PINKERTON: The Future of Trumpcare — What Is Seen and What is Not Seen

Third in a series…

In the first installment of this series, we explored the past fight over Obamacare and the coming fight over Trumpcare.  In the second installment, we observed that the middle-class orientation of the Trump administration is likely to define the future outlines of Trumpcare.  Yet in the meantime, as we shall see, there’s a great deal of what Silicon Valley techsters call “FUD”—Fear, Uncertainty, Doubt—being circulated by Obamacare partisans.

 

1. The Wisdom of Frédéric Bastiat

As we await the debut of the Trump administration’s healthcare policy, perhaps it will be helpful, providing a useful context, if we step back and consider the wisdom of the 19th century free-market economist, Frédéric Bastiat.  In 1848, in an essay entitled “What Is Seen and What Is Not Seen,” Bastiat argued that shortsighted people look only at immediate and obvious effects, which could be harmful, while farsighted people look to longer-term and not-so-obvious effects—which could be beneficial.   To illustrate this point, Bastiat cited a homey example: sugary sweets may taste good, but they are not good for you, and the most profound ill-effects are felt only in the long run.  And yet, of course, sweets are always popular. 

And so it seems be with healthcare today: Obamacare, unhealthy as it might be, is here; it is seen—many people have grown accustomed to it.  By contrast, Trumpcare is not here—it is unseen.    

So the challenge for President Donald Trump is to convey the promise of the unseen; that is, the prospect of better healthcare in the long run.  And while the short term is not unimportant—when making a journey, one has to be careful about every footstep—ultimately, it’s the long term that’s more important.  That is, the destination matters more than the journey. 

In a famous illustration of the seen and the unseen, often called the Parable of the Broken Window, Bastiat observed that if all the glass windowpanes in Paris were smashed, that would be good news for Parisian glassmakers, because they would get the work of replacing all those panes.  Indeed, without a doubt, that would involve a lot of money—money that’s immediately seen.  And yet, Bastiat observed, in the end, after all that spending, Paris itself would be no better off than it was before.  In fact, it would be worse off, because it would have spent all that money replacing glass, just to get back to where it was before the glass was smashed.  So it would be far better for society, Bastiat concluded, for the glaziers of Paris to work on new projects, thereby enlarging the number of windows.  

This might seem to be a rather obvious point, but then, of course, economics is little more than the systematic elaboration of obvious points.  

And for his part, back in 1848, Bastiat wasn’t done: In that same essay, he went on to outline other economic scenarios with more of a direct policy point.  For example, if the government were to create, in the spirit of socialism, its own company, thereby preempting private companies, politicians could point to that new public company and say, “See? Look what we’re doing for you!”  That’s the seen.  And yet ordinary people, gazing upon the new company, might never know its true cost—the unseen.

Indeed, the ultimate cost, Bastiat added, would have to be measured not only by the direct government outlay, but also by the private-sector activity that had been preempted by the new government venture.

So now we see more clearly the point Bastiat was making.  The seen is right in front of you; you can, as it were, taste it.  Meanwhile, the unseen is more subtle; it might well be better, but even if so, its superiority is still hidden in the future. 

Over the last century-and-a-half, economists have further elaborated on Bastiat’s insight; the concept is now known as “opportunity cost.” That is, economists now know, the real cost of doing something is not just what it costs to do it, but, in addition, the cost can be computed as what else could have been done with the same time and money.   

So if, for example, the government uses tax money to construct, say, a new health-insurance system, well, that appeals to many, because there it is, it can be seen.  But if we were to ask ourselves, “What else could have been done with that same money?” we find ourselves back to the Bastiat question: What about the unseen?  Or to cite the issue at hand, what other health system, other than Obamacare, could have been created?  

As Bastiat wrote more than a century-and-a-half ago, the diligent effort to get it right—and the willingness to delay gratification until it is right—is usually rewarded: 

It almost always happens that when the immediate consequence is favorable, the later consequences are disastrous, and vice versa.  Whence it follows that the bad economist pursues a small present good that will be followed by a great evil to come, while the good economist pursues a great good to come, at the risk of a small present evil.

2. How Bastiat Might Look at Obamacare and Trumpcare 

So now to the fate of Obamacare.  As we all know, the program—dubbed by the Democrats, without irony, as the Affordable Care Act—is a mess.  

Back in 2010, if the Democrats had been thinking in Bastiat-like terms, they would have realized that the “bright shiny object” of a poorly thought-through stab at universal health insurance was, in fact, a short-termist delusion.  That is, any time that the federal government presumes to make massive changes in a multi-trillion-dollar sector of the economy—the National Health Expenditure of the US in 2015 was $3.2 trillion, or nearly 18 percent of GDP—there are sure to be a lot of bad impacts, a lot of unintended consequences.   

And yet the Democrats were heedless of these dangers. Thus it was that they went happily sailing into the 2010 midterms and hit an unseen reef—the wrath of American public opinion.  And then, in 2014, they hit a second reef and, in 2016, a third.  So now, of course, the Democrats are at their weakest point since the 1920s. 

However, now that the Republicans are in charge, they, too, must be cautious: They might have a better long-term model for American healthcare, but, as we have noted, the short run can still be tricky—the GOP can’t afford to trip.

In particular, Republicans have to step carefully as they seek to fulfill the promise they made in their 2016 Platform.  As Republicans gathered in Cleveland last summer, they formally affirmed about Obamacare:

It must be removed and replaced with an approach based on genuine competition, patient choice, excellent care, wellness, and timely access to  treatment.

Sounds good!  And the Republicans won.  And yet now, just a few months later, some in the GOP are suffering from FUD—Fear, Uncertainty, Doubt. 

Hence this headline in Friday’s Washington Post, “Behind closed doors, Republican lawmakers fret about how to repeal Obamacare.” The article, based on a surreptitious recording of a private GOP planning session at the recent Philadelphia retreat, quoted many Republican lawmakers sharing their ideas and concerns—in that meeting, if the report was to be believed, mostly concerns.  One of those concerned was Rep. Tom McClintock of  California, who warned about the danger of immediate repeal without a replacement model: 

We’d better be sure that we’re prepared to live with the [health insurance] market we’ve created.  That’s going to be called Trumpcare.  Republicans will own that lock, stock and barrel, and we’ll be judged in the election less than two years away.

We might note that whoever made that sneaky recording committed a felony offense in the state of Pennsylvania, but it’s a safe bet that, since the recording was aimed at damaging Republicans, nothing will happen.

Soon thereafter, Politico got the same recording; the publication eagerly added its own FUD-inducing headline: “Republican split on Obamacare strategy evident during private meeting: An audio recording of the closed-door session revealed a host of divisions over the details of a replacement plan.”

And then, to complete the Main Stream Media bushwhack trifecta, The New York Times, too, got the recording, and the newspaper delightedly headlined its piece, “In Private, Republican Lawmakers Agonize Over Health Law Repeal.”

Another GOP Congressman quoted in the stories was Tom MacArthur of New Jersey: “I recognize that we can’t keep Obama’s promises. They were wrong to begin with, and the system can’t be sustained.” And yet MacArthur worried aloud that many could lose their health insurance if Obamacare is too-hastily repealed.  As he said of the the public as a whole:

We’re telling those people that we’re not going to pull the rug out from under them, and if we do this too fast, we are, in fact, going to pull the rug out from under them.

MacArthur added that reversing a key provision of Obamacare, the expansion of Medicaid, could be made to look as if the GOP was pulling a “bait and switch with the states.”  He further added that a key Republican idea, offering middle-income Americans a “refundable tax credit” to cover the cost of health insurance, might not be adequate as a replacement model, because, he said, “the people who struggle to pay for groceries” can’t afford premiums in the here and now, not to mention having to wait a year to be reimbursed for their insurance payments by the IRS.

We must say: These are legitimate concerns.  Yes, to be sure, there are good answers to the questions being raised, but it’s obvious that it will take a long and sustained effort fully to communicate reassurance to the American people.  

Meanwhile, it’s not lost on Republicans in the House that at least 14 GOP Members hold congressional districts that Hillary Clinton carried last year.  In other words, factoring in those and other closely competitive seats, the fate of the House Republican majority in the 2018 midterm elections could be determined by the ability of GOPers to find the right path on Obamacare replacement. 

Of course, in the meantime, the MSM is doing its best to make things harder for Republicans.  In addition to reporting on the illegal recording, the media are piling on the FUD-making headlines: On January 17, for example, The Washington Post blared, “18 million would lose insurance in first year of Obamacare repeal without replacement, CBO report says.”  Republicans immediately pointed out the obvious: that the Congressional Budget Office study concerned “repeal” only, as opposed to “repeal and replace.”  

And yet that didn’t stop other outlets from running with the same dubious factoid.  Some even upped the story, hence this Vox header: “CBO report: Obamacare repeal would lead to 32 million more uninsured by 2026.” And oh yes, Vox added, piling it on, the Republicans would purportedly “double insurance premiums in the individual market.”  (As Mark Twain once said, “A lie can get halfway around the world before the truth gets its boots on.”) 

So for sure, the politics of Obamacare repeal-and-replace will indeed be tricky.  According to a poll taken earlier this month by the Associated Press/NORC Center for Public Affairs Research, nationwide support for Obamacare is closely divided, pro and con.  Moreover, within the pro and con blocs, opinion is divided even further. That is, while 53 percent of Americans say that they want to keep Obamacare, only 12 support keeping the law as it is now, while 40 percent would like to see changes to make it better.  Meanwhile, on the other side, 46 percent think that the health-insurance law should be repealed, and yet within that group, two-thirds want to hold off on repeal until a replacement is ready; only 16 percent want to see the law repealed immediately.

In fact, the war over repeal-and-replace is only getting started.  In past years, anti-Obamacare Republicans benefited from blunt headlines such as, “Obamacare Killed My Sister.”  That piece, published in 2014, was written by a guest-columnist on Ann Coulter’s website. 

Yet now, as the left is accelerating its efforts on behalf of the embattled legislation, it’s adding new voices to the fray.  Earlier in January, this provocative headline appeared in a a food blog, Eater: “I Work in the Restaurant Industry.  Obamacare Saved My Family’s Life.”

So that’s the future: dueling narratives of life and death.  And we know which side the MSM will take.  As President Trump told ABC News’ David Muir on January 25, the administration’s goal is the full and superior replacement of Obamacare.  As Trump said, “We want no one” to be left out.  And then the president added, slyly, that if someone is somehow left out, “knowing ABC, you’ll have this one person on television saying how they were hurt.”  Indeed. 

Meanwhile, the left’s big money is joining the defend-Obamacare barrage.  According to Axios, liberal groups calling themselves the Alliance for Healthcare Security have made a seven-figure TV and digital ad buy in six states, running a 30-second spot.  Interestingly, in this spot, Obamacare is referred to by the generic word, “healthcare”—we can surmise that “Obamacare” tested poorly.  (And yes, there’s conservative money, too, out there, but so far it seems to be mostly focused on getting Tom Price confirmed as Secretary of Health and Human services.) 

As Bastiat might say if he were still alive to provide commentary: To win, the Republicans must emphasize the brighter “unseen” of the future, even as the Democrats hammer away on behalf of the stained “seen” of the present-day.  

So this is the fight: short-term Democratic FUD vs. long-term Republican hope that there is, in fact, a Better Way.  

It’s funny to think: it wasn’t that long ago that the Democrats declared, fervently,  that they were the Party of Hope.  Times change.

Next: The Seen and the Unseen of Pharmaceutical Drug Prices