Can Obamacare Set Americans Free?

July 20, 2012 |
How many times have you heard someone discuss the need to maintain health insurance for themselves or their family as a factor in an important personal, job-change, or life choice? If the health-insurance exchanges that Obamacare promises work at all well, a new era of personal freedom beckons.
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About six years ago, Netflix offered an award of $1 million to anyone who could mine its database of customer-provided movie ratings and improve the system’s overall accuracy by more than ten per cent. Many people tried. In 2009, Netflix awarded the prize, in the form of stock, to one participant.

David Bollier, writing for the Aspen Institute last year, cited the contest as a lottery-like, high-reward example of crowdsourcing, which is one of the ways that computers and connectivity are changing how work gets done. “People no longer need to work through organizational hierarchies to do important work,” he argued. “Because they are connected electronically, they can undertake ‘small activities’ on their own, without authorization, and still have significant, often global impact.”

The New America Foundation, the think tank where I have worked for the last five years, was one of the places where scholars first fixed on the use of an individual mandate to buy health insurance as a way to address the economic and moral problem of large numbers of Americans who lacked insurance, and therefore, health and economic security. These scholars were focussed in large part on the problems of equity and access to health services. Yet a futuristic vision of work and mobility in post-industrial America also influenced them. And this expectation of a coming age of connectivity, mobility, and empowered individuals—which comes more into reality each year—is a reason why the Supreme Court’s decision to uphold Obamacare will be transformational in ways that are hardly ever noted.

The fact that most Americans of working age receive their health insurance through their employers—a system that has lately produced too many people without any insurance at all—is an accident of history and an anomaly among industrialized democracies. It reflects a twentieth century America of factories and assembly lines, some of them scaled up massively to fight the Second World War.

The conventional wisdom at mid-century held that “the best way to harness human talent is through full-time, exclusive employment relationships where people are paid for the amount of time they spend at a common location,” wrote Michael Chui, a fellow at the McKinsey Global Institute. Employees should also “be organized in stable hierarchies where they are evaluated primarily through the judgment of their superiors.”

The story of how health insurance ended up as a common benefit of working in a big private or public-sector organization (and overtook the drive for other insurance schemes, such as a Medicare-like single-payer one) is long and tangled. By 2000, however, the system had produced a gap that no longer looked sustainable, at least not to many Democrats—tens of millions of uninsured Americans, many of them poor, who died early for lack of preventive care and whose visits to emergency rooms and other uncovered expenses imposed high costs on everyone else. The individual mandate was chosen to address this problem because it fostered a market-led approach in which insurance companies could benefit, which attracted Republicans like Mitt Romney, when he oversaw the enactment of such a plan while the governor of Massachusetts.

The mandate idea was also responsive, however, to the collapse of the mid-century, employment-for-life corporate workplace. The new system would make health-care insurance portable, so that a father who wanted to work part-time to be with his children, or a new entrepreneur who wanted to take a flyer on a new idea, could temporarily restructure their working lives without falling through the health safety net. (A single-payer system also would have been responsive to more mobile work, but it was seen as less politically viable.)

Global economic forces have made this portability of insurance more and more essential for reasons that have less to do with aspiration and creativity.

The worldwide mobility of capital, factories, and information that is shorthanded as “globalization” has meant that American factory workers, for example, have had to compete with Chinese and Bangladeshi workers in ways they never had to in the nineteen-fifties. This integration—coupled with campaigns by business against labor unions, the normalization of temporary and contract workers, and other factors—seem to have suppressed American wages over the past two decades, in many fields.

The same system unduly rewards those at the very top. Because Kobe Bryant’s jersey is hugely popular in China, his wages exceed even those he could command if he were only, at times, the best basketball player in America. And so we get more inequality—the middle and the bottom of the work force slide gradually backwards, and the very top separates and rises quickly.

All of this is pretty well understood by now, and agreed upon, even if Republicans and Democrats (and the Tea Party and the Occupy Movement) have completely different views about how much it matters and what should be done. We’ll hear a lot about these themes when Obama and Romney debate in the fall. The reason Obama’s attacks on Bain Capital, which in their tone and technical charges involving Securities and Exchange Commission filings can sound like demagoguery, are in fact legitimate is because Bain’s history is a proxy for the larger debate about why inequality is increasing and who gets hurt.

Economic insecurity is less often discussed than inequality. It is not the same. For the last couple of years, Jacob Hacker, a political scientist at Yale, has led a series of studies into economic volatility experienced by American families. Hacker and his team have created an Economic Security Index, which measures, over time, what percentage of Americans lose at least a quarter of their available household income because of job losses, medical spending, or other shocks. The percentage has risen substantially between 1986 and 2010, they have documented.

This is where Obamacare matters. It will raise the number of insured individuals and families—by exactly how much, we’ll see, but a lot. By doing so, it will make American family life less volatile and insecure. Rising medical costs—more than a one-third increase in median costs—are a factor in household insecurity, although it less important than job loss. About a quarter to forty per cent of all personal bankruptcies are caused by the shock of unmet medical costs, according to a 2005 Harvard University study.

Obamacare won’t address this just by extending insurance to those who could not obtain it. Over time, the new system would also have to reduce total health-care costs as a percentage of household income and raise the number of people who live healthy lives, through prevention and higher quality service. But the law obviously will help right away to reduce economic insecurity for many Americans in all sorts of circumstances.

How many times have you heard someone discuss the need to maintain health insurance for themselves or their family as a factor in an important personal, job-change, or life choice? If the health-insurance exchanges that Obamacare promises work at all well, a new era of personal freedom beckons.

There are many implications. Employers will have to do more to create workplaces that are more attractive than self-employment; individuals will have to acquire new skills to succeed outside of hierarchies; and policymakers will have to figure out how to keep the floor of median American household income from falling further. But even if economic insecurity persists, Obamacare unquestionably means that personal liberty will also rise. Isn’t that what the Republican Party is supposed to want?