Obamacare and why we have a two-tiered welfare state

Image: The illustration from Suzanne Mettler's article on the "submerged state," a key aspect of America's two-tiered welfare system.

A little background: In 2009, as Congress debated the corporate sell-out known as Obamacare, Iowa Republican Senator Chuck Grassley proposed an amendment that would force every member of Congress to use the Obamacare exchanges.  Grassley clearly thought that the Democrats secretly expected the exchanges to crash and burn, and would thus be unwilling to rely on them.  Fearing for their health, the Democrats would vote the amendment down, thus exposing their own hypocrisy.

Grassley miscalculated, however.  The Democrats, apparently confident in the principle of the health insurance exchanges, called Grassley's bluff and his amendment became law.  So, starting in 2014, all members of Congress are legally required to purchase health insurance from the exchanges.

This makes no sense, however, because the exchanges are meant for individuals who are not offered insurance through their employer, and the law does not permit employers to make a contribution to insurance their employees purchase over the exchanges.  Members of Congress do get health insurance through their  employer--the federal government--but are somehow expected to use the exchanges.

This creates an odd paradox wherein members of Congress are both expected to utilize their employer-sponsored health insurance, yet legally required not to.  This paradox was ironed out earlier this year, when it was determined that members of Congress would purchase their insurance on the exchanges with the help of the federal government; the federal government will pay the current employer contribution towards Congress' health insurance, and each member of Congress will have to pay the rest of the bill for whatever plan they purchase on the exchanges.

For those making up to 400% of the poverty line, subsidies are available on a sliding scale to help purchase insurance.  Obviously, members of Congress are making more than 400% of the poverty line, and thus would not be eligible for this subsidy.

Ok, done with the background.  This entire fiasco has led to one of the most amazing works of cognitive dissonance I have ever encountered:

“Members of Congress and their staff must go into the exchange,” said an administration official. “No ands, ifs, or buts. They will not be eligible in any way for subsidies or tax credits. But they don’t lose their current employer contribution.”

This is coming from an official from a Democratic administration, showing how deeply engrained the two-tiered welfare state is in our society: Members of Congress aren't those people who need help from the government.  They're doing just fine, so let's make sure those subsidies and tax credits are available for the people who really need them.

Try to find the difference between that statement and this one, from a Tea Party activist:

"As soon as you mention a government program and Medicaid, you don’t have to talk that long," she says. "I like that there is still a stigma [around Medicaid]. That people want to stand on their own feet..."

The difference is a matter of degrees.  The Tea Partier would have us believe that the stigma of accepting a government handout is so bad that one should avoid it at all costs.  The "liberal" Democrat would argue that the stigma really isn't that bad, but would still endorse a stigma indirectly: those people need special help, while these other people don't.  If liberals don't endorse "separate but equal" when it comes to race, why is it ok to endorse separate but equal when it comes to poverty?

The Obama administration official's statement drives at another key aspect of the two-tiered welfare state: the submerged state.  Let's unpack how utterly inane the administration official's understanding is.  The official claims that members of Congress "won't be eligible in any way for subsidies or tax credits."  Of course members of Congress are eligible for a subsidy!  The federal government is paying a portion of their health insurance!  The ugly premise of the two-tiered welfare system is the foundation of this understanding: those poor people are accepting government assistance, but there's nothing wrong with this other group of people, members of Congress, who aren't accepting government assistance--they're just getting an employer contribution!

This is really no different from the Tea Partier's understanding, wherein it's OK to accept a government handout in the form of employer-sponsored health insurance (rich people's welfare), but it's not OK to accept a government handout in the form of Medicaid (poor people's welfare).  Says the Obama administration official: it's just an "employer contribution"--nothing to be ashamed of!

Remember that the federal government generously subsidizes private employer-sponsored health insurance.  The Cato Institute estimates that subsidies for employer-sponsored health insurance cost the government an enormous $147 billion per year.  That is welfare for the rich--massive government welfare spending that disproportionately benefits the rich (since so few poor have employer-sponsored health insurance).  This spending is, of course, not stigmatized, even though it acts the same way as welfare for the poor.  To put the $147 billion figure in perspective, the federal government spent half that on Food Stamps in 2012 and about a tenth on "welfare" (Temporary Assistance for Needy Families, or TANF).

None of us are any different; we all accept government handouts for health insurance (except for the poor without health insurance, who do not).  Yet we are very different; when a poor person accepts a handout, it's stigmatized.  When a rich person accepts a handout, it's not stigmatized.