Obamacare, Good for the Economy

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Over here on stage left, we have been debating whether Obama’s pursuit of health care reform prevented him from getting a second stimulus in late 2009 or early 2010, the kind that would have prevented or at least mitigated the economic backslide took place afterwards. The main proponent of this claim is my colleague Noam Scheiber. To get a detailed version, you’ll have to read his book,The Escape Artists (which, by the way, you should do anyway). To get a more abbreviated version, you can read his latest entry at TNR.COM. Among the critics of this view are Jon ChaitKevin Drum, and Ezra Klein. They make overlapping, although slightly different, arguments. Sean Trende, from RealClearPolitics, has weighed in on Noam’s side. 

Do I have an opinion on this? Of course I do. I tend to side with Noam’s critics, although I’m the first to admit it’s a close call and that Noam makes a strong case. A big factor for me is what administration officials knew about the political environmentand when they knew it. They had hoped and expected that health care reform would be law by fall 2009; they knew the congressional debate would be ugly but not as ugly as it got. Were they wrong about those things? Quite obviously they were. But was their mistake choosing health care or mismanaging the legislative process? Or not getting a bigger, better stimulus? I'm also not sure that dropping comprehensive reform in the late summer of 2009, while the right was ginning up the death panel protests and the Senate Finance Committee was dithering, would have cleared the decks for significant action on economic policy. Noam reports that, by that time, Democratic members of Congress were agitating for Obama to change focus. He’s right. But my read of that protest was a desire to move off health care, not a desire to move onto stimulus so quickly after passing the first one. And then there’s the question of whether reform’s merits were worth the risks.

Like I said, I think you can argue this either way. The more important issue is the argument that started this whole discussion: Mitt Romney’s claim that the Affordable Care Act itself has slowed the recovery, by introducing new taxes and regulations. Romney keeps citing Noam’s book as proof of this claim, even though Noam keeps pointing out that he said no such thing. But Romney was making this argument even before he read Noam’s book. And Republicans have been calling the Affordable Care Act a “job-killer” since before it became law. That makes the argument ripe for scrutiny.

You can certainly find business owners who think as Romney and the Republicans do. Of course, you can also find business owners, particularly self-employed entrepreneurs, who think the law will allow them to start or sustain a company because the law gives people with pre-existing conditions access to comprehensive, affordable medical coverage. And while that’s all anecdotal, the best study I’ve seen on this subject is a new report from the Urban Institute and Robert Wood Johnson Foundation, examining the impact of Massachusetts health reform on that state’s job market. Yes, that’s the same law Romney signed as governor. Yes, that’s also the same law whose coverage scheme was a template for Obama’s.

The report’s conclusion is unambiguous: “The evidence from Massachusetts would suggest that national health reform does not imply job loss and stymied economic growth.” The study is impressively thorough, too. It breaks down employment numbers by education, income, and part-time versus full-time status. No matter how they analyzed the data, they came up with no evidence that health reform had hurt the job market. “All” the reforms did was get insurance to many more people, providing them with better access to care and more financial security. This is consistent with predictions from the Congressional Budget Office, which determined reform’s only significant employment impact was a reduction in the labor force, primarily because people holding onto jobs just to keep insurance could finally retire. 

These findings are, or should be, a reminder to all of us: Health care is very much an economic issue, but the likely impact will be the very opposite of what Romney and the Republicans suggest. It’s no accident that the name of the new health care law is the Affordable Care Act. The whole point is to make health care more affordable. It attempts to do that, in part, by making the system more efficient and, in part, by making sure everybody can get comprehensive insurance.

Bolstering and expanding insurance coverage is more than a line item in a CBO report. It’s financial security for tens of millions of Americans.

follow me on twitter @CitizenCohn

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