Cowen on Health Care Reform

Tyler Cowen has a good post on health care reform at Bloomberg View. The gist of it is this: health care reform that makes most people worse off while helping a few is unlikely ever to be popular.

One possible solution is to make the penalties for not signing up tougher, to ensure participation. But it is no political accident that the mandate was so lax to begin with, because such tougher pressures would have made Obamacare less popular. Furthermore, what is the point of a health-care reform that makes so many policyholders worse off by the standards of their own preferences?

Another way to manage health-care subsidies would be a single-payer system, and some commentators suggest that is where the Democratic Party is headed. I wouldn’t be so sure. Obama made his (partially incorrect) “if you like your health care plan, you can keep it” promise for a reason. The Americans who get health insurance through their jobs often enjoy privileged access to doctors and benefit from superior reimbursement rates.

If the price of covering the sick is for millions of wealthier and more influential people to give up those advantages, I don’t see that happening. The health-insurance industry and other medical lobbies will be opposed, too, with doctors fearing that a single-payer system would bargain down their reimbursement rates. Even a relatively progressive state such as Vermont could not make a single-payer system happen.

The Affordable Care Act took the form it did for good reasons, almost none of them policy reasons. Under what conditions would some future reform be any different?