Obamacare—or at least the version of it that the president and his advisers currently think they can get away with putting into place—has been upending arrangements and reshuffling the deck in the health system since the beginning of the year. That’s when the new insurance rules, subsidies, and optional state Medicaid expansions went into effect. The law’s defenders say the changes that have been set in motion are irreversible, in large part because several million people are now covered by insurance plans sold through the exchanges, and a few million more are enrolled in Medicaid as a result of Obamacare. President Obama has stated repeatedly that these developments should effectively shut the door on further debate over the matter.
Of course, the president does not get to decide when public debates begin or end, and the public seems to be in no mood to declare the Obamacare case closed. Polling has consistently shown that more Americans oppose the law than support it, and that the opposition is far more intense than the support. The law is built on a foundation of dramatically expanded government power over the nation’s health system, which strikes many voters as a dangerous step toward more bureaucracy, less choice, higher costs, and lower quality care. The beginning of the law’s implementation does not appear to have eased these fears, and in some cases has exacerbated them.
But opponents of Obamacare must also reckon with the reality that the goal of repealing the law and replacing it with real, market-based health reform to bring down costs and enable more people to get covered is no longer aimed at a system that exists only in theory. When President Obama won reelection in 2012, it became inevitable that some version of the law would get implemented starting this year. And it was also a pretty good bet that, despite the law’s internal contradictions and problems, it would not, as some had surmised, collapse on the launch pad. Massive federal spending authority can prop up many a teetering edifice. The surprise is not that some 6 million people or so eligible for nearly free insurance under Obamacare took advantage of the offer; the surprise is that many millions more who were eligible declined to take it.
Some of the law’s opponents are reacting to these developments with something close to resignation. One prominent proposal would leave much of Obamacare’s government-centric architecture in place on the theory that it can be reformed and made to serve genuine market-oriented purposes. The law’s state and federal “exchanges,” which are the focal points of Obamacare’s expanded federal control over the health system, would be enlarged under this plan with millions of new enrollees from Medicaid. Future Medicare beneficiaries would also be forced to get their coverage through this mechanism.
It is true that exchanges are not, by definition, anti-market. Indeed, in concept, they could facilitate transparency and thus modestly improve consumer choice. But the Obamacare exchanges were built to assert increasing federal regulatory control over the nation’s health system. It is very rare for deregulation efforts to remove all such authority from an agency of government. Even if a deregulation effort partially succeeds in the short run, over the long run, federal regulatory agencies gain power by cleverly creating vested interests in the protection and expansion of that power. It is a very risky bet to place the future of American health care at the mercy of a new and improved system of Obamacare exchanges.
And there is no need to do so. The reality of Obamacare implementation in 2014 does not mean the law is no longer replaceable with something better. It still can be displaced by an appealing conservative alternative if a newly elected president chooses to make repeal and replace a top priority in 2017. But plans to replace Obamacare must now take into account the changes that the law has brought about this year, and stands to deliver over the next few years.
The president and the law’s supporters may pay a heavy political price this November for breaking their repeated promises not to needlessly disrupt pre-Obama-care insurance arrangements or doctor-patient relationships. The law’s opponents must avoid making the same mistake in their plans to replace Obamacare: They should refrain both from promising that all disruption can be avoided and from causing avoidable disruption. A replacement will need to include a transition—a bridge from Obamacare’s broken architecture to a working health financing system.
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