If deficits and debt were supposed to be an actual issue in 2009/2010 instead of a bludgeon against liberal change during the course of a recession that is still competing with the Great Depression, one would think that a program and policy that implements actual structural reforms to the labor market by beginning the slow process of disentangling health insurance and more importantly insurability from employment and reducing the long run costs of a major social welfare program without harming the recipients and beneficiaries of that program, but actually expanding coverage of benefits would be a major policy win that would lead to its sponsors bragging.
The Affordable Care Act is a massive structural reform that is expanding social insurance coverage while reducing long run costs while also engaging in labor market structural reforms. Below is a table of the CBO’s mandatory Medicare expenditure projections that shows how the cost curve is continually bending.
Some of the cost curve is technical changes to economic projections. A decent chunk of the difference is the rapid drop in projected costs of Medicare Part D as the drug pipeline for expensive on-patent new drugs is thinner than many thought it would have been. Another and more important chunk is due to a combination of new programs in the ACA that is slowly shifting the United States away from a per widget fee for service model towards a population health model where the incentives to save money are lining up to actually save money. To do this, Medicare Advantage is no longer a massive transfer to insurance companies buying better hookers and more blow but reducing the pricing differential to where the value proposition between Medicare Advantage and traditional Medicare are approaching parity. It means penalizing providers who readmit too many patients within a month of a hospital discharge. It means trying to get hospitals and providers to focus on chronic condition management to save money over the long term. Those things seem to be working to some degree. This is structrural reform without inflicting pain on the bottom 90% of the population.
At the same time, the ACA is a labor market reform which should, over the long term, produce a more flexible and risk taking labor force. The CBO has projected that 2.5 million full time equivilent workers will voluntarily remove themselves from the labor force because they were tied to the labor force for health insurance reasons only. They wanted to be doing something else, but they were prevented due to market failures in the individual health insurance market. People who had a good idea but a good reason to worry that they were uninsurable if they went on the individual market can now take a risk to run with their own idea, or leave Giant Evil Corporation to work at a little 7 person boutique firm.
If you think that the biggest problems with the American economy are supply side instead of demand side, the ACA is a significant supply side structural reform. It is also a massive demand side reform as the ability of more Americans to engage in the health insurance market place should reduce the aggregate level of optimal savings which should make it slightly easier to get out of a demand trap.
Or shorter Richard Mayhew: Shut the fuck up Chuck