Topic: Decline of the West
The failure of Obamacare: It’s a story that should figure prominently in media retrospectives of the soon-to-be-history Obama administration. But the media are too solicitous of the President’s legacy to shine the spotlight on this debacle. Anyhow, after her inevitable election Hillary Clinton will fix the Affordable Care Act. So that’s all right.
Except that she can’t fix it—no one can fix it. The assumptions, fiscal, political and sociological, that underpin the ACA consist of wishful thinking leavened by bad judgment. Let us count the ways in which Obamacare defies logic and reality.
There was, first, the assumption that the key component of Obamacare, the Web-based federal and state healthcare exchanges, would revolutionize the individual insurance market. Health insurance plans could be compared and purchased with a few mouse clicks. If Amazon can do it, the thinking went, then surely government can! But the federal exchange website’s launch was a costly fiasco that laid bare the utter incompetence of the federal bureaucracy. Many state exchanges, such as Maryland’s, crashed and burned as well, and for much the same reason. Thus early on we learned that the self-nominated smartest people in the room—Obama, his senior aides and advisors, bureaucrats and regulators, healthcare experts in and out of government—didn’t actually know what they were doing. And the blundering debut of the ACA was merely a harbinger of many more bad things to come.
Then there was the assumption that via law and regulation, the government could reconfigure the health insurance market, taking power out of the hands of greedy insurance companies and turning them into a kind of regulated public utility. Banished were such nefarious practices as denial of coverage due to preexisting conditions. In return the insurance companies were promised a captive market, for the individual mandate would force everybody to carry health insurance. Young, healthy people would purchase insurance on the exchanges, balancing the risk pool by paying premiums but not making heavy demands on service. It was believed that after two or three years the Obamacare exchanges would become profitable for insurance companies. In the meantime, the federal government proposed to cover their losses.
But all the components of this assumption proved false as well. Once denial of coverage due to preexisting conditions was eliminated, people discovered that they could game the system, buying insurance only when they got sick and dropping it again when they no longer needed healthcare. True, the individual mandate was supposed to prevent this from happening. But there is no less popular feature of Obamacare than the individual mandate and in practice the Obama Administration has not enforced it with vigor for fear of a public backlash. The fine that people are supposed to pay if they don’t get covered is easy to evade and only a fraction of the money that the government expected to rake in by this means is actually being collected. Thus the exchange risk pools consist of fewer and sicker people than the creators of Obamacare so blithely forecast. The premiums being collected do not even begin to cover the benefits being paid out and no turnaround is in sight. And Congress nixed the proposed insurance company bailout.
Insurance companies are coping with Obamacare’s faulty financial design in two ways: (1) increase premiums, deductibles and copays; (2) exit the exchanges. Aetna, having lost $400 million last year, recently chose the latter option. As for exchange customers, they face the prospect of escalating costs, less choice and declining quality. Yes, lower-income customers are subsidized by the government. But that merely puts taxpayers on the hook for the inevitable subsidy increases that will be necessary to keep pace with rising premiums. With Obamacare, everybody loses.
Of the rosy scenarios that bloomed in the early days of the ACA, none has proved more fanciful than the expectation that young people would get covered in droves. Pajama Boy would put down his cocoa and rush to his laptop for a visit to the exchange. The young love Obama, after all, so why wouldn’t they love Obamacare? Well, it turns out that the young’s adoration of Obama and their starry-eyed idealism stop well short of their wallets. Of the many dumb claims made on behalf of the ACA none seemed to me more fanciful than one pundit’s prediction that for young people, health insurance would become a kind of fashion accessory, something you had to have to be to be cool. Yes, that’s right, the sheer force of peer pressure would drive young people into the arms of Obamacare. But in reality—not so much. Paying a substantial amount of money for something they think they don’t really need looks to young people, as it would to anyone, like a bad deal. So no, they’re not signing up in droves. And the Obama Administration fears to use the big stick of the individual mandate to force them onto the exchanges.
Oh, and by the way: Six years after the ACA began operating, 11% of Americans still have no health insurance coverage.
How Hillary Clinton—or anyone—can possibly fix this mess is an excellent question with a simple answer: Obamacare is unfixable. And I haven’t even mentioned all its problems, e.g. the collapse of the nonprofit healthcare co-ops that were supposed to enhance choice and competition in the exchange markets. Clinton’s probable solution will be the public option, i.e. the federal government as a health insurance company. And from there it would be just a short step to that much-beloved nostrum of the Left, single-payer. To put it another way, Clinton’s probable solution would be a tacit admission that Obamacare’s a bust. Heck of a job, there, Barry…
Nor am I anticipating blue skies ahead. Given the demonstrated incompetence of our political/bureaucratic lords and masters, it’s very likely that any Obamacare replacement would be just as bad if not worse. The idea that Hillary Clinton, Bernie Sanders, Elizabeth Warren and the rest of them have some magic solution at their fingertips is simply too ludicrous for words. They haven’t got a clue, and their tinkering will simply make things worse. So take my advice, America: Don’t get sick. It’s your only defense against that ravening beast, healthcare reform.
