Obamacare Is Going To Be Great

A blog about business and economics.
June 5 2013 3:51 PM

The Income Redistribution Element Guarantees That Obamacare Is Going To Be A Smashing Success  

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Jonathan Cohn has a great post about the Affordable Care Act's alleged bro problem that I think can be made a bit pithier: It turns out to be a huge win once you consider the income redistribution element.

The chart above compares the "teaser" rate on a catastrophic insurance plan for a 25 year-old non-smoking man to the post-subsidy rate for an ACA bronze plan. It shows that if you make less than $25,000 the subsidized bronze plan is cheaper, though if you make more than $25,000 it's more expensive. Conveniently, the median personal income for 25 year-olds is about $25,000. And keep a few things in mind: A bronze plan is better coverage than a standard catastrophic plan. They come out to similar actuarial value in case of an epic cataclysm, but the bronze plan gives you more goodies in terms of preventive services and help with routine care. And of course some 25 year-old men are smokers. And some 25 year-olds are women. So even among the youth cohort, the Affordable Care Act is a huge win for the majority of people.

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Now is that because of its amazingly awesome program design? Not really. It's because the Affordable Care Act taxes the rich to offer up these subsidies.

That's an issue ACA critics have been weirdly reluctant to address. Obviously, Republicans are against taxing the rich to provide more social services to the non-rich. That's the core economic policy commitment of the party. It's something they've adhered to in a variety of contexts for about 25 years now. So given that this structural element of the program is a total non-starter with the conservative movement, you'd think you'd hear more about it. But instead I hear crickets. There's all kinds of derping about death panels and Medicaid expansion and rate shock and basically everything under the sun except the core element that makes it totally unacceptable to the right. But the same thing that makes it unacceptable to the right, guarantees that it's going to be a good deal for most people. That's one of the reasons I'm so confident that the program, despite some hiccups, is going to be a huge success.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

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