Barack Obama, Marcelas Owens, John Dingell, Tom Harkin, Richard Durbin, Joe Biden, Vicki Kennedy, Christopher Dodd, Sander Levin, Ryan Smith, Kathleen Sebelius, Nancy Pelosi, Steny Hoyer, Harry Reid, Patrick Kennedy, James Clyburn, Henry Waxman
Then President Barack Obama signs the Affordable Care Act in the East Room of the White House in Washington on March 23, 2010 (AP Photo/J. Scott Applewhite). Credit: AP

There’s an economic concept called “Path Dependency”: It refers to an individual or societal preference for an existing product despite the availability of better or less costly alternatives (the QWERTY keyboard is the most oft-used example). Loss aversion, the fear of losing what you already have, is a leading precept in behavioral economics and path dependency’s first cousin.

The Ten Year War:
Obamacare and the Unfinished Crusade for Universal Coverage
by Johnathan Cohn
St. Martin’s Press, 416 pp.
St. Martin’s Press, 416 pp.

These twin concepts help explain the epic failure of the Clinton administration’s 1993-94 healthcare reform plan, the U.S.’s first serious attempt at adopting universal coverage since Harry S. Truman’s run at the problem. The insurance industry’s infamous “Harry and Louise” ads, echoed by Republican opponents of reform, scared the bejeezus out of the already insured.

People became convinced they would lose their existing employer-based plans, even though Hillarycare’s extensive regulations not only covered the uninsured but improved benefits for the vast majority of Americans. The political earthquake that followed reform’s defeat allowed Republicans to seize control of Congress in 1994 for the first time in 40 years.

The awesome powers of path dependency and loss aversion also help to explain why the Democratic Party’s leaders, think tank experts, and political consultants, once Democrats regained control of Congress in 2006, gravitated toward the Heritage Foundation-generated approach to reform, which had just been signed into law in Massachusetts by then Republican Governor Mitt Romney. To achieve universal coverage, that model relied on offering the uninsured heavily subsidized private insurance plans coupled with an expansion of Medicaid and a universal mandate to get healthier, younger people who often skip getting insurance into the system.

None of the three major candidates running in the Democratic presidential primaries in 2008, including the eventual winner, embraced single-payer health insurance. Even progressives bowed to the prevailing wind by throwing their support behind a government-run “public option,” which would compete with insurers and, progressives hoped, serve as an opening wedge to make single-payer palatable to a loss averse public.

The path dependency/loss aversion paradigm reminds us that history’s lessons matter. As Jonathan Cohn notes in his insightful chronicle of the most recent advance on our long march toward health coverage for all, The Ten Year War: Obamacare and the Unfinished Crusade for Universal Coverage, “Americans have a strong bias toward the status quo, even when they don’t like it. On health care, they are wary of promises and new and better health insurance alternatives, especially when those come from a government that they still do not trust the way they did in the 1950s and 1960s.”

His book provides the definitive account of the passage of the Patient Protection and Affordable Care Act of 2010, and shows how the law, a.k.a. Obamacare, survived repeated assaults by the GOP. Cohn’s meticulously researched narrative, which includes interviews with both parties’ key players including former President Barack Obama, takes its well-earned place next to Haynes Johnson and David S. Broder’s account of HillaryCare, The System, as must-reads for anyone wanting to understand how the mean-spirited but occasionally uplifting politics of healthcare played out in the capital at crucial turning points in recent history.

Cohn brackets his narrative with the courageous thumbs-down gesture by Arizona Senator John McCain. In July 2017, Obama’s vanquished 2008 rival flew back from Arizona, where he was undergoing treatment for the brain cancer that would eventually take his life. He cast the deciding “no” vote on repealing Obamacare after Republicans had seized control of both houses of Congress. Newly-elected President Donald Trump was sitting in the White House itching to sign the bill.

Supreme Court Chief Justice John Roberts also played a key role in rescuing the law from its legal near-death experience. When the constitutionality of the individual mandate to purchase insurance came before the high court in NFIB v. Sebelius, the conservative jurist defied both politics and logic by casting the deciding vote in a ruling that said Congress had no right to regulate inactivity but could tax the failure to engage in an activity, that is, buy insurance. The other part of the June 2012 ruling gave states the right to abstain from expanding Medicaid, which in the end, proved far more devastating to the ultimate goal of the law than the loss of the individual mandate.

There are lessons to be learned from the intra-Democratic Party squabbles over the mandate, which Cohn addresses in depth. Chief among them: Don’t listen to economists or to Democrats who think they know the minds of their moderate GOP colleagues when they are in thrall to the party’s newly ascendant right wing.

Before the 2008 election, Hillary Clinton, who understood healthcare better than any politician and better than many think tank experts, had argued the mandate was necessary to get young, healthier people to sign up. That, in turn, would make the individual market premiums affordable.

Candidate Obama, better attuned to the mandate’s political liability, opposed the idea but agreed to include it in the bill once in office, albeit rebranded with the Republican-friendly “personal responsibility” label. He also wanted to please Senator Max Baucus, chairman of the Senate Finance Committee, who thought it crucial to achieving bipartisan support.

Obama also listened to economist Peter Orszag, who ran the Congressional Budget Office before the election and joined the Obama administration as chief of the Office of Management and Budget. He fought for inclusion of an Independent Payment Advisory Board, which was empowered to recommend cost-cutting measures to Congress if overall healthcare spending surged beyond expectations.

The Democrats paid a huge price for pursuing the chimera of bipartisanship. The mandate and the cost-control measures proved useful cudgels for “Don’t Tread on Me” Republicans running as Tea Party candidates in the 2010 elections. The right’s success put an end to the Democrats’ short-lived control of Congress. Indeed, the other attack on the law—popularized by Sarah Palin’s false claim that it would lead to “death panels”—was based on Orszag’s IPAB and an amendment written by Republican Senator Johnny Isakson of Georgia, who pushed allowing Medicare to pay for counseling beneficiaries who wanted to write end-of-life directives or living wills.

The law survived those assaults and the botched rollout of the exchanges with its broken web interface. Eventually, more than 11 million people signed up on the exchanges. Even more were newly enrolled in Medicaid. Most stayed enrolled, even after Republicans took over the White House and Congress and undertook numerous measures to discourage enrollment.

Indeed, the law’s survival through the Trump era—and the main reason the Democrats were able to retake control of the House in the 2018 election—can be largely attributed to the more stringent controls the law imposes on insurance companies. They no longer can discriminate against people with pre-existing conditions; children can stay on their parents’ plan until age 26; and all private plans on the exchanges are subject to hard limits on how much they could charge for overhead and profits. All are extremely popular with the public, so much so that even GOP candidates include them in their talking points.

Cohn, an experienced healthcare writer now at HuffPost, offers support for the Obama law even as he recognizes its shortcomings. It succeeded in cutting the number of uninsured Americans by more than 23 million and getting the uninsured rate into single digits. Moreover, the hidden half of the ACA law—its delivery system reforms—substantially reduced the rate of increase in overall healthcare spending. While less celebrated in the book and barely noticed by the public, this, too, is an Obamacare legacy.

In the decade before the law passed (2000-09), healthcare spending went from 13.3 percent to 17.3 percent of GDP. In the decade since (2010-19), it rose only to 17.7 percent of GDP, the longest period of relatively tame growth since Lyndon Johnson signed Medicare and Medicaid into law in 1965.

As the Obamacare architects understood at the outset, both components of the law were crucial to getting costs under control. That’s because the uninsured postpone care, and when they show up in hospital emergency rooms, their uncompensated treatments for more costly illnesses show up as higher insurance rates for everyone else.

And, as demonstrated by the ill-fated 1990s experiment with health maintenance organizations that led to a patient backlash, leaving unregulated insurance companies in charge of cost control invariably leads to stinting on care. Cohn skips this crucial chapter in his brief history of pre-Obamacare healthcare reform efforts, but it informed the Obamacare payment reform experiments, which are still underway.

Ultimately, doctors, hospitals, and others will need to take charge of the prudent use of our limited healthcare dollars. As Cohn points out, that can be done under a single-payer system, as in most of the countries of western Europe, or under a heavily regulated system that relies on private insurance companies, as exists in Germany and Switzerland. Given America’s health insurance history, and the laws of path dependency and loss aversion, I believe the latter is the most likely path.

But either way, the most immediate concern of most Americans is the unaffordable co-pays and deductibles that exist in many Obamacare and employer-based plans. The Biden administration’s COVID-19 relief bill begins the process of addressing that concern by expanding the subsidies in the law.

In his brief concluding chapter, Cohn expresses skepticism that a single-payer Medicare for All plan, the preferred alternative for about half the Democratic Party and a third of the public, will play a major role in the next generation of reform. “The transition alone would be a massive challenge, given how much of the current medical ecosystem depends on existing financial arrangements,” he writes. “Advocates need to show that it’s possible.” Obamacare had its trial run in Massachusetts. No state has yet figured out a way to do a trial run of a single-payer system.

Fearing current cost control efforts haven’t gone far enough, Cohn offers the thoughts of “many card-carrying economists” that the time has come to try global budgets and price controls like other developed nations. The one thing we can bank on is that the GOP as currently configured will not play a constructive role in that debate or the necessary work of achieving universal coverage.

Implicit in most Republicans’ objections to Obamacare is their rejection of its redistributive effects, which is the foundation of any universal health insurance. The wealthier, who as a group are healthier, pay more than their average cost of care. The old and poor, who suffer a disproportionate share of the nation’s sickness, pay less. If Republicans truly believe “redistribution is unjust and an infringement on liberty,” a phrase Cohn uses to describe the conservatives’ philosophy, then they have nothing to offer in the debate over how to finally achieve universal coverage since they don’t really believe in it,

Merrill Goozner

Merrill Goozner, a former editor of Modern Healthcare, publishes “GoozNews” on Substack.