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Obamacare is turning out to be nothing like Medicare

Rick Newman
Senior Columnist
The Exchange
A man is silhouetted behind a sign at an Affordable Care Act outreach event hosted by Planned Parenthood for the Latino community in Los Angeles, California September 28, 2013. REUTERS/Jonathan Alcorn

President Obama has defended his unpopular healthcare reform law by noting there was also strident opposition to Medicare when it passed back in the 1960s. Medicare is now more popular than just about any government program, a turnabout Obama would no doubt love to see happen with Obamacare.

It’s not happening, however. Medicare had already begun to look successful just a few months after its launch, whereas Obamacare remains polarizing and unproven more than three months after going into effect, due largely to notorious problems with the federal website and the plight of several million people whose private insurance got canceled because it failed to meet minimum requirements of the new law. Only 40% of Americans approve of the Affordable Care Act, as the law is officially known, according to the Real Clear Politics polling average. And disapproval rose following the launch last October. Obama, no doubt, was hoping the opposite would happen once speculation about the law ended and Americans got their first taste of the real thing.

Obama is right that Medicare faced similar opposition in its early days. The American Medical Association warned that, if it ever passed, Medicare would be “the most deadly challenge ever faced by the medical profession." Ronald Reagan, then still a politically minded actor, recorded a 10-minute tutorial in 1961 explaining why Medicare would become “socialized medicine.” It took years of political wrangling before Congress finally passed Medicare in 1965.

A far better launch

But that program got off to a much better start than Obamacare and enjoyed far broader support at the beginning. A few months before Medicare became law, 63% of respondents told Gallup they favored government-backed health insurance for the elderly, even if it meant raising taxes. One big difference back then was trust in government was close to 70%, and it seemed plausible Washington could effectively run something as sweeping as Medicare. Today trust in government is around 20% close to a record low — and the botched launch of Obamacare seemed to confirm widespread suspicion the government wrecks whatever it touches.

Medicare went into effect in the summer of 1966, much more smoothly than Obamacare did 47 years later. There had been concerns the elderly wouldn’t sign up — but that year alone, more than 90% of the 19 million people eligible for the program enrolled. There was virtually no controversy over the new law, and Democrats running in the 1966 midterm elections touted their support of Medicare while making their case for re-election. Within a year, support began to grow for expanding Medicare to cover more prescription drugs and other benefits.

Democrats who voted for Obamacare in 2010, by contrast, have been backing away from the law and calling for reforms to the reforms, mindful that future Republican opponents will likely attack their support for the ACA as a liability. The sign-up target for Obamacare is far smaller than it was for Medicare — a mere 7 million people or so in 2014 — yet early results show fewer than 3 million have enrolled, with a higher proportion of older enrollees than desired and a smaller proportion of young people. If sign-ups fall short or too many young people skirt the program, it could imperil the economic viability of Obamacare. Medicare, this ain’t.

A bigger challenge

To be fair to Obama and his fellow Democrats, they faced a bigger challenge than President Lyndon Johnson did when he ushered Medicare through Congress. Medicare, of course, is a single-payer program fully administered by the government. But a single-payer approach had little support when Obama sought a Medicare-like program for people under 65 who couldn’t purchase affordable insurance in the private market. The result was a convoluted public-private mashup that’s subsidized and partly administered by the government, yet run through private-sector insurers subject to the varying laws in each of the 50 states. In retrospect, it may seem  Obamacare’s hybrid nature guaranteed trouble and vastly overcomplicated the task of insuring the uninsured.

Obamacare may have one advantage Medicare doesn’t — it’s financially sustainable. Medicare is the single-biggest budget-buster on the federal books, with the program on its current course headed for insolvency sometime in the late 2020s. That may explain Medicare’s popularity, since the public basically gets more than it pays for — with some benefits financed by payroll taxes but others by borrowing, which pushes up the national debt. As the Medicare rolls swell with aging baby boomers, the gap between Medicare costs and tax revenues will get even bigger, forcing tax hikes or benefit cuts or both.

The Affordable Care Act is more, well, affordable. Obamacare will cost about $1.4 trillion during the next 10 years, but the law also entails new taxes and other provisions — already in effect — that will more than offset the cost. The Congressional Budget Office actually estimates Obamacare will modestly reduce the national debt, rather than adding to it.

That alone won’t make Obamacare successful, however, and even if the law survives, it may never be as popular as Medicare. You only get one chance to make a good impression — even in government.

Rick Newman’s latest book is Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman.