Consequences of the Failure of Obamacare

In reading critics of Obamacare, I occasionally come across an interesting, if mildly paranoid, theory—that it was designed to fail in order to bring in the single payer system that its supporters really wanted. I would not be surprised if there were supporters who saw it that way, but I doubt that they represented a significant fraction of those that initially supported the program. It is, however, worth thinking about whether that strategy, deliberate or not, will work. If Obamacare turns out, as now seems likely, to be a clear and massive failure, what will come out of its collapse?

The theory I described makes most sense from the standpoint of people on the left who were strong supporters of a single payer system. Many of them saw Obamacare as a compromise with the Devil, a kludge that retained an unnecessary and inefficient system of private insurance. Some even said so. From their standpoint, the obvious implication of its failure would be that it did not go far enough.

Whether or not they are correct in their view of what should happen, I do not think their view works in terms of what will happen. Obamacare, having been fiercely opposed by Republicans and especially conservatives, is widely perceived as a form of socialized medicine. After observing that the glittery promises offered to pass it were wildly false, I do not think voters are likely to conclude that it went in the right direction, just not far enough.

What I would like to see come out of its collapse is a shift in the other direction, away from the extensive government involvement in medicine and medical insurance that already existed before Obama. While people often talk as though the pre-Obamacare system was private, about half of all medical expenditure was by governments and the rest  in various ways regulated. I have seen it claimed, whether correctly I do not know, that the anomalously high cost of American medicine, the one part of the standard criticism that is clearly true, only dates from the introduction of medicare. Perhaps one of my readers can offer data to support or refute that claim.

Two obvious reforms in the direction of something closer to a free market would be to permit interstate selling of insurance and to eliminate the regulations, I think largely at the state level, that, like Obamacare, constrained what insurance companies had to offer their customers. It makes sense that suppliers of mental health services would lobby governments to force insurance companies to cover what they sold—whether or not most purchasers of insurance thought such coverage was worth its cost. Similarly for  other services.

Readers interested in discussions of these issues by someone who knows much more about them than I do may want to look at the website of the NCPA, John Goodman's organization.