Is Obamacare an entitlement program?

I guess so. Medicaid is considered an entitlement program, so Obamacare should be too.

However, Obamacare (and Medicaid) differs materially from Social Security and Medicare, the classic entitlement programs. Everyone can get Social Security and Medicare if they reach a certain age. Moreover, because we pay into these programs, there’s a strong case that we are entitled to receive benefits.

Obamacare is a welfare program. It provides free health insurance to people who are slightly above the poverty line and subsidized health insurance to a group somewhat further up the income scale. The money comes, in effect, from people who are better off, for example from those who must purchase more insurance than they need and receive no subsidies.

Social security is said to have been designed to provide benefits to everyone in part to avoid the stigma of being a welfare program. The idea was that if everyone gets benefits, the program will never be eliminated or substantially curbed.

Nowadays, it is nearly axiomatic that true entitlement programs will never be eliminated. For example, Charles Krauthammer cites the axiom in the context of Obamacare replacement. Welfare programs aren’t easily eliminated either but they can be, and sometimes they are cut back substantially.

Thus, in thinking about the possibility of eliminating Obamacare or curbing the benefits its provides, it makes sense to ask whether it is more like a classic entitlement or more like welfare.

Along these lines, let’s note that more than one-third of the states did not adopt the Medicaid expansion. Have the state officials and legislators responsible for this decision paid a political price? If so, I’m not aware of it, at least on a widespread scale.

I doubt that state politicians could get away with opting out of Medicare or Social Security, if such an option were legally available.

Let’s return to Obamacare and conduct this thought experiment: Instead of a Medicaid expansion, the class of people who benefit from the expansion receive partial subsidies and the people who receive subsidies get only tax credits or a tax deduction.

This approach obviously would produce losers. Thus, to be politically viable, such a reform would have to produce winners to roughly the same degree. (Note that this is possible to do in ways that don’t apply to Social Security and Medicare, which provide benefits to everyone who reaches a certain age).

Winners might include people in the individual market who don’t receive subsidies. They would win if their premiums and/or deductibles went down. They would also win if they had more choice when it came to selecting insurance plans and doctors.

Premiums would go down for people who want, or are willing to accept, less coverage than Obamacare mandates. Premiums would also go down to the extent that reform legislation brings about increased competition and malpractice reform.

Lower premiums would also offset, at least partially, the loss of subsidized coverage for those who now receive it. Savings from the reduction in the cost of insurance would partially replace the subsidy.

The practical problem is that Republicans lack the votes to implement the full range of reforms likely to produce a major reduction in the cost of health insurance. Thus, it’s far from clear that they can pass replacement legislation that produces more winners than losers and/or greater net benefit than lose.

Still, practical legislative obstacles to rolling back a welfare-type benefit are one thing; the barriers to substantially reducing a true entitlement benefit are another. For purposes of this distinction, I think it makes more sense to view Obamacare as welfare than as a classic entitlement.

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