This Criticism of GOP Health Reform Is Revealing

The emerging Democratic attack against the GOP’s health bill, unveiled today in the Senate goes something like this: This is not a healthcare bill but a reverse class warfare bill—a tax cut for the rich financed by Medicaid cuts for the poor.

This argument is powerful because there is a good deal of truth to it. The Senate bill would cut taxes deeply, including by repealing an Obamacare tax on investment income for high-earners. The bill remains revenue neutral in part by cutting Medicaid spending in ways that conservatives say would make the program work better, but that would also leave more low-income people without coverage.

This critique may be enough to kill the bill. And maybe the bill deserves to be killed. But it also inadvertently highlights Obamacare’s underperformance.

When Obamacare was pitched, its champions promised a sweeping, root-and-branch reform that would foster competition and bring down premiums and change the way insurance was purchased and care was delivered. David Brooks, writing last year, recalled the heady mood perfectly: “The supporters argued that the system would help Americans purchase health insurance through carefully regulated state exchanges. President Obama envisioned a day when consumers could shop for health coverage ‘the same way you’d shop for a plane ticket on Kayak or a TV on Amazon.'”

As it turns out, the bill has fallen far short of those expectations. The individual mandate isn’t working as well as hoped; the insurance exchanges are under pressure; and insurers are leaving the market in many states.

Meanwhile, more than half (estimates vary) of the coverage expansion under Obamacare was achieved due to the Medicaid expansion. Once expected to be just one part of a wide-ranging law, the Medicaid expansion has been the main vehicle by which the Affordable Care Act provided coverage to people who couldn’t afford it.

This is a major achievement, to be sure. People who got access to Medicaid are better off than they were before. But the ACA wasn’t supposed to simply be a welfare program that taxed the rich to give free healthcare to the poor. It was billed as something much bigger than that—a total overhaul of the healthcare system that would bring down premiums for the middle class.

So the Democratic critique of the law—”you’re just cutting taxes on the rich and paying for it by cutting Medicaid”—has a corollary: Obamacare just raised taxes on the rich to pay for a Medicaid expansion. For some Obamacare partisans, that doesn’t matter—the point was just to expand coverage for low-income people. But that amounts to an admission that the law has turned out to simply be a moderate-sized welfare program, not the sweeping technocratic overhaul that was promised.

America’s healthcare mess, decades in the making, stems from the fact that care is too expensive no matter who pays for it. The debate over Obamacare is about how much care should be subsidized by the federal government. But neither the law, nor this effort at repeal, will do much to arrest the underlying cost growth that makes the issue so brutally contentious and polarizing.

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