Barro hopes that the political blowback from Obamacare rate shock will teach future politicians “that shadow fiscal policy is not necessarily politically easier than explicit fiscal policy, and take their future expenditure programs on-budget”:
Obamacare’s explicit funding sources are mostly new taxes on people with high incomes and cuts to Medicare provider payments. But some of the “shadow fiscal policies” in Obamacare are effective tax increases on people with moderate incomes; these people didn’t expect to face a tax increase under Obamacare, and now that they’re discovering they are, they’re getting angry.
This is another example of the closing wonk gap: Members of the general public figuring out facts about Obamacare that policy wonks on both sides of the debate have known for years.
Obamacare relies heavily on cross-subsidies as it greatly expands the market for individually-purchased health insurance. Premiums in this market will be tightly regulated so young and healthy people pay more than they’re expected to get back in claims and older and sicker people pay less. This is a tax, of sorts, on a subset of young and healthy people that goes to finance health care for people who need more of it. And the individual mandate is designed to make sure they pay the tax, one way or another.
The Dish 