• Hoisted from the archives: health reform, austerity, and the GOP

    Today, Matt Yglesias writes,

    Republican elected officials will be driven by a mix of their own convictions, interest group politics, and opinion among Republican voters. That strongly suggests that the Perry administration will reduce taxes on high-income individuals and pay for it by denying subsidized health insurance to poor people.

    (Aside: Democrats are driven by the same mix of forces but, in general, in a different direction.)

    Anyway, this was not hard to see coming. In December of 2009, I wrote,

    To the extent we hear more about health reform it will be for one reason: the money. While the legislation may be internally balanced so it scores as deficit reducing, it will not be viewed as monolithic once it passes. It has both spending and savings. Could we keep the savings and gut the spending? Sure.

    Who would do that, and why? Answers: Republicans, for tax cuts. While the former are out of power, that won’t last forever. And the latter are always popular. This reform will be attacked. Things may quiet down, but this is not the end of it. Money has a way of drawing attention and a crowd.

    In a follow-up post, I wrote,

    What I think is more likely than repeal, though by no means certain or even highly probable, is an erosion of the low-income subsidies in real terms, perhaps tied to a change in the minimum level of coverage required. A Republican congress and president might pass such changes along with a tax cut. It is very likely that Republican candidates will campaign on it.

    I could see the whole thing being spun as middle class assistance: options for cheaper insurance and a lower tax bill, albeit with subsidies for the poor that don’t keep up. Since the poor aren’t a big constituency this strikes me as at least plausible.

    Another wrinkle that could make this work [politically, and especially for Democrats] is a weaker mandate that includes exemptions when the premium-to-income ratio is above a threshold. Put it all together and you’ve got a gradual erosion of health reform: worse insurance, less low-income assistance, fewer individuals covered, a weaker mandate. That’s not repeal, but it would make a mockery of the hard-won reforms. Watch for it.

    By the way, it’s likely many Democrats would be in favor of some of the changes to health reform Republicans might seek. That won’t please the left wing of the party, naturally, but some Democrats are fighting for survival in moderate to conservative districts. Moreover, in a climate of fiscal belt tightening, it will be a tough fight to keep ACA and other health expenditures as high as originally envisioned. Even President Obama has proposed to cut them back.

    The biggest threat to the ACA is not factions of one party or the other, but the climate of austerity. Sure, political positioning matter, but the contextual sea in which all politicians are swimming is the challenging economic climate and low GDP growth. It’s still the economy, stupid, even if it plays out in the politics of health reform.

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    • Yet isn’t it in this same vein of austerity and health reform that a case can and should be made for long term deficit reduction because of a commitment to health reform?

      • Yes. But there is short-term temptation to try to cut the spending aspects of health reform and keep the savings.

        • And I recognize that temptation. One can easily refer to Rep. Ryan’s budgetary framework that included the 500 billion in “savings” from ACA to prove your point. Yet the political question is why is there not a counter-narrative from the White House? Why are the one year anniversaries of early implementations from ACA not touted as successes from the Dems?