A 40,000 Foot View of Obamacare

“How can the government make us buy health insurance?  What gives them that right?” Sitting on my left while our airplane raced above the clouds, Elizabeth was clearly upset about Obamacare. 

She wondered why the bill had to be so long, and why Obama would endorse a plan that doubled her health insurance costs.  But nothing vexed her more than the individual mandate. 

At least that’s what I though until I spoke with her at greater length, and she revealed a profound truth to me about people’s attitudes towards the mandate and towards Obamacare more generally: she showed me that deep down she liked the idea of the mandate, once she realized its important role in accomplishing goals people on all sides of the political spectrum care about deeply. 

We were flying towards North Carolina the day before the Supreme Court held its oral arguments on Obama’s healthcare plan.  Elizabeth had heard a great deal about the mandate.  She read The Wall Street Journal regularly, in part because it was so relevant to her work in banking.  And she enjoyed watching Bill O’Reilly on Fox News, but not Hannity, who she thought was “too extreme”.  She was by no means a conservative extremist.  She had major concerns about the banking industry for example, and as a Christian felt strongly that income inequality is a morall problem that neither party was addressing in an effective manner.  But she was solidly Republican, no doubt about that, and she agreed with most people in that political party that Obamacare was hurting the economy.  And above all she believed the health insurance mandate was “un-American.”

Bottom of Form

Elizabeth and I began discussing Obamacare because she saw me reading a medical journal and wondered what I, as a physician, thought of the law.  I told her that I teach an undergraduate course at Duke on healthcare policy, and that I was quite familiar with this big and complex piece of legislation, which I saw as having strengths and weaknesses almost inevitable in such a complicated law. 

That got her going on how long the bill was, and she wondered why it had to be so complex. 

“Well let’s just look at one part of the bill,” I said to her professorially.  “The bill aims to provide financial subsidies to help people buy insurance, who otherwise might not be able to afford it.  That means the authors of the bill had to put together a list of how much they would subsidize people, depending on how much money they made and the size of their family.  Just laying out the details of that subsidy takes a lot of words.” 

“But if it’s so long,” Elizabeth wondered, “how is anybody going to be able to read it before they vote?  I think there should be a law requiring legislators to only vote on bills they’ve read, cover to cover.”

I didn’t ask her how long that kind of bill would have to be.  Instead, I explained that legislation would come to a halt under that rule—that legislators don’t have time to pour over every word of every bill they vote on, but have staff that help them understand details, and tend to focus on bills that are in their expertise.  I explained that a Congressperson who specialized in, say, health insurance regulation would have paid a lot of attention to this bill while relying on his colleagues to let him know what is going on in, for example, upcoming agricultural legislation. 

She was deeply unsatisfied. 

Then she complained about how Obamacare would double the cost of her health insurance.  I asked her where she had heard that and why she thinks it would happen.  “I’ve read a lot of analyses of the law, and none predict anything like that kind of price escalation,” I told her.  “And why would the Democrats have passed a bill that would hurt people this much?”

She remained unconvinced.

She was equally unconvinced about all my arguments in favor of the health insurance mandate.  I explained the difference between broccoli and health insurance for example, but she remained worried that the government would control her supermarket behavior.  I discussed the free rider problem—how hospitals are required to offer emergency care to patients and thus pay for their care if they can’t afford it on their own and lack insurance to cover the costs.  Indeed, this free rider problem was the main reason that the conservative Heritage Foundation supported an individual mandate as far back as the 1990s. 

On a 0-100 persuasion scale, I was scoring something like a -11. 

Until Elizabeth told me the one thing she was willing to admit she liked about Obamacare: “I like that it won’t let insurance companies deny care to people with pre-existing conditions.”

At last: common ground!

In the Supreme Court oral arguments, the Obama administration contended that if the individual mandate is struck down as unconstitutional, then the court does not need to throw out the whole law.  But it did believe that the court would need to get rid of Elizabeth’s favorite rule—the ban on pre-existing conditions.  The reason for their argument was that insurance companies, if required to take everyone who comes to them as client regardless of their health, would go bankrupt because so many people would simply wait until they became sick before purchasing health insurance.  That means insurance companies that charge reasonable premiums will find themselves deluged by customers who cost a lot more than the average cost of their premium.  That’s what health economists call “adverse selection.” 

In other words, if you like the idea of letting everybody get insurance, even if they through no fault of their own carry a diagnosis of breast cancer, then you want to make sure everybody gets health insurance.  Because if you don’t, insurance companies will have only two choices: first, they can jack premiums up to cover the expense of all the sick people coming their way.  Or they can go out of business.  Private health insurance can’t be affordable if we force insurance companies to take all comers, unless we find some other way to make sure everyone comes to them, whether they’re sick or healthy. 

The Obama team made a mistake in not marketing the mandate as being an inevitable part of its efforts to stop insurers from either denying coverage to people with pre-existing conditions, or charging premiums that are beyond anybody’s reach.  Fortunately, it is not too late.  Justice Kennedy, likely the deciding vote on the Supreme Court, knows that striking down the mandate would be a disastrous thing to do if we leave legislation intact to force insurance companies to take all comers, regardless of pre-existing health.  He also knows that striking down the ban on pre-existing conditions—the most popular part of Obamacare—won’t reflect too well in the court of public opinion. 

Perhaps an upholding of the individual mandate will be the first step towards public acceptance of Obamacare.  Maybe in reconciling themselves to the Supreme Court’s opinion, the Elizabeths of the world will realize that at least a few pages of the Affordable Care Act made a bit of sense.

Peter Ubel, M.D., is The Jack O. Blackburn Distinguished Professor of Marketing and Professor of Public Policy.  This commentary was first published in Psychology Today on May 4, 2012.