An Experiment in Positive Government

“Obamacare” & the Public Good
by ANTHONY DiMAGGIO

Reactionaries on the American right are seething in anger at the Supreme Court’s validation of health care reform, while liberals and center-right Democrats are predictably celebrating the ruling as a step forward in solidifying Obama’s “progressive” public policy “vision.”  Rather than worshipping a bill that essentially grants massive subsidies to corporate America, liberals could be using this occasion as a teachable moment to address the importance of an active government – one that could take serious steps toward reign in corporate power and raising the living standard of the masses.

It’s not that we should refuse to acknowledge positive aspects of the Obama health care reform; it’s just that those benefits should be tempered by a more sober analysis of the long-term need to move toward a universal health care, single-payer system.
The first step in this process is to recognize what the strengths of the current reform are – namely the government stepping forward to actually do something to make health care more affordable.  This is something Republicans were happy not to do during the Bush years.  Most generally, “Obamacare” demonstrates that government can play a positive role assisting the middle class and poor.  This theme runs directly counter to the rhetoric and propaganda of right-wing libertarians and reactionaries, who have been happy to use the government to line their pockets for years, while seeking to promote a rabid, bile-spewing, and ultimately self-defeating hatred of “the government” among main street Americans.

Critics of the Obama health care reform have argued that the law is deeply unpopular among Americans, and as a result, it should be repealed through the legislative process.  Following the Supreme Court ruling, however, there is little evidence of such unpopularity.  For example, an ABC News/Washington Post poll from July 5-8, 2012 finds that 47 percent of respondents support the health care bill, while 47 percent oppose it.  Polling from Reuters (July 5-9) finds that a slight plurality of Americans (48 percent) oppose the bill, while 45 percent support it.  Yet other polls find the opposite; for example, the ABC/Washington Post poll (from Jun 28-July 1) finds that 43 percent have a “favorable” reaction to the Supreme Court’s ruling upholding “Obamacare” while 42 percent have an “unfavorable” response.

These numbers suggest a deep split in public opinion, rather than strong opposition to the reforms.  That Americans are rather guarded over the possible effects of “Obamacare” shouldn’t be surprising.  Republican officials and reactionaries in the media have spent the last three years shamelessly demonizing Democrats by making countless false claims, depicting Obama as a Nazi socialist seeking to destroy the health care system, warning about fictitious “death panels” and “rationing” of care (as if rationing isn’t already a massive problem in the private health care system), and predicting that “Obamacare” will singlehandedly destroy jobs, the American economy, explode the debt, destroy democracy, and endanger the future of the country.

Closer examination of public opinion might reveal different results from those seen above.  It may be the case that Americans are more open to health care reform than previously thought.  Unfortunately, Democrats have done little to nothing to identify latent support for reform.  Generally speaking, Democrats do a very poor job today explaining the value of having an active, liberal government (probably because most Democrats, in fact, aren’t liberal, but lean rather to the center-right).  The party has failed (or outright refused) to argue that government can promote the common good by asking more of corporate America, and by refusing to redistribute wealth from the rich to the masses in an era of record inequality, economic stagnation, and record corporate profits.  Most Democrats seem too busy arguing about the importance of finding private market “solutions” (such as the Obama health care mandate), arguing about the need to promote fiscal “austerity” by enacting savage budgets cuts against social spending programs (which will greatly hurt the economy).  Instead they emphasize how the government can reduce “unnecessary” regulations on Wall Street and corporate America.  Indeed, Obama’s presidency has been defined by an almost pathological obsession with trying to mimic and ape the Republican Party’s positions.  This reality became all the more apparent with the stimulus (nearly half of which was comprised of tax cuts), the privatization-based health care mandate (which was originally a Republican proposal supported by the party in the 1990s, by Mitt Romney in 2006, and by Paul Ryan in 2011), with his extension of the Bush tax cuts for the wealthy in late 2010, and with the 2011 debt ceiling talks.  In the debt talks, Obama tried to “out-Republican” Republicans by calling for Social Security cuts (which Republicans hadn’t even asked for), and for greater cuts in federal spending overall (beyond those asked for by Republicans).

It’s worth reflecting on how Americans might react to a political party that actively tries to help improve the living standards of the people through expanding, rather than downsizing government responsibilities for promoting the common good.  Trying to answer this question, I asked more than four dozen students in my American government class this summer to take part in an experiment.  Almost immediately following the Supreme Court health care ruling, I surveyed them on their opinions of the health care bill, trying to measure their general perceptions of the mandate.  Prior to providing them with any specific information about how the bill might help them purchase health care, I asked them the following question:

“On a scale from 1 to 7, 7 being very positive and 1 being very negative (and 4 being neutral), how would you say you feel about Obama’s health care reform and the health care mandate that individuals be required by law to purchase health insurance, or pay a fine of $695 a year?”

Unsurprisingly, students answered not that differently from most Americans, with a weak majority (about 56 percent) feeling positive about the legislation.  Following this question, I then provided them with a basic context for the bill, in terms of explaining likely benefits and tradeoffs.  To date, disturbingly, I have yet to see a single Democrat provide such figures in defense of their own health care bill.  The information provided to students (based on some recent research I completed) read:

“As of 2012, the average family of four earns on $67,000 a year, and their total health care costs were on average $20,000. Families on average pay 59 percent of health care costs, versus employers who pay 41 percent. This means the average family of four pays $11,800 a year for health care, or about $1,000 a month, or a total of 17.5 percent of their pre-tax income.

“Under the affordable care act, by law a family of four cannot pay more (through the state exchange) than 6.5 percent of their pre-tax income for health care or about $4,355 a year. If you subtract the previous cost of $11,800 from $4,355, this would translate into a savings via the exchange of $7,445 a year, which constitutes 11 percent of their family’s pre-tax income.”

“For single persons, the average salary is about $31,000 a year. Individuals pay on average $5,900 for their own health care, or 19 percent of their pre-tax income, or $490 per month. Under the Affordable care act, they can’t by law pay more than 9 percent of their pre-tax income into health care for exchange-based insurance, which translates into $2,785 a year, or $232 a month. This represents a savings of about 10 percent of your income, or $3,115 dollars for the year.”

“How it’s paid for: the bill introduces a tax on those making $250,000 a year, through a tanning tax, through a tax on higher end health care plans, and through a tax on Medicare advantage (a high-end Medicare program).  The catch is that, if you don’t buy health insurance, you have to pay a $695 a year fine, but only if you make more than the 133 percent of the poverty rate ($11,856 for a single person or $30,656 for a family of four).  For those individuals or families making less than 133 percent of the federal poverty level, they would not be fined because they would be eligible for Medicaid coverage.”

After reading through this basic information, and informing them of the financial subsidies included in the bill (amounting to an average 10 percent increase in individual income due to the government subsidies for insurance), I then asked my students to break up into small groups and discuss for five to ten minutes whether this information meant anything to them, and whether it changed their
minds, either a great deal, modestly, or even just a little bit, or if their opinions remained unchanged.  Following the discussions, students were again asked to rate the health care bill on a scale from 1 to 7.  Revealingly, the information I provided made a large difference in their calculations: favorability toward the law grew from 56 percent prior to the exercise to about 75 percent after students became aware of the financial benefits involved.  In other words, if you explain to Americans how government can help them, support for government intervention tends to grow.

This experiment was not meant to vindicate the Obama administration, but rather to understand how individuals feel about their government when someone actually explains to them the positive things government can provide.  Indirectly, the experiment demonstrates what an active government could have done if Democrats had bothered to undertake a real, sustained campaign to convince Americans of the need for a public option or universal health care.  Could members of the Senate have been pressured to support a public option, rather than corporate friendly, private health care mandate?  What about creating a public option on the way to creating a universal health care system?  These possibilities are worth exploring, and are supported by most Americans in national surveys.  Sadly, little discussion of these proposals has taken place among members of an increasingly corporatist Democratic Party.

Yes, the Obama health care reform will assist Americans by making health care more affordable.  But there remain very real questions over the long-term about whether this plan is financially sustainable.  The bill still relies on for-profit, private health insurers, and the bill does literally nothing to limit the increase in premiums paid to health insurance providers (which often grow by between 5 to 10 percent a year, on average).  While American families may not legally be allowed under this legislation to spend more than 9.5 percent of their pre-tax income on health care costs, what is to stop health insurance providers from jacking up premiums (as they’ve already been doing for years) and transferring the costs to the taxpayers more generally?  This “loophole” in the bill has been acknowledged by Democrats like Senator Dianne Feinstein to be a major potential weakness in the mandate.  The legislation does say that insurance providers must allocate 80 percent of premium payments to medical care, while just 20 percent can go to administration, profits, and CEO pay, and this may be part of the reason why many predict (in line with the estimates of the Congressional Budget Office) that “Obamacare” will not add to the deficit or national debt in the next ten years (and may even decrease the debt slightly).  Such rules may serve as a check on insurance companies, considering that most of the premium costs will have to be returned to customers in the form of better care.  On the other hand, in a health insurance industry where the profit margin is typically between 3 to 4 percent annually, a 20 percent profit margin allowed by law may do little to stem increased premium costs.  Furthermore, the 80/20 rule went into effect in 2011, and analysis of premium costs for this admittedly small sample size of one year suggest that costs of care continued to rise at about the average annual rate 8-9 percent – comparable to increases we’ve seen over the last ten years.  In other words, real questions remain about whether the 80-20 rule will realistically reign in growing premium costs.

However, one comes down on the specifics of health care reform, the concern that “Obamacare” might lead to growing costs of care for consumers is certainly understandable.  Such concerns could easily have been allayed by moving toward a universal health care system, where the government pays individuals’ health insurance, and regulates the costs of care at every step of the process (restricting amounts charged by doctors, hospitals, pharmaceutical companies, and producers of medical equipment).  If the above experiment tells us anything, it’s that government can play a very active role in improving the living standards of the American people.  For a variety of reasons, however, it’s increasingly unrealistic to expect that the Democratic Party will undertake this campaign on its own.  Americans will need to become more engaged in the political process, demanding more from their elected officials via lobbying, pressure, and protest, if positive changes are to materialize.  The economic and human health of the country very much relies upon it.

Anthony DiMaggio is the author of numerous books, including most recently The Rise of the Tea Party,  and  other works such as Crashing the Tea Party (2011); When Media Goes to War (2010); and Mass Media, Mass Propaganda (2008).  He has taught American politics and International Relations in Political Science at a number of colleges and universities, and can be reached at: adimag2@uic.edu

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