Don't Compare Obamacare to Bush's Medicare Part D

by Jonathan Cohn | November 19, 2013

No historical analogy is perfect. But if you want an analogue to the calamitous rollout of healthcare.gov, it’s not the federal response to Hurricane Katrina in 2005. It’s Medicare Part D, the prescription drug program for seniors that the Bush Administration introduced in January 2006.

On Monday, writing in the Washington Post, Ezra Klein reminded everybody of the history: The program’s first few weeks were chaotic, with seniors unable to get their drugs because enrollment into their chosen plans hadn’t worked. Even Republicans called it a disaster. But the Bush Administration fixed the problems and, eventually, it became popular. Today millions of seniors use it to pay for their prescriptions. Nobody talks of modifying the program, let alone repealing it. It’s part of the policy landscape.

Even this analogy, though, has its limits. The most important difference between Medicare Part D and Obamacare has nothing to do with information technology—and everything to do with policy trade-offs. The Bush Administration and its allies weren’t particularly concerned about budget deficits, though they frequently talked about them. And it showed in their drug benefit proposal, which called for spending hundreds of billions dollars in perpetuity—and no new revenues or cuts to offset the new spending. When a government actuary warned that the program would cost even more than the administration projected, the Bush Administration famously tried to squelch the finding. The actuarial projections turned out to be wrong, but the law is still increasing deficits by hundreds of billions of dollars in the next decade alone.

Bruce Bartlett, the former Republican budget official, has the full story at the New York Times Economix blog:

From the beginning, Republicans decided to forgo dedicated financing for Part D. Except for trivial premiums paid by recipients, the entire cost would fall on taxpayers. Moreover, Republicans refused to raise the Medicare tax or cut spending to cover Part D. Hence, the deficit increased by virtually the entire cost of the program.

Through 2012, Medicare Part D added $318 billion to the national debt (see “General Revenue” on Page 111 in the 2013 Medicare trustees report). That same report projects that Medicare Part D will add $852 billion to the debt over the next 10 years.

Obama and his allies adopted a very different approach. They made two vows—that health care reform would pay for itself and that, over time, it would actually reduce the deficit. Critics mocked them and, to this day, few people seem to believe them. But the official projections suggest they were good to their word. The Congressional Budget Office has on several occasions estimated the cost of the Affordable Care Act, first upon passage and then following various tweaks to the law. Each time, the conclusion has been the same: A slight reduction in the deficit during the first ten years, with greater reductions after that.

But fiscal responsibility is not easy. To offset the law’s new spending—and, by the way, to reduce health care spending overall—the Affordable Care Act raises revenue and cuts spending. Among other things, the law reduces Medicare spending, caps the existing tax break for employer health insurance, and raises payroll taxes on the wealthy. It also calls upon individuals to spend some of their own money on insurance, even if that means requiring them to buy coverage they might not otherwise get. And for each of these changes, there’s a constituency bound to get angry about it. Seniors and parts of the health care industry don’t like Medicare cuts. People with more generous health plans don’t like losing some of their tax benefits. Wealthy people don’t like paying taxes. Healthy people don’t like paying more for their coverage.

By taking these steps, Obamacare’s architects guaranteed they’d make some people angry. And that is the biggest difference between what Bush did and what Obama did. Medicare Part D was all gain, no pain—the program gave millions of senior citizens access to drugs, without asking anybody to pay for it immediately. Instead, the program passes along the bill to future generations, for whom higher deficits mean fewer resources for public or private spending. The Affordable Care Act, by contrast, has gain and pain. Most of the people bearing the pain can arguably afford to bear it, and the consequences are frequently not what they imagine, but they won’t like it and they’re going to say so. Many already have.

The political backlash Obama and his allies are facing, evident in a series of new polls, have a lot to do with poor implementation: If healthcare.gov were working, the storyline about Obamacare would be a lot different. It also has to do with the president's vow that people could keep their health plans, even though a small but significant number of people can't. But some of the backlash is a product of the policy’s trade-offs—trade-offs that Obamacare’s architects embraced because, unlike their predecessors, they happened to take fiscal responsibility seriously.

Source URL: http://www.newrepublic.com//article/115646/obamacare-vs-medicare-part-d-comparing-two-health-care-reforms