Some Background On the “Genealogy” of Obamacare, Romneycare, Bill Clinton’s Proposed Reforms, and Republican Ideas

Alan Blinder:†

… Before the ACA, the U.S. stood out from the international pack on health care in two very unpleasant ways. First, it spent a far larger share of gross domestic product on health care. Second, it was the only advanced industrial nation that left vast swaths of its population uninsured. These two doleful facts remain true …

There are several ways to get more people covered. One is to adopt a system in which the government provides or pays for universal coverage—the British or Canadian model. This won’t happen soon in the U.S., not even as Medicare for All.

A second route, advocated unsuccessfully by President Clinton in 1993, is to mandate that every employer provide health insurance to its workers. This approach might seem natural in the U.S. context because so many workers already receive health insurance that way. But the employer mandate has fatal flaws. It wouldn’t cover the nonworking population, and it would impose heavy burdens on small businesses.

For these and other reasons, many economists in the Clinton administration—including me—favored an individual mandate. But that idea was dead in the water in 1993 because it had been advocated by the Heritage Foundation starting in 1989. It was therefore a “right wing” idea.

There are problems with an individual mandate, too. For one, the high cost of U.S. health insurance means that many low- and moderate-income families cannot afford to buy policies on their own. For another, if for-profit insurance companies are made to lose money by covering people with pre-existing conditions, the government must also force young healthy people, who tend to have limited medical expenses, into the insurance pool.

Fortunately, both problems are easily solved—conceptually, that is, not politically—by mandating that everyone buy a policy and providing subsidies to the needy. Massachusetts legislators understood this in 2006. They also knew they were not writing on a blank slate; many citizens received health insurance through their jobs and didn’t want to lose it. Hence the hybrid system that became known as RomneyCare.

If this short description reminds you of the ACA, it should. The two plans are not identical twins, but there is a family resemblance. In 2010 Democrats didn’t follow in the footsteps of Romney Republicans to make them look good; they designed their plan that way because under the constraints of precedent, the underlying logic practically forces you there.

Keep that in mind: If there ever is a TrumpCare, an unlikely proposition, it’s bound to resemble RomneyCare and ObamaCare—no matter what the president claims.

Parse that again: yes, the individual mandate that Obamacare included, and which drew from Romenycare in Massachusetts, that was struck down in 2018 (to the cheers of Republicans), was originally a Republican idea which the Clinton administration rejected (The Heritage Foundation is a conservative think tank).

Read the whole thing, entitled “The Individual Mandate Is Here to Stay”, in the April 14, 2019 issue of The Wall Street Journal.

† Alan Blinder is a pretty big name in macroeconomics, and one you should familiarize yourself with. He’s been a professor at Princeton for a long time, served in the Clinton White House, was vice chair of the Federal Reserve Board of Governors, and is co-author of one of the major principles texts. While he’s published a ton, my sense is that he’s never had the one hugely cited article that puts you on any list for a Nobel Prize.