Obamacare: The Logistical Nightmare

Obamacare is not too popular, and the Obama administration (like most administrations) is comprised of politicians who normally pay attention to such things. Obamacare is a logistical nightmare, and even proponents cannot rule out the possibility that it will shrink the economy. For sure, if the law goes ahead, some of the promises from Obama administration will prove to be false and embarrassing.

Yet the convention wisdom is that the Obama administration really wants Obamacare to go ahead. How can that conventional wisdom be reconciled with the facts above? One interpretation — the conventional interpretation I guess — is to assume that the Obama administration is simultaneously (a) obsessed with the “legacy” of starting “universal” health care, and (b) sufficiently over-confident or risk loving that they assign little probability to the nightmare scenarios that would make the Obamacare legacy not worth owning.

A second interpretation is that the Obama administration only wants to appear this way, so that it can sell delays or repeals of Obamacare to the Republicans and charge them an exorbitant political price. E.g., agree to delay or repeal Obamacare in exchange for (a) 2-5 percentage point increase in taxes on the “rich” or on big businesses and (b) planning to work on a “bipartisan” health care “solution” that would reduce the number of Americans without health insurance below a threshold (say 30 or 40 million).

Under this scenario, the Obama administration does not have to worry much about Obamacare logistics, or (ignoring those employers who have already changed their way of doing business in expectation of Obamacare — they can always go back to business as usual) the possibility of significant economic damage, because it does not really plan to carry this thing out. This scenario has few, if any, broken promises.

This scenario also has a good cop/bad cop version with President Obama sticking to his support for Obamacare but Mrs. Clinton and a few others agreeing, for a price (see above), to talk him out of it.

What do you think? If the second interpretation is correct, what should the Republicans be doing? Should Democrats “sell” Republicans control of Obamacare (repeal), or just rent it (“delays”)?

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About Casey B. Mulligan 76 Articles

Affiliation: University of Chicago

Casey B. Mulligan is a Professor in the Department of Economics. Mulligan first joined the University of Chicago in 1991 as a graduate student, and received his Ph.D. in Economics from the University of Chicago in 1993.

He has also served as a Visiting Professor teaching public economics at Harvard University, Clemson University, and Irving B. Harris Graduate School of Public Policy Studies at the University of Chicago.

Mulligan is author of the 1997 book Parental Priorities and Economic Inequality, which studies economic models of, and statistical evidence on, the intergenerational transmission of economic status. His recent research is concerned with capital and labor taxation, with particular emphasis on tax incidence and positive theories of public policy. His recent work includes Market Responses to the Panic of 2008 (a book-in-process with Chicago graduate student Luke Threinen) and published articles such as “Selection, Investment, and Women’s Relative Wages,” “Deadweight Costs and the Size of Government,” “Do Democracies have Different Public Policies than Nondemocracies?,” “The Extent of the Market and the Supply of Regulation,” “What do Aggregate Consumption Euler Equations Say about the Capital Income Tax Burden?,” and “Public Policies as Specification Errors.” Mulligan has reported on some of these results in the Chicago Tribune, the Chicago Sun-Times, the Wall Street Journal, and the New York Times.

He is affiliated with a number of professional organizations, including the National Bureau of Economic Research, the George J. Stigler Center for the Study of the Economy and the State, and the Population Research Center. He is also the recipient of numerous awards and fellowships, including those from the National Science Foundation, the Alfred P. Sloan Foundation, the Smith- Richardson Foundation, and the John M. Olin Foundation.

Visit: Supply and Demand (in that order)

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