Loose Change, Part II

In my last post we observed how overwhelming the desire for “change” is in America, and we also paused to notice the penalty the Democratic Party has paid for ignoring voters’ wishes. In this post and the ones that follow, I will touch on some of the more important policies and practices that will be evaluated by the new Administration, for better or worse.

I’ll skip some of the high profile changes the Trump Administration has promised—tax reform and infrastructure spending, for example—because these have been widely discussed and, except possibly for the proposed reduction in tax rates for high earners, aren’t particularly controversial. Instead, I’ll focus on some of the more tendentious issues that will undergo reevaluation.

The Affordable Care Act

I know precisely nothing about the substance of healthcare reform, so I’ll focus instead on the (ugly) politics of it. But first let’s pause to notice the magnitude of the task we face. Americans want world-class health care but we don’t want to pay much for it. We want health insurance whether or not we have a job. Even though we have preexisting health issues, which are going to cost a bundle, we don’t want to pay any more than anyone else. We want to keep our own doctors and hospitals. Oh—and don’t even think about raising our taxes to pay for any of this.

The elephant in the room is that a very small group of Americans are responsible for most of the health care dollars we spend: 1% spend over 20%, 5% spend over half, and 20% spend over 80%. But of course we don’t know in advance who those health care hogs are going to be. This year it’s the annoying lady down the street, but next year it could be us.

And then there’s the mastodon in the room: self-inflicted diseases represent a huge chunk of healthcare costs. We eat too much and we eat all the wrong things. We drink too much. We smoke cigarettes. We abuse prescription and other drugs. We don’t exercise. And then one day we wake up and have lung cancer, diabetes, COPD, and/or heart trouble and we demand that everyone else pay for our foolishness. And here it’s not a small minority of folks who are causing the trouble; it’s most of us.

The Patient Protection and Affordable Care Act (I’ll refer to it as the “ACA”) was a disaster from the day it was signed into law. I don’t mean that it was a legislative disaster, far from it. Given the complexity of the subject matter, the ACA is a pretty good piece of legislation and it has succeeded in its principal mandate of dramatically reducing the number of uninsured Americans.

No, I mean that it was a political disaster. In 2008, the Democrats succeeded in gaining control of the House, the Senate and the Presidency. Like so many political parties before it (witness Newt Gingrich’s Contract with America), the Democrats mistook their electoral win as a “mandate” to implement all their pet projects.

In point of fact, when any party takes control, all it means is that, at the margin, voters preferred them over the alternative. Except in very rare circumstances—FDR and the Democrats in 1932, for example—there is no mandate involved. Americans expect that the winning and losing parties will find ways to compromise and get things done in a manner that avoids either party’s most extreme views.

But that’s not what happened. We had an inexperienced President in office—as one Clinton advisor put it, when he ran for office “Obama had been a Senator for twenty-five minutes” —and one who was constitutionally disinclined to involve himself in the rough and tumble of legislative horse-trading. As a result, partisans like Harry Reid and, especially, Nancy Pelosi, rammed the ACA through the House and Senate using bureaucratic subterfuges (budgetary reconciliation, for example). The ACA passed both houses without a single Republican vote. As J. P. Morgan & Co. has pointed out, the ACA was passed with the “greatest partisan gap in [American] history.”

Given the complexity of the health care challenge, everyone in Congress knew—hell, everyone in America knew—that however well-constructed the ACA was, it would inevitably need to be revised, probably significantly, to make it work. But the Democrats now “owned” the ACA and the Pelosi-Reid strategy made sense only on the assumption that the Democrats would control Washington for a very long time.

As we know, that was patently silly. Indeed, the Republicans regained the House a mere eight months (almost to the day) after the ACA was signed into law, and in part because of the partisan manner in which it was enacted. As more and more parts of the ACA became problematic, they couldn’t be fixed because the Republicans, furious with the Democrats’ hardball tactics, were in no mood for compromise. Thus, for six long years the ACA was left twisting slowly in the wind, and now that the Republicans control Washington it will quickly be repealed.

The political history of the ACA is important because it now appears that the Republicans are about to make exactly the same mistakes. The bureaucratic shortcuts used by the Democrats to pass the ACA—reconciliation—have already been rolled out by the Republican leadership, and Paul Ryan and Mitch McConnell seem determined to ram repeal and replacement through Congress without regard to Democratic concerns. This makes sense only on the assumption that the Republicans will control Washington for a very long time. In fact, Republican overreach is probably the best possible way to hand the Senate back to the Democrats in 2018.

As it happens, however, your humble blogger has in his hands the solution to the political imbroglio over the ACA. Since we’re running out of space, though, I’ll have to save that for next week.

Next up: Loose Change, Part III