Wednesday, September 5, 2012

Obamacare at the DNC

Last night was the first night of the Democratic National Convention. I watched about an hour and a half of it. Two main points stuck out to me: a claim about the effects of Obamacare, and an explanation by Michelle Obama about how her husband makes decisions. I'll address the first here, and the second in the next post.

First, in Kathleen Sebelius's speech, she repeats a line that has been the cornerstone to the argument in favor of Obamacare:
[I]f you already have insurance you like, you can keep it.
This is a big Democratic talking point. (Actually, the whole speech is nothing but a list of talking points strung together, but that's another post.) The President has said it before, as well:
Let me be clear: If you like your doctor or healthcare provider, you can keep them. If you like your health care plan, you can keep that too. (President Obama, July 15, 2009)
This is the prime example of wishing the law did something it does not -- or if you believe the intent is more sinister, deliberately misleading the public. The claim is clearly not true because not all plans will legally qualify and there will be/have been behavioral responses to the law both by people and firms forcing people to change their coverage. For instance, see herehere, and here.

If it were true, and people could voluntarily keep everything about their health care and insurance the way it is now, the law would have had a good shot at being welfare improving by revealed preference. In consumer theory, if a person's choice set changes, and he can still choose the bundle he had before, then he must be better off because if he changes his consumption bundle, it's because he likes the new option better. Sadly, this is not the case for Obamacare, no matter how much Sebelius and the President wish it to be.


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