The American Interest
Analysis by Walter Russell Mead & Staff
Obama's ACA "Fix" Stuns DC, Nation

obamacare

The bad consequences of the President’s ACA “fix” just keep getting clearer. The Christian Science Monitor has a good summary of the stunned reactions from industry experts to Obama’s announcement that insurance companies will now be able to extend pre-existing plans for another year, if they choose to do so:

In blue Washington State, where, unlike HealthCare.gov, the state-run exchange has rolled out with great success, the insurance commissioner rebuffed the president and announced his state would not be reissuing old policies.

“I do not believe his proposal is a good deal for the state of Washington,” Mike Kreidler, the commissioner, said in a statement. “In the interest of keeping the consumer protections we have enacted and ensuring that we keep health insurance costs down for all consumers, we are staying the course. We will not be allowing insurance companies to extend their policies. I believe this is in the best interest of the health insurance market in Washington.”

Insurance companies and commissioners aren’t the only ones getting an immense headache from this “fix.” In the White House also people are coming to grips with the huge mess created by the President’s desperate maneuver, and in the Beltway wonks are panicking. The American health and insurance system, badly flawed as it is, is as complex a web of interests and institutions as you will find. It can’t be uprooted and overturned by casual comments and presidential decrees—not without serious side effects.

This miscalculation is sadly entirely consistent with the long series of miscalculations this President has made about health care going back all the way to 2010. Obama is in trouble because he did not fully understand the interplay of forces in the American health care system, and is trying to reform it via a clumsy set of fixes, off-sets, mandates and subsidies. Imposing a new and even less well-considered decree is not going to end his troubles.

Published on November 16, 2013 2:00 pm
  • Corlyss

    “This miscalculation is sadly entirely consistent with the long series of miscalculations this President has made about . . . . ” everything in his job description. His woeful lack of experience for the job and his screwed up Communist indoctrination at an early age combined with his brainless advisors like Val and ‘Chelle and Cass Sunstein (of Nudge fame) simply compound the disaster. Repeatedly we are treated to strategically catastrophic policies and tactically convenient fixes whose aims are nothing more than promoting Democrats and destroying Republicans. The man is monster straight out of M.R. James or H. P. Lovecraft.

    ObamaCare’s Nonfix
    by Joe Rago, WSJ

    Americans still can’t keep their health plans, but Democrats get political cover.

    Nov. 14, 2013 7:32 p.m. ET

    You know the politics of ObamaCare is bad when even President Obama is forced to concede that the rollout is a bloody mess. If only the new “administrative fix” he announced on Thursday did more to help the consumers who are losing their coverage than it does to help Democrats protect their political future.

    In a major political reversal, the President announced at a surprise press conference that he is suspending the regulations that he now admits are the reason that millions of health insurance plans have been terminated. Only days ago he was saying these were “substandard plans” sold by “bad-apple insurers.” Some of us have been warning for years about the coming insurance market destruction, but Mr. Obama went ahead anyway even though millions of middle-class folks preferred their coverage to ObamaCare.

    Now these mass cancellations are proving to be unpopular, and Democrats are panicking, so Mr. Obama is offering a temporary stay of execution. He is instructing his health regulators to suspend eight complicated rules that all insurance plans had to meet and had caused the market implosion.

    There is less reprieve here than Mr. Obama claims. It’s hard to un-cancel insurance. The rules Mr. Obama is repudiating were written in 2010, and insurers have been adapting to them for years. They will now have to scramble to revive the policies they can while throwing all of their actuarial assumptions out the window.

    The faux reprieve also lasts for only one year and applies only to anyone who was covered in 2013. The insurers are essentially being asked to agree to accept losses on behalf of a rump group of policy holders in a legacy business that would then turn into a pumpkin in 2015.

    The burden will also now fall on state insurance commissioners to decide if they want to try to reapprove old plans, or something similar to the outlawed products. But even the insurers that want to exercise this option will need to resuscitate plans in a mere six weeks. The first they heard about the President’s “fix” was at the press conference.

    Standing up new rates and benefits will be a major logistical undertaking, and at best only a small fraction of the dropped policies will return, mostly in Republican-led states. Liberal insurance commissioners are already saying they are going to stay the ObamaCare course.

    Such regulatory rewriting is also probably illegal. The Administration claims it has “enforcement discretion” to suspend the regulations. But like the employer mandate Mr. Obama also delayed for a year, their hard start-dates are defined in the statute—January 1, 2014. The black-letter law of the Affordable Care Act does not say the rules apply whenever they are politically convenient.

    The President’s regulatory rewrite looks all the more cynical because it was rolled out a day before a House vote on legislation that would do much more to solve the cancellation problem. Republican Fred Upton’s bill would allow insurers to sell policies to new customers as well as the old. This would increase the odds that the industry would want to sell profitable policies outside of ObamaCare’s exchanges.

    But Mr. Obama can’t tolerate that because it would begin to re-establish a viable private insurance market with more consumer choices that competes with his exchanges. Mr. Obama knows that those exchanges can’t succeed if people are allowed to choose a lower-cost, higher-quality alternative.

    That’s why even as he feigned concern for the cancellations he also went out of his way on Thursday to trivialize the anxiety and disruption he has caused. “You have an individual market that accounts for about 5% of the population,” Mr. Obama noted, as if 16 million Americans are a trifle. But in the liberal calculus of ObamaCare, these people are the necessary collateral damage of making entitlement history.

    The real justification for Thursday’s “fix” is defensive politics. Democrats needed some political cover against the daily headlines about cancelled policies, and even Bill Clinton was telling Mr. Obama to do something. His faux reprieve will now let Democrats shift the blame for cancellations to insurance companies, though all they have been doing is following the Administration’s orders.

    All of which fits the familiar ObamaCare script. Democrats jammed the law through Congress on a partisan vote and against public opinion. At every step since, Mr. Obama has refused to compromise or change the law. And even with this tactical retreat, he is merely trying to find a way to relieve the political pressure long enough to avoid having to work with Republicans in Congress on a larger improvement.

    Mr. Obama’s gamble is that he and the Democrats can dissemble and shift responsibility long enough to muscle through the “transition” while the website gets fixed and more people can sign up for subsidies. But none of this will change the fundamental ObamaCare problem that Democrats are trying to remake a sixth of the U.S. economy by government fiat.

    They are trying to impose on Americans insurance they don’t want, at prices they don’t want to pay, while limiting their choices of doctors and hospitals. This is the reality of modern liberal government.

  • Boritz

    If you do much reading about the ACA and the ACA ‘fix’ you encounter numerous references to ‘allow’ such as ‘…would allow….will allow…. to keep…..allow for another year…..’
    American life is now an exercise in what the people are allowed. Nice.

    • Andrew Allison

      Not nice, terrifying!

    • Jim__L

      We need to re-introduce freedom into this too-heavily regulated market. To make that happen, the GOP needs to reform (or eliminate) ObamaCare according to the following two principles:

      The Affordable Care Act should be Affordable, above all, and

      You should be able to buy the health insurance that’s right for you.

      Exchanges shouldn’t just make available the insurance that’s good for Val and Kathleen — this has to be the insurance that’s good for Jacob and Joshua as well.

      If you want a high-deductible plan, there should be no regulation against that. If you want a plan that doesn’t cover acupuncture because you think it’s quackery, there should be no law against that. If you want a plan that doesn’t cover prostate cancer because you’re a woman and it doesn’t apply to you, there should be no law against that. If you want a plan that doesn’t cover bariatric surgery because you think it causes more health problems than it solves, there should be no law against that.

      This will actually put the Affordable into the Affordable Care Act. Subsidies won’t do the trick, because the federal government is too broke — subsidies aren’t Affordable.

      • Jim__L

        Additionally — considering the fact that Millenials have on average 10x less wealth than Boomers, there shouldn’t be any law against policies tailored for Millenials that are 10x cheaper.

        One thing that the GOP could do right now is to set up one or more competing exchanges. These exchanges would offer the sort of policies I’ve outlined in these two posts, and they could be designed and maintained by the sort of web companies that my own insurance providers use, websites that are pretty solid.

        The GOP needs to provide a viable alternative to Obama’s cluster-disaster, and this is a good opportunity to do so.

        • https://www.facebook.com/ritchietheriveter Ritchie The Riveter

          Jim, your approach only treats the symptoms of the underlying disease.

          There is only one good alternative, when you get down to it.

          Repeal the dang thing and tell the American people the truth: it is OUR job to solve the problems of health care, as individuals and neighbors, consumers and providers … for the Federal government is structurally incapable of doing so from the top down. Its job is instead to protect the ability of, and maintain the infrastructure for, US to exercise our personal initiative to solve these problems.

          Anything other than this, perpetuates the lies that got us into this mess. Had health care been approached from this viewpoint, we would have had workable solutions before now. We can still have them … IF we quit relying upon our “leaders” to solve the problems FOR us.

  • Anthony

    “Creating a base of coverage to protect from disaster, to ensure that basics of insurance routinely made available to those of us in groups are there for those not in groups, is not some horror of big government run rampant but a rational and humane way to create basic national standards.” No matter what side you come down on, health care conversation generated by ACA focuses the attention on our complex system and its costs.

    • Andrew Allison

      Well yes, of course, but what should we as a nation be doing about it? Creating a base of coverage to protect from disaster requires a definition of disaster. Are the results of tobacco, alcohol or drug abuse disasters. STD’s? Etc. Surely the issue is what do we, as a society, feel that we owe society.

      As to your closing sentence, the problem is exactly the complexity of the system. At the risk of being boring, it appears to me that we can’t afford both humanity and complexity: if we (as a nation) want to provide basic healthcare for all, the answer is obvious: Medicare for all. Note the “if”. The corollary is that there’s no way that we can afford to maintain a private insurance industry for basic care for all. It’s that simple.
      (Well, maybe not quite that simple, but the problem is demographics. Our aging population and the horrendous costs associated with its healthcare mean that we can’t afford to support the insurance industry)

      • Jeff Jones

        Nor can we afford single payer at the same time we’re operating with wide open borders and nearly half the country not paying income tax.

        The proponents of single payer need only come back when those things are solved. I, for one, want no system where I will have to spring for non-citizens to have the same care I work my a$$ off for.

        It’ll just create more debt, because they’ll hand out freebies like candy for votes.

        • Andrew Allison

          Single payer systems cover only legal residents.

          • Ruth

            Until the next presidential fiat

          • ThomasD

            And we have a functional immigration system that identifies who is legal and who is illegal…

            (As if.)

          • Andrew Allison

            Agreed, but isn’t it at least conceivable that having to provide proof of legal residency, or at least that they are paying for insurance in order to obtain Medicare might help with that problem? Maybe the answer is to devolve power to the States. The economies of the South-Western States, for example, are heavily dependent upon the labor of illegal immigrants. Is it really moral to deny the latter benefits? Is is moral to require all taxpayers to pay for those benefits? I think that these are questions which are best answered by the States. California, for example recently enabled illegals to obtain drivers licenses for the simple reason that it’s a requirement for auto insurance. Permitting non-citizens to vote, I hasten to add, is off-limits.

          • Jeff Jones

            > Agreed, but isn’t it at least conceivable that having to provide proof of legal residency, or at least that they are paying for insurance in order to obtain Medicare might help with that problem?

            Here is where the all time low trust in government comes into play. I have about as much confidence that Democrats will enforce what you propose as I have in Donkey pi$$ solving the world’s energy problems.

      • koblog

        Trusting in Medicare will:
        1) bankrupt us
        2) get you killed

  • Pete

    Barack Hussian Obama is being exposed for the incompemntent clown he is.

  • Matt B

    As I said in my previous post on a related article (which inexplicably disappeared – have I run afoul of some automatic censor at VM?), this is the kind of resolute, stick-to-your-guns leadership we’ve come to expect from Mr. Obama.
    Has there been a more gutless president in American history? One year since he he proclaimed his pride in the label “Obamacare”, he’s trying to convince the country that none of this was his idea.
    And this is the man who has decided he is uniquely qualified to negotiate with the Iranians. Neville Chamberlain had more backbone than this putz.

  • Bobothree

    Obama’s actions are fully consistent with those one would take if one were trying to create the demand for single payor socialized healthcare but didn’t yet have the votes to get it through congress.

    • m00tpoint

      Only if “one” is an idiot. Indefensible incompetence at regulating insurance doesn’t inspire people’s confidence that government should run the whole system.

      • https://www.facebook.com/ritchietheriveter Ritchie The Riveter

        Never under-estimate the power of profit-phobia to blind one to government incompetence.

  • ljgude

    At one level money functions like energy and we are talking about 1/6 of the US economy or something north of 2 trillion dollars. The ACA has disrupted that system enough that emergency measures (well kludges, really) are being attempted to stave off serious consequences. If I were advising the president I would warn him that he may have a runaway schlimazel on his hands.

    • feastfirst

      You mean he pee’d in the hasenpheffer?

  • BobSykes

    By what authority does Obama unilaterally amend existing law? He has precipitated a constitutional crisis, but Congress seems to be willing to let him do whatever he wants in order to distance itself from the mess.

    The bigger issue is the ever-growing irrelevance of Congress as a legislative body. As far back as T. Roosevelt one of the goals of the progressive movement was to remove legislative power from Congress and transfer it to the bureaucracy. This goal is largely achieved. Almost all effective law is written by bureaucrats under the guise of writing regulations to implement laws.

    Also, Congress has allowed Presidents to usurp its war making power, and for almost a century Presidents have conducted wars on their own say-so.

  • Ray Hannigan

    Obama should simply have issued a presidential decree mandating that the word “period” shall henceforth and retroactively mean “sort of.” This would have been more effective in eliminating his political problem since his oft cited promise will now read: “If you want to keep your current health plan, you can keep your current health plan. Sort of.”

    • koblog

      Humerous, but incorrect. DemBamaCare in no way allows anyone to keep their plans. Period. Even if you redefined “period” to mean “sort of” they still lose their plans and are forced into a different, more expensive, less effective plan.

      • Ray Hannigan

        Yeah, I was wavering between “sort of” and “hopefully” — since Lord O is so full of hope — or even “if you close one eye and kind of look at it sideways.” But it was most definitley an “inaccurate promise” by his lordship, as you point out.

  • LouAnnWatson

    the media has a allowed this cretin to pontificate about everything without challenge for 6 years…why would he behave any differently? his lies are on such a grand scale and based upon his own inflated opinion of himself. lame duck now on fire

  • koblog

    “…what we’re also discovering is that insurance is complicated to buy.”

    — Obama, Nov 14, 2013, Imperial Decree Announcement

    The most brilliant President EVAH, the smartest man in any room, the Editor of the Harvard Law Review, the author of two autobiographies, the Nobel Prize Winner, the Chicago Constitutional Law Lecturer, he who would lower sea levels and warm or cool the earth as necessary, Mr. FantasticPantsCrease — but a guy who has never run anything in his life — is just discovering that selling insurance is complicated.

    Hint to little Barry: so is selling travel on Kayak or mouse pads on Amazon. You and your clown posse couldn’t do that well either! Incompetence on a stick.

  • ExPat_in_Krakow

    “If you like your cake, you can keep your cake, period.” (Thank you, Mark Steyn.)

  • robin hood in reverse

    It is a vast left wing conspiracy but humor is tragedy plus time and distance. The solution is simple.

    Second place is the first place loser but a peek is worth ten free market estimators. Reverse auction bid results can be turned into a low bid equation with a variance that looks something like this:

    Low Bid = (95% – 1% times the number of bidders) times the average bid

    Companies play free market basketball on a diving board because a company can’t maximize their profits if the company hits more often than the dummy. A 5% drop in price is usually enough to jump to 15% higher overall hit rate. Government is a slam dunking monopoly that has proven to be 20% more expense than the free market. Socialism, Fascism, Marxism, Statism, etc. is four scarcity leaps backwards and corresponds with Carman’s and Kenneth’s findings.

    A Harvard Professor and previous President of IMF wrote a book called “This Time is Different” . Carman Reinhart and Kenneth Rogoff studied fiscal crisis in 65 countries over 500 years. 1% GDP reduction in taxes increases private sector 3% in GDP. 1% GDP increase in Government Spending deceases private sector 1.2% GDP with a -0.2% change in GDP. Obviously a great deal of government debt can put a country at significant interest rate risk.

    If we go from a 38% tax rate to 20% tax rate with a balanced budget the private sector will grow from $11 Trillion to over $16 Trillion. Tax revenue won’t decrease 48%. Tax revenue will only decrease 24%. Half of Washington won’t have to go on a permanent vacation, only one out four. Employment will increase 25% so displaced bureaucrats will have lots of new opportunities to contribute to society.

    If we get down to a balanced 10%, $20 Trillion – more than a 60% increase in jobs if half of Washington goes on a permanent vacation, each dollar earned buys ($0.90/$0.62) 45% more, and hard America becomes a soft warm place.

    John Nash’s beautiful mind recognized the importance of interactions in which the results of one person’s choices depend not only on his own behavior but also on the choices of another person. There is a related game called Ultimatum. You and your partner split $10. Less than $3 deals disgust and anger. The dealer has a pulpit.

    The Laffer effect is no joke. Charles Adams, an international tax attorney and historian, wrote books on taxes. Once tax rates rise above the disgust and anger point, the expected extra tax revenue never shows up. A flat tax system is part of Constitution. Everyone has to pay taxes to keep as many people’s tax rate below the disgust and anger tax rate or make sure an overwhelming majority is disgusted with high taxes.

    Carman, Kenneth, John, and yours truly believes dealers can routinely get an $8 to $10 deal by getting his or her partner work for a $3 to $5 deal. With each $3 to $5 of earned success the partner becomes a dealer that turns the $3 to $5 deal into $6 to $8 of earned success. Turning $10 into $13 is a win-win systemic solution that creates good people, great outcomes, and durable trust but when it rains, rainmakers show up and turn everything to dirt.

    There will always be zero-sum losers who just accept less than $3 deals and think the key to success is being an abusive dealer. A $7-$3 deal isn’t better than a $6-$4 deal because $7-$3 deals turn into $6-$2, $5-$1, and $4-two bit deals. Rainmakers turn everything to dirt because they feel entitled to $7up and someone else has to pay for the diet $7up.

    Obama and company’s overall 30% to 40% tax and spend policies have systemically increased the public sector by 25% and eliminated 10 million private sector jobs. For the first 150 years of our existence, we were 10% tax and spend country. Present day Switzerland, Russia, and much of Eastern Europe are 15% tax and spend countries.

    I can’t taste the difference between Wilson and Barack vegetable oil. The Federal Reserve was created on Jekyll Island and Obama is the Prince of Hyde Park. A famous Central Banker said something like “If I control the money supply, I care not for your laws”. If debt is money that can only be paid off with more money …. someone ends up owning everything and everybody.

    Our founding fathers promoted the species (Gold and Silver) because a stable money supply is key to creating an innovative middle class and responsive Government. When things are set up right, the wealth disparity between rich and poor is only four fold and a society’s standard of living doubles every decade.

  • mikekelley10

    I like this tweet from Iowahawk:

    David Burge ‏@iowahawkblog

    How did us ignorant hillbilly Teatards guess that Obamacare would be a disaster? Jes’ lucky I reckon.

  • Freddie Sykes

    Republicans must remind the public of the ACA / Obamacare whenever any “comprehensive” legislation is called for.

    We had an imperfect system that was appreciated by a super majority of the people. Of course, the progressive solution was to totally redesign that working system. They failed.

    The Republican response to any function, albeit imperfect / human, system is to address perceived faults in tightly focused bills that address one or two problems at a time.

  • Herb Suhl

    Norway, Sweden, Minnesota, Washington — Socialism must only work for coffee drinkers with Scandinavian DNA?

  • teapartydoc

    Things are getting real interesting. The liberals I’m surrounded by on a daily basis are not very conversant and, to be blunt, downright sullen. Especially since this was supposed to “save healthcare” somehow. One reason why I like reading this blog is because WRM seems to understand the weaknesses of the Blue Model approach to things. I’ve understood this since I was able to stand up–for some reason I’ve always hated big organizations, having been exposed to them since I was put into nursery school (daycare) at age three, and later exposure to the wonders of left-wing policy living in Southern Africa, and witnessing the destruction wrought by the abstraction of democracy applied to people who were not ready for it.
    I have worked in a variety of positions in health care, beginning in the support service aspect of hospitals and seen how public and private institutions run, including the VA. I have been in private solo practice, small group, and now massive ACO group practice affiliated with a megauniversity and it’s affiliated hospitals and clinics.
    I have never witnessed the level of outright fear and depression among the people I work with that I do now. Suddenly, otherwise cheerful, optimistic people who have been confident of their future security and that of the institutions they work for realize that they put their faith in something and someone they now realize are houses of cards being overseen by someone with the mind of a child who thinks he has special powers.
    Things are going to get a lot more interesting. I’m just glad I won’t have to be a part of it that much longer.

  • bowman

    The statute of limitations on companies breaking the law with Obama’s blessing outlasts Obama’s remaining term in office. Even if Obama warps the fabric of the legal system to allow the companies to break the law, There’s no way for Obama to bind the Justice Department of the next president to keep THEM from prosecuting the insurance companies.

    So even if Obama is telling the truth about what he will do, that doesn’t provide enough legal protections for the insurance companies to be safe in violating the law based on Obama’s urging them to break the law and his promise not to prosecute them.

    And seeing how willing the administration has been to use the government to go after Obama’s political enemies, if the executives of one of those insurance companies were to take the president at his word and break the law then later give large campaign contributions to a Republican, how long to do you think it would be until some government agency prosecuted them for breaking the law?