There is clearly a significant direct financial cost created by going with a private health insurance exchange model to expand coverage instead of just automatically providing people with a government policy.
To begin with there was of course the one time cost of building the exchanges, which is a totally unnecessary bureaucratic middleman layer to help people select another middleman.
There was also the cost of getting people to sign on to the exchanges once built since they are not automatically enrolled. That included a large advertising campaign by the government, companies and non-profits.
In addition there is the expense of helping people figure out the exchanges once they log on. A significant number of navigators were hired to play this role. While setting up the exchanges is a one time cost, advertising them and helping people to use them will be a recurring cost.
Finally, there is the huge added expense which stems from private insurance being a significantly more expensive way of providing care than public insurance. The CBO determined the government run policy could provide similar coverage for noticeably less money.
The Policy Cost
Beyond the financial cost though there is a significant policy cost of going with an inherently less direct and more inefficient system. The law was passed in 2010 but took years to set up. President Obama was extremely happy to get 7 million people to use the exchanges this year but it is important to remember that is only a small fraction of the people who “should” be using them. Because getting people to actively sign up is inherently slow, less effective and less comprehensive it is assumed that it will take several years for enrollment to ramp up to its final goal of around four times the current number.
A simple system that automatically just gives the population government insurance could have increased coverage much sooner and by a greater amount. We could have exceeded the ACA’s final coverage goal a year ago.
If progressives want to make the case for government programs they need to prove they are good stewards of the purse. Cheering needlessly complicated and wasteful systems is not the way to do that.