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ObamaCare: Rocky Politics, Stable Coverage

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  • David B. Kendall

Abstract

The Affordable Care Act (ACA) and Medicare Part D had the same rocky start. Both were criticized as unworkable and unsustainable. Yet both have similar structures. They offer individuals a choice of competing health plans, provide subsidies to make coverage affordable, and impose penalties for late enrollment. Medicare Part D's success in creating stable coverage of prescriptions drugs for Medicare beneficiaries shows how the ACA may stabilize health insurance coverage for working-age Americans. The comparison with Part D also reveals two potential sources of instability for the ACA: a narrow subsidy structure and benefit mandates. The biggest source of instability for the ACA and all other forms of health care coverage is rising health care costs. That threat, which can lead to higher taxes or benefit cuts, could stimulate bipartisan action. There are a series of opportunities that start small and work up to major action: the repeal of Medicare’s Sustainable Growth Rate, sequestration replacement, state gain-sharing, and tax reform. A focus by policy makers on rising costs as a common enemy can help move the health care debate beyond the rocky politics over the ACA.

Suggested Citation

  • David B. Kendall, 2013. "ObamaCare: Rocky Politics, Stable Coverage," NFI Policy Briefs 2013-PB-05, Indiana State University, Scott College of Business, Networks Financial Institute.
  • Handle: RePEc:nfi:nfipbs:2013-pb-05
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    File URL: http://www.indstate.edu/business/sites/business.indstate.edu/files/Docs/2013-PB-05_Kendall.pdf
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    More about this item

    Keywords

    Affordable Care Act; health insurance; exchanges; Medicare Part D.;

    JEL classification:

    • H4 - Public Economics - - Publicly Provided Goods
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • I00 - Health, Education, and Welfare - - General - - - General

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