Why Has Obamacare Worked?

We’ve just passed the 14th anniversary of the enactment of the Patient Protection and Affordable Care Act, a.k.a. the Affordable Care Act, a.k.a. Obamacare — although many of the law’s provisions didn’t take effect until 2014.

In its early years, Obamacare was the subject of fierce criticism from both the left and the right. Actually, as I pointed out in my most recent column, politicians on the right are still saying the same things they said a decade ago, pretending that their predictions of doom haven’t been falsified by events. But Obamacare has survived, greatly expanding health insurance coverage without busting the budget. Critics on the left complain that it hasn’t produced truly universal health care, which indeed it hasn’t. But it has done a lot and has become quite popular:

So why has Obamacare worked as well as it has?

The thing is, critiques of Obamacare from the left have a point. If your goal is to give people access to health care, why not just give them access, by instituting a single-payer system in which the government pays the bills? This was, in fact, what we did for seniors when Medicare was created in the 1960s.

The A.C.A., however, created a complicated system in which people have to buy their own insurance, although in many cases the government picks up much of the tab. And the complexity of the system, combined with the fact that important parts of it are run by state governments, some of which are controlled by conservatives who want Obamacare to fail, means that a lot of people fall through the cracks: 8 percent of the U.S. population is still uninsured, although that’s a lot better than the pre-A.C.A. situation:

Why, then, didn’t we go for single-payer? Politics. It wasn’t just a matter of buying off the insurance industry by keeping it at the center of American health care, although that was part of it. More important, I believe, was the perceived need to avoid disturbing Americans happy with their existing health coverage, mostly those getting insurance via their employers. Rather than reforming our whole health insurance system, Obamacare sought to fill the holes in our system by adding new stuff. In particular, it tried to create a working marketplace in which individuals not covered by their employers could find affordable health insurance.

Many people, especially but not only on the right, expected this effort to fail. I don’t want to get too deep into the weeds here, but the A.C.A. prohibited insurers from denying coverage or charging higher premiums to people with preexisting medical conditions. This kind of regulation can cause a “death spiral”: Too few healthy people buy insurance, so the risk pool gets worse, which drives up premiums, which drives out still more relatively healthy people, and so on.