The Affordable Care Act broke through the policy trap by combining solutions to the cost-inflation problem with solutions to the access problem. The medical industry would undergo painful reforms, but in return Washington would supply it with some 25 million new customers.
At the time of its passage, the received wisdom in Washington (and not just among partisan Republicans) deemed Obamacare’s cost reforms pitifully inadequate. “This legislation was supposed to end that asphyxiating growth, which will crowd out investments in innovation, education, and everything else. It will not,” concluded David Brooks. “This bill is full of gimmicks designed to get a good score from the Congressional Budget Office.” The final, negative pronouncement from the professedly sympathetic pundit emblematized the widespread conclusion that Obamacare amounted to well-intentioned but softhearted big-government liberalism.
In the three years since, a steady accumulation of evidence has amassed to the contrary. Through a thousand tiny nudges, the law has transformed the entire medical field from one that encouraged more, and more expensive, care with no regard for outcome into one geared toward paying for quality. Some of the changes have been blunt and simple. The old pay-for-quantity system rewarded hospitals for doing a bad job, since patients who contracted an infection or received poor treatment would come back for more treatment, bringing in a second Medicare reimbursement. Obamacare created penalties for hospitals with high rates of infection or patient readmission. Lo and behold, this year, Medicare announced that its patient-readmission rates fell—“a feat that long seemed beyond reach,” the Washington Post reported.
Obamacare also imposed a tax on the most expensive insurance plans, and though the tax does not take effect until 2018, employers have already started shopping around to avoid its bite. “Companies hoping to avoid the tax,” reported the New York Times last spring, “are beginning to scale back the more generous health benefits they have traditionally offered and to look harder for ways to bring down the overall cost of care.”
The most dramatic change underfoot is an entrepreneurial wave encouraged in sundry ways by Obamacare. The law encourages the creation of Accountable Care Organizations—doctors who band together and get paid based on their patients’ medical outcomes rather than on how many tests and procedures they perform. As Bloomberg News reported in June, “Hospitals are improving care and saving millions of dollars with one of the least touted but potentially most effective provisions of the law.” Walgreens is making a huge investment in its own ACOs, and the consulting firm Accenture predicts the law will continue to prompt an explosion of walk-in clinics. The significant increase in doctors and hospitals converting to electronic medical records and other technological innovations has helped create “a new marketplace and platform for innovation—a health-care Silicon Valley,” as an awed Thomas Friedman reported.
All these reforms have added up to a revolution in modern medical economics. Health-care inflation since 2011 has fallen to its lowest level in half a century. The Congressional Budget Office estimates of Obamacare’s costs, widely derided at the time of its passage as too optimistic, have thus far proven too pessimistic. The agency has already cut $600 billion off the expected ten-year spending total for Medicare and Medicaid. If the reforms continue to bear fruit, costs will come in even lower.
And health experts increasingly expect the reforms will bear fruit. “The ongoing slowdown in the health-care growth rate defies historical post-recession patterns and is likely to be sustained,” concluded PricewaterhouseCoopers in June. “It appears that the reforms will stick and health-care exchanges and other policies will bring competitive pressure to markets,” says Randall Ellis, a professor of health-care economics. “Although the proof for this point of view is not yet definitive,” reports the Health Affairs blog, “the depth and breadth of change suggest that significant transformation in the nation’s delivery system is under way.” Among health-care wonks, this is no longer a controversial assertion: The evidence thus far suggests Obamacare’s cost reforms are a staggering success.
Now look back at all the quotes in the last paragraph. Every one of them has qualifiers attached: likely, appears, not yet definitive. That, appropriately, is how people in the worlds of academia and economic forecasting express themselves. The future is uncertain by definition.
No such analytic caution can be found on the right. Conservatives concluded from the outset not only that Obamacare’s goals offended them but that its operations were doomed to collapse. “Just as economic shortages were endemic to Soviet central planning,” wrote Weekly Standard editor Bill Kristol last month, “the coming Obamacare train wreck is endemic to big-government liberalism.”
That Obamacare is both bound to fail and must be destroyed is the premise of conservative-movement thought, the A=A from which every other conclusion springs. In 2010, the American Enterprise Institute fired David Frum after he wrote a blog post questioning the Republican strategy of total opposition to Obamacare. Fealty to the cause of repeal is a sine qua non for any effective participation in the movement. The e-mail listserv where conservative health-care-policy wonks gather is called the “Repeal Coalition”—which is to say, anybody not fully dedicated to repeal cannot participate in conservative health-care-policy deliberations.