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News Link • Obamacare

Obamacare Was Never Affordable

• https://fee.org, Gary M. Galles

The focus of the current government shutdown circus has increasingly narrowed to Democrat demands to undo proposed reductions in very large, supposedly temporary, Covid-era Obamacare (Affordable Care Act) subsidy boosts. A major part of their public push is the claim that they are trying to save citizens money, though what they are actually demanding is that we shift the burden to future generations via increased federal debt, backed by the threat of demonizing Republicans as heartless for taking away any benefits. They emphasize the need to maintain the "great deal" the ACA offered.

The problem with their emphasis was revealed by a recent Washington Post editorial that admitted that "The real problem is that the Affordable Care Act [Obamacare] was never actually affordable," because "policies cost more than expected." The Post cited the assumption that "risk pools would be bigger than they turned out to be" for the gap between the Act's name and reality. However, the fact is that "higher than expected costs" were actually expected by ACA's architects, but were intentionally misrepresented to make a sow's ear look more like a silk purse to voters.

Most instructive on this score were comments made by MIT economist Jonathan Gruber, who helped assemble Obamacare, at the time.

Remember the proposed 40% tax on "Cadillac" company insurance coverage? Gruber admitted it was really a means to tax workers in a way that would lead them to blame employers rather than the ACA for expensive plans. Employers were legally responsible to pay the tax, but every economist knows who actually bears the burden. When employers know their costs will be higher as a result of the tax, employees are worth less net of the taxes paid, and workers would end up bearing the burden. In other words, it was a sneaky way to get workers to overlook the expenses they would actually bear, in a bid to increase political support by deception.

Gruber and other ACA builders also manipulated Congressional Budget Office methodology to misrepresent its cost to the public. The law's design was tweaked to look as good as possible in the CBO's eyes, not in reality. This was why the ACA imposed mandates. As Gruber stated, "The bill was written in a tortured way to make sure the CBO did not score the mandate as taxes. If the CBO scored the mandate as taxes, the bill dies. OK, so it's written to do that," to take advantage of "the stupidity of the American voter."


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