Disdainful Economists, Hubristic Jurists, and Fanatical Republicans: A Recipe for Single-Payer Health Care?

Posted in: Health Law

The two most recent attempts to reform the American health care system, in the early 1990s and early in this decade, were notable for what the would-be reformers refused even to consider: single-payer health care. Although nearly every major nation in the world uses a version of the single-payer system—and, as I will discuss below, even though the U.S. itself has had great success with a partial single-payer plan—both the Clinton and Obama Administrations ruled out universal single-payer reform even as one of the possible options.

Self-styled realists claimed in both instances that the political obstacles blocking adoption of a single-payer plan were insurmountable—so why even try? Defenders of President Obama’s approach noted that his advisors were worried that proposing anything like single-payer would brand the Administration as being too extreme, and that this would lead to huge losses in Congress for the Administration, and perhaps even the loss of Democratic majorities in both the House and Senate. We all know how that worked out for the Democrats, as former Speaker of the House Nancy Pelosi and soon-to-be Minority Leader Harry Reid sit dazed in their smaller offices.

Even that explanation, however, assumes that the Clinton and Obama Administrations were reluctantly trimming their sails, settling for less than they truly wanted. That could be true, I suppose, but there is an even stronger case—based on the totality of the economic policies that both presidents have enthusiastically embraced—that neither president was ever all that interested in seriously challenging the status quo.

The Affordable Care Act (ACA) is actually working rather well, given that it is by design a wasteful system that continues to pump profits into the bank accounts of unnecessary intermediaries. On the substance of what is included in the ACA—no more denials of coverage for preexisting medical conditions, more choices for many consumers, affordable coverage even for people who move between jobs, and millions of previously uninsured people now receiving coverage—Americans genuinely like the law. Even rising Senate Majority Leader Mitch McConnell, in what by the end was a very easy reelection campaign, refused to admit that he would take away the Kentucky version of the ACA, even as he promised to try to repeal the whole law nationwide.

No matter whether it is a marriage of convenience or a matter of deeper ideological commitments, the Obama Administration now finds itself in the position of having the health insurance industry as its greatest (only?) ally. Indeed, it seems that the rest of the political world is aligned to bring an end to “Obamacare.” An economist who advised the Administration has become the unintentional star of videos in which he disparaged voters’ intelligence. The Supreme Court is poised potentially to drive a stake into the heart of the ACA. And the rabid anti-Obama activists in the Republican Party continue to push for the ACA’s repeal.

The interesting question is what comes next, if the ACA fails or is killed. Republicans have never provided a meaningful alternative, and they dare not repeal the more popular parts of the law (including, in addition to the features noted above, the inclusion of children through age 26 on their parents’ policies). Moreover, the more Republicans attack the government for its supposed incompetence in running the ACA, the more we could reach the paradoxical moment where the public rallies behind the ultimate government solution that is single-payer health care.

How to Understand the Now-Infamous Remarks of One Unfortunate Economist: Both Liberal and Conservative Economists Think They Are Smarter Than Everyone Else

Much of the anti-ACA political landscape is by now utterly familiar. We have seen years of posturing by Republicans at all levels of government, dozens of pointless votes in the U.S. House of Representatives to repeal the law, and a razor-thin loss for repeal advocates in the Supreme Court in 2012. All of this makes the ACA a sore spot, and a focus of rage, for the Republican base. Even so, little new has come along to change the political landscape, until this week.

Now, the MIT economist Jonathan Gruber is at the center of a controversy over arrogant and disdainful remarks that he made at some policy/academic forums over the last few years. In particular, Gruber referred blithely to the “stupidity of the American voter” in explaining why he thought the law was written in less-than-clear ways.

Even a political opposition that was not as extreme as today’s Republican party would understandably respond to such comments with glee. Professor Gruber sounds, after all, more than “a bit dickish,” as Jon Stewart put it on his late-night show recently. If the Obama people relied on Gruber, as they clearly did, in setting up the law, then the President’s opponents would be crazy not to make political hay.

The problem is that people are misunderstanding what was at work in Professor Gruber’s comments. Republicans and their allies want to paint this as a case of “liberal condescension,” where the supposedly smug do-gooders in the Obama Administration are caught showing that they have no respect for “real Americans.” But that is most definitely not what was happening.

I am an economist, and I have spent large amounts of time with other economists. The one unimpeachable fact about economists of all political stripes is that they think that non-economists are stupid. (Indeed, one of the reasons that I now teach in a law school is that I found this mindset among economists to be so unfortunate—and unwarranted.) Economists are trained to think that only they can see through the silly nonsense of politicians, lawyers, pundits, and regular people—people who are too dense to understand that wage increases are not necessarily “real” (because they might be offset by inflation), or who fail to notice that a subsidy is the same thing as a tax reduction, or any of a number of other “simple” issues that economists deal with all the time.

Importantly, this disdain for the public is nonpartisan and not at all ideological. In fact, the Economics Department at the University of Chicago, which is famously conservative in its approach to economics, takes pride in its supposed ability to set the world straight and correct people’s dimwitted misunderstandings. One Chicago-School economist once referred to his colleagues’ approach as an “acid bath,” bringing the harsh reality of brutal logic to bear against the confused and sentimental ramblings of the great unwashed masses.

Professor Gruber, therefore, was simply caught saying to his colleagues what economists say to each other all the time: If everyone in the world were as smart as we are, we wouldn’t have to deal with their nonsense; but because they are easily confused, we can use our superior intelligence to take advantage of their shortcomings and dupe them into doing the smart thing. I have heard virtually the same words coming out of the mouths of conservative economists and liberal economists alike, many times.

Even so, and even though nothing that Professor Gruber said actually bears on the substantive content of the ACA, the new narrative is that the Obama Administration was somehow uniquely Machiavellian in its manipulation of the American people. That is not true, but there are plenty of false accusations against this president that Republicans have refused to abandon.

The net result of this new mess, therefore, is that the Republicans will be able to repeat relentlessly the claim that the ACA is a nefarious trick that was foisted on an unsuspecting public. The general suspicion that “we can’t trust Washington” will have inadvertently been enhanced by one economist being recorded saying what all of his colleagues believe.

The Supreme Court and the New Challenge to the ACA

As Professor Michael Dorf explained in his Verdict column yesterday, the Supreme Court has agreed to hear a new challenge to the ACA, King v. Burwell. There, the Court could decide that the subsidies for low-income Americans that allow them to buy insurance under the new health law must be limited to the dozen or so states that have set up their own insurance exchanges. That would leave the citizens of the majority of states without subsidies, because they are currently buying their insurance through exchanges established on the states’ behalf by the federal government.

The merits of that challenge are not the issue in this column, but I have to say that I find the central claim in King to be extraordinarily weak. Even so, a motivated group of conservative justices could decide to engage in naked partisan politics in that case, which would (among other things) allow Chief Justice Roberts to rehabilitate himself in conservatives’ eyes, after his vote to uphold the ACA in the 2012 NFIB v. Sebelius case.

If the Court strikes down the subsidies in the affected states, what would happen next? The so-called “death spiral,” in which the insurance pools in those states would include fewer healthy people, causing rates to rise and push out even more healthy people, is better thought of as a near-death experience. The exchanges would not be “really most sincerely dead” (in the immortal words of the munchkin coroner in The Wizard of Oz), because there would still be a core group of relatively ill people who are just barely able to buy the now-much-more-expensive insurance, and for whom even expensive insurance is better than nothing.

As the New York Times columnist Josh Barro has written, this unfortunate limbo perfectly describes the pre-ACA world in which New York State’s residents lived for years. It was a bad state of affairs, and no one liked it, but it limped along until the ACA radically improved the situation.

The point here, however, is that conservatives’ preferred result in the King case would lead to a new reality in which two-thirds of the country is stuck with especially dysfunctional private insurance markets. The public might well look back fondly on the days when health insurance was briefly affordable under the ACA.

Of course, even now Republicans are doing everything possible to convince the world that the ACA is impossibly broken. Last week, the Obama Administration announced that health insurance premiums would rise in 2015, in some cases by as much as 20%. Although unfortunate, this outcome (if, indeed, it turns out to be true) was quite common before the ACA came into effect. The reason that there was political support for reform in 2009 and 2010, after all, is that the old health care system was broken, and people knew it.

At this point, the Republicans cannot resist any opportunity to attack the ACA. A news article describing the new cost estimates included an Administration official claiming, correctly, that “the Affordable Care Act is working.” The next sentence in the article, however, says that “Republicans quickly pounced on the data as evidence of the opposite.” Their message: Get rid of the ACA, because we cannot trust a new bureaucracy to get things right.

Single-Payer Could Become a Very Real Possibility After All

If Republicans convince the public that the ACA is broken, then there will be a need for an alternative. As I noted above, however, they have offered nothing to replace the ACA. At best, they will return us to the status quo ante, but more likely, they will end up with a system in which the private health care markets are even worse than they were before. Moreover, state-by-state differences will become more pronounced, and businesses will find that their support of Republicans has made conducting business nationwide much more expensive.

If Americans are convinced that the government cannot run the ACA, would they ever believe that the government can do anything right? Strangely, the answer is yes. Once the Republicans and their allies on the Supreme Court—with an inadvertent assist from Professor Gruber—have convinced the public that the government cannot be trusted, while dooming Americans to an even worse private health care market, people will be looking for an alternative that is simple, clear, and tested.

We have such a system, and it is called Medicare. Even the older voters who skew toward the Tea Party love Medicare. (Famously, some of them apparently do not even realize that Medicare is a government-run program.) It is a single-payer system, and it has been working here in the United States for half a century. It is true that the way we formally finance the Medicare program is currently out of balance, but that is entirely fixable. Moreover, because the program has such low administrative costs, its total cost would be much lower than the private insurance system that it would replace.

I am not going to bet the house that the U.S. will adopt “Medicare For All” any time soon. I am certain, however, that the current road down which the Republicans and the Supreme Court are driving the country does not necessarily lead to their version of a utopia. Health care will always require a large amount of government involvement, as even the pre-ACA system showed. At some point, Americans might decide that enough is enough, and every citizen will finally be able to enjoy a tried-and-true program that works.