined amount that President Biden is requesting for his infrastructure and American Families Plan. In short, it is real money.
Health care costs slowed sharply in the years following the passage of the ACA. This has meant that we have much more money for other things, as health care has risen only slightly as share of GDP. This is even though we had a substantial aging of the population over this period.
The ACA certainly is not responsible for all of this slowdown in health care costs. There has been a comparable slowing in most other wealthy countries. Also, the slowdown began before most of the elements of the ACA had gone into effect, so it is hard to give the credit exclusively to the program.
Nonetheless, there can be zero doubt that if costs had gone in the opposite direction, we would be hearing about it nonstop. If there had been some factor, unrelated to the ACA, that had led health care costs worldwide to accelerate, Obamacare certainly would have been blamed.
For this reason, it is very hard to understand why the Obama administration was not more anxious to tout the slowdown in costs that took place under Obama’s watch. It is a big deal and people should know about it.
The Affordable Care Act Was Family Friendly
Another item in this vein is the impact of Obamacare on the labor market. Prior to the passage of the ACA, there was a considerable literature on the phenomena of health care related job lock. The issue was that most workers got their health care insurance through their employer. If people with health conditions or family members with health conditions lost or left their jobs they risked losing health care insurance. Insurers would either refuse to issue insurance to someone with a health condition, or they would charge very high rates that would make it unaffordable.
By prohibiting insurers from discriminating based on pre-existing conditions, the ACA largely ended this problem. As a result, we should have expected to see more people leaving jobs with health insurance for jobs where they may not be getting insurance through their employer.
There is some evidence that this sort of shift did happen. In 2014, the first year of the ACA’s Medicaid expansion and the full operation of the exchanges, the share of the employed working part-time by choice rose 0.2 percentage points. While this is a very modest rise, for women with children the increase was 0.8 percentage points. For women with three or more children the increase was 1.4 percentage points. And, we also found, to no one’s surprise, that women working part-time spend more time providing care for family members.
Since part-time work generally does not provide health care insurance, this is consistent with the story that the ACA allowed workers to find jobs that better fit their needs, rather than staying at a job because of health insurance. For some reason the Obama administration never chose to highlight this effect of the ACA.
I should also add a difficult to quantify aspect of Obamacare. Those of us who are fortunate enough to have reasonably good paying jobs that provide insurance know that we are one health crisis away from losing both our job and our insurance. Even for this fortunate segment of the labor market, a debilitating injury or illness is likely to eventually lead to job loss. And, after a period of time, to loss of insurance.
The ACA provides a backup so that even in that situation we are likely to still be able to get insurance, either through Medicaid or through the subsidies provided to people in the exchanges. In effect, the ACA provides insurance that people can get insurance. Perhaps not many people appreciate this fact, but when you do work on the topic (and have a family member with health issues), it matters a great deal.
To sum up the book I wanted Cohn to write, there was a lot of silliness in the debate around Obamacare, but the program’s benefits have actually been undersold. As our current president rightly said, it is a big f**king deal. And, in important ways it is a bigger f**king deal than most people recognize, even its supporters. I wish this book had done more to make that clear.
 One Republican, Joseph Cao of Louisiana, voted for the bill in the House, but he waited until after all the votes were in, and it was clear that the bill had passed, to switch his vote from no to yes. He has publicly said that he would not have voted for the bill if his vote would have been decisive.
 For low income people even a ten dollar fee can be a substantial cost. There are mechanisms that can address this. For example, they can be issued a $200 card at the start of each year, with the unused money going into a retirement account.