On the Progressivity of ObamacarePosted: January 31, 2014
Is the Affordable Care Act progressive in the most effective way?
In a very fine study, Henry Aaron and Gary Burtless at Brookings have looked at the ACA’s potential effects on income inequality and have preliminarily concluded that the ACA redistributes income—largely in the form of health benefits
fits—to the poorest one-third of Americans. Most of the law’s additional subsidies—the expansion of Medicaid and subsidies for those buying insurance on the exchange—are highest for those with the lowest incomes. Offsets, such as some new taxes, tend to be concentrated less at those lower income levels.
What the Aaron and Burtless’ study was never intended to assess—and a lingering 21st century concern with almost all government health policies—is the ACA’s effectiveness and efficiency, both for the public in general and those with modest means in particular. For instance, many rewards of our government health policy have traditionally been captured by health industry providers, who are able to charge consumers higher prices. A program can be progressive, but still end up charging the public an additional $2 for $1.50 or $1 worth of care.
The ACA does at times attempt to deal with some of these issues and includes several experiments. But it was mainly directed at improving access, not reducing health costs. Reforms beyond the ACA still are required on that front regardless of which political party accedes to power.