The Transitional Gains Trap and Obamacare
In my prior post on the Transitional Gains Trap, I discussed how a government program can provide special benefits or rents to a group initially, but then over time not provide any rents to anyone. Even though the program may be inefficient and undesirable, the existing beneficiaries may fight hard to keep it since they will be harmed by its elimination, even thought they are not receiving any rents from it.
If one favors government programs, then transitional gains are a way of making them popular. Social Security and Medicare transferred money from future generations to existing beneficiaries, which is part of the reason why they were popular.
Many people — both advocates and critics of Obamacare — believe that it will soon become popular in the way that Social Security and Medicare have. But if those programs became popular because of transitional gains, then Obamacare will only become popular if it has such gains as well.
But does it? I am not as familiar with the program as some, but it is not obvious to me what the significant transitional gains are. And if the transitional gains are absent or limited or not conferred on politically important groups, then Obamacare may remain unpopular.
I would be interested in a discussion of the transitional gains – especially redistributions from future generations – that might exist in Obamacare, if anyone knows of one.