OP-ED

Preparing for 2014: Questions for Obamacare’s Opponents

As a confident critic of ObamaCare from its genesis, I’m impressed that the law remains unpopular and that the American people appear ready to scrap it and start again. Last March, a senior bureaucrat in charge of rolling out ObamaCare fretted about a “third-world experience“.

ObamaCare’s opponents have managed to keep Republican politicians unified against the law. The only tactical question is whether the GOP can credibly threaten to “shut down the government” during the forthcoming debate over the Continuing Resolution (the legislation that funds the government in the absence of a budget).

It’s been a good three and a half years for ObamaCare’s opponents. Nevertheless, outside the political realm, businesses and investors are behaving as if ObamaCare is hardened concrete. Although ObamaCare’s opponents have overwhelmingly succeeded in convincing society of the law’s drawbacks, it is not at all clear that society is ready to accept a more free-market alternative reform.

Indeed, some of the approaches used against ObamaCare might have unintended consequences that will appear in 2014, the law’s first fully operational year, which would make repealing and replacing ObamaCare extremely difficult.

Here are a few friendly questions for ObamaCare’s opponents:

First: We’ve spend a lot of effort convincing people that state-based health-insurance exchanges will be a disaster, and succeeded in blocking their establishment in many states. To be sure, they are an unnecessary bureaucracy, but do we really believe that enrolling in the New York Health Benefits Exchange or Cover California will be the worst thing since unsliced bread? It won’t be like shopping on Amazon.com, but I’ll bet it will be easier than doing business with the DMV. The New York Times recently reported on exchange outreach efforts in Colorado (a pro-ObamaCare state) and Missouri (an anti-ObamaCare state). The take-away: In Colorado, it’s almost impossible for people to avoid learning how to enroll in the exchange, while in Missouri it’s been extremely difficult to get information. Most people will not be interested in how much it cost taxpayers to set up and operate the exchanges. Do we really believe that when ordinary Missourians learn from their Coloradan friends that their state government has helped them get federal tax credits for health insurance, that they will reward Show-Me state politicians for trying to block them?


Second: We’ve believed that if a state declined to establish an exchange, the U.S. Department of Health and Human Services would not be ready to operate one in 2014. That might have been credible until recently, when it became clear that the federal exchanges will be run by for-profit businesses, including eHealthinsurance.com. eHealth, Inc.’s stock jumped 28 percent on announcement of the federal contract. eHealth, Inc. has operated for 13 years, was listed on NASDAQ in 2006, and is consistently profitable with an operating margin around 9 percent. Do we really believe that companies like eHealth.com will fail to enroll as many exchange beneficiaries as possible? Do we really believe that if state politicians try to hinder residents from applying for federal tax credits through eHealthinsurance.com’s portal, they will be rewarded at the next election?

Third: We’ve consistently emphasized that the young will suffer dramatically higher premiums under ObamaCare, because premiums cannot vary much by age. According to an analysis by actuaries at Milliman, premiums for twenty-somethings will increase by 9 percent. However, premiums for every other age group will drop. Forty-somethings will enjoy a 17 percent reduction in premiums. Do we really think that the politicians who passed this law did not anticipate this? In the 2010 election, 17 percent of eligible voters aged 21 through 24 voted. 41 percent of those aged 25 through 34 voted. But 81 percent of those aged 45 through 64 voted. Can we not see that the limits on age-adjustment, which will cause “rate shock” for young people, actually benefit the politicians who imposed them?

Fourth: We’ve consistently exposed the Administration’s inaccurate claim that “if you like the plan you have, you can keep it”. We’ve anticipated that many businesses will drop coverage and throw their employees into the exchanges. In doing so, we’ve inferred that employer-based coverage is a good thing. Haven’t we struggled for years to persuade people to understand that their employers do not actually pay for coverage, but just control and limit our choices? Haven’t we struggled for politicians to take up tax reform that allows individuals to choose our own health insurance? How will we pivot back to this position after four years of attacking ObamaCare for achieving exactly that goal (for some of the people)? How will we convince risk-averse politicians to embrace a policy of individual tax credits, when we’ve been telling people that they should cling to their employer-based benefits?

ObamaCare is a bad law, and I recognize the tremendous efforts of so many to repeal and replace it. Nevertheless, our tactics have introduced risks that we will have to manage carefully as ObamaCare rolls out in 2014.

John R. Graham is Director of Health Care Studies at the Pacific Research Institute, & Senior Fellow at the National Center for Policy Analysis, where this post originally appeared.

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25 replies »

  1. Please explain to me the difference between vouchers and the exchange subsidies (other than the exchange subsidies are illegal in federally established exchanges).

  2. “You don’t morally and rationally get to opt out until you hit your 50′s or 60′s and then show up with a litany of Chronic dx’s wanting insurance at 20-somethings’ premiums.”

    This is exactly what the exchanges in The Act allow. If you support the exchanges, then you support allowing folks to opt out (with small tax/penalty) then show up in their 50’s with a litany of chronic dx’s and pay 20 something rates (maybe 2 times 20 something rates). This comment of yours indicates you believe the exchanges are morally and rationally wrong. I agree.

  3. The insurance coverage I am speaking of is employer provided, not individual coverage. What an employer offers to their employees may not be all that great. I have been a professional employee for years, but not union. So the health insurance options were what the employer decided to offer, not what was negotiated. I had no choice except the 2-4 options the employer chose. Unless I wanted to pay 3-4 times as much on the “open” market. The “Obamacare” insurance pools certainly can’t be worse than what most employers have offered me where ever I have worked.

  4. Maybe you should pay more attention, Chris.

    “On March 21, the House passed by a vote of 221 to 207 its FY 2014 Budget Resolution, H. Con. Res. 25. On March 23, the Senate passed by a vote of 50 to 49 its FY 2014 Budget Resolution, S. Con. Res. 8.”

    Since then, Republicans have been blocking a House/Senate conference to reconcile the two budgets.

  5. Our President’s goal for healthcare reform is to “bend the cost curve,” an uninspiring and near meaningless goal. The US healthcare industry will exceed $3 trillion (20% of GDP) this year. Numerous studies have acknowledged that less than half of that amount is actual healthcare. In fact, most studies agree there is at least $1 trillion in waste, inefficiency and fraud – why isn’t that the target? Nothing in the ACA does anything to eliminate that waste and inefficiency. Nothing.

    By allowing the “industry” the opportunity to write this Law, the participants simply enriched and protected themselves. The result will be higher costs and additional taxes – not affordable healthcare.

    Our current healthcare industry is the most expensive in the world, yet we rank 38th in the world. Soon we will pass 20% of GDP and will become wholly unsustainable.

    It concerns me that so many people (for and against) believe the government will reform healthcare – what have they reformed before? Energy? Education? Agriculture? Anything? It’s delusional to believe that the ACA will do anything more than raise revenues for the insurance industry and our government – that’s why it will fail. It shouldn’t be a surprise.

    Unless and until someone presents a real solution, one that saves $1 trillion and delivers more healthcare, it will not be fixed. This conversation is a complete waste of time because there is no point in arguing a Law that only makes the situation worse. The GOP has no plan other than “status quo.” But, there is hope – look for a solution in the coming year as this latest government reform (written by industry participants) derails without ever making a real difference. America can have a fair and equitable healthcare system if it is designed that way. Changing a few rules and mandating insurance coverage does not deliver more or even better healthcare, it just creates a bigger problem.

    Solutioneur@gmail.com

  6. Mostly because the “individual market” has been really, really bad.

    Employers and especially corporations can negotiate with a LOT more power than a “single” individual can (as they have more buying power and a larger “pool” of “customers).

    If the employer tax advantages were changed to individual tax credits and deductions the only way people are likely to get “good” health insurance at rates that don’t suck is to form something like a union to buy health coverage.

  7. Peter says that the new co pays and deductibles will be excruciating.

    Then Chris says that small group premiums will go up because deductibles are being halved.

    This would imply that deductibles and co pays are excruciating right now.

    The awful income cliffs will indeed be a big problem. In the long run, Americans will be motivated to show less taxable income. This will reduce income tax revenues, which in turn reduces the funds available for social programs. Shades of Greece!

    If subsidies are going to be hard to apply for, then a lot of people will delay signing up on the Exchanges. We could have a bulge in the number of uninsureds for 6 months to a year,

  8. “2. The natural resistance of persons who are in fact financially harmed by the ACA.”

    This is an area where Repugs CAN acually help improve the law rather than try to kill all of it.

    “People making over $250,000 are harmed.”

    Do you really think that income bracket has many uninsured – if any?

    Those who will be hurt include:

    Those who will experience the off-the-cliff income levels that will deny subsidies.

    Those who have to turn down raises because that will negate their subsidy.

    Those with one spouse employer-covered and one not. The other spouse will be forced to take the employer coverage no matter how expensive.

    The co-pays and deductibles will be excruciating.

    Cynthia is right – ” Americans are now required to pay tribute to terminally-greedy owners of the insurance industry.”

  9. “and when they call the Navigators with 72 hours of traing they’ll wait on hold for 30 minutes.”
    __

    Yeah, that’s rich. I think in California they’re budgeting around $50 a signup, using part-time “navigators.”

    A Cluster[bleep] draws nigh. The viability future of the ACA hinges on HIX success.

    Pass the popcorn.

  10. I knew someone would take the bait.

    “not so much on its merits, but on its inability to be enacted because all the “not you people” will never vote for it.”

    BS- What have the right-wing think tank people proposed?

    I know: Vouchers.

    Now, THERE’S a “conservative” idea. Giving tax money to grandma so she can go on the private market and buy insurance no one would rationally want to sell her, given her actuarial reality in later life.

    I’d like to know at what point redistributing tax money to “needy” people became a Conservative notion? I though that was a Leftie thing.

  11. You’re too optimistic:
    1. Individual rates for most people will double. Subsidies will not help enough people above 300% FPL to offset the rate shock.
    2. The argument that “you’re getting better benefits” won’t matter to 95% of the people who go to the doctor once a year.
    3. On top of rate shock, most people with individual coverage today will A) lose their current plan and B) lose their doctor.
    4. Small group rates are going up in addition because the deductibles are halved.
    5. It will take an hour for most people to apply for a subsidy, which they won’t do online and when they call the Navigators with 72 hours of traing they’ll wait on hold for 30 minutes.
    6. The cost of this legislation has already exploded and we haven’t doled out a single subsidy yet. If that doesn’t fire up the TEA Party crowd, I’ll be amazed.

    As liberals, all we can hope for is blame is shifted to the insurers and it speeds the path toward single payer.

  12. “you people” lol

    Not that I consider myself part of the “you people” but I find it interesting how when one of the “you people” does put some idea forward it is criticized, not so much on its merits, but on its inability to be enacted because all the “not you people” will never vote for it. So the definition of “credible alternative” really is “something we will vote for!” Another big lol.

  13. The opposition to the ACA has two main sources I think:

    1. The fear of creating more dependence on government.

    If employers do push their employees onto the exchanges en masse, we will have millions more people dependent on government subsidies. A 50 year old taxpayer who suddenly gets a $9000 subsidy for family health insurance may never vote for a real tax-cutter again. He cannot afford to.

    2. The natural resistance of persons who are in fact financially harmed by the ACA.

    People making over $250,000 are harmed. Large retail and food service employers will be harmed. Insurance agents fear that they will be harmed.
    People who have high deductible policies and like them will be harmed.

    This in itself would be a minority that Obama could ignore. But the opponents rather cleverly seized on Medicare cuts to convince seniors that they might be harmed by the ACA. The evidence for that is rather shaky, but demagouging seniors is old hat in Washington. (The Dems did it to Newt Gingrich in the 1990’s.)

    If seniors lose their worry about the ACA, it might be over for the opponents.

  14. It’s indeed not “healthcare” reform. It’s byzantine insurance reform. With a pastiche of provider reimbursement incentives tossed in.

    I call it “AHIPcare.”

  15. Perhaps so. But did we really expect the young senator from Ilinois to institute universal care and eliminate the entire health care industry in one fell swoop? Even if he could? (He can’t.) He, and we, have to work within the system as it exists, unless we want to take an axe to it (a not altogether bad idea).

    So, Bobby Gladd’s question still stands, preferably for Mr. Graham to answer: What are the credible alternatives?

  16. Don’t think of ObamaCare as “health care.” Think of it as a protection racket.

    It’s another rent-extraction mechanism engineered by the FIRE — finance, insurance and real estate — sector, government-sponsored and government-enforced. Americans are now required to pay tribute to terminally-greedy owners of the insurance industry. Banksters: “Your money or your life.”

    Americans wanted the government to fix the health care system. So did the insurance industry. So they did. The fix is in.

  17. “ObamaCare is a bad law, and I recognize the tremendous efforts of so many to repeal and replace it.”
    __

    It’s a flawed law, but you people have put forth no credible alternatives.

  18. “Third: We’ve consistently emphasized that the young will suffer dramatically higher premiums under ObamaCare”
    __

    As they should. The actuarial risk envelope should be 60-70 years, not one. You don’t morally and rationally get to opt out until you hit your 50’s or 60’s and then show up with a litany of Chronic dx’s wanting insurance at 20-somethings’ premiums. PPACA proponents have largely failed to make this incontrovertibly clear.

  19. “The only tactical question is whether the GOP can credibly threaten to “shut down the government” during the forthcoming debate over the Continuing Resolution (the legislation that funds the government in the absence of a budget).”
    __

    If the “shut the government down” thing includes defaulting on the national debt (as the Tea Party nihilists are tactically insisting on), you have a clear violation of the Constitution that would clearly be the fault of Congress — notwithstanding the right wing spin to lay it off on the President, that HE will be “choosing” to let the government shut down.

    Here’s all you need to know about it, from the Constitution:

    ARTICLE I SECTION 8:
    The Congress shall have power to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States; but all duties, imposts and excises shall be uniform throughout the United States;

    To borrow money on the credit of the United States;

    To make all laws which shall be necessary and proper for carrying into execution the foregoing powers, and all other powers vested by this Constitution in the government of the United States, or in any department or officer thereof.

    AMENDMENT XIV SECTION 4:
    The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.

    SECTION 5.
    The Congress shall have power to enforce, by appropriate legislation, the provisions of this article.
    __

    That’s it. There’s nothing else pertaining to passing laws and funding the federal government.

    NOWHERE in the Constitution is the President authorized to [1] borrow money to run the nation and/or [2] repeal or “defund “his own law” (the Affordable Care Act). The authority to pass, amend, or repeal laws (and/or to borrow money or enact taxes to appropriate funds) is SOLELY the responsibility of Congress.

    Congress has the power to override any Presidential veto should it become necessary. Should Congress fail to uphold the national debt as required, those voting to let the government go into default and shut things down will be in explicit violation of their Oaths of office and the Constitution and should be removed from office.

  20. I have never understood why some think employer provided health insurance is a good thing. The last place I worked, the premiums paid by the employee doubled in cost one year for coverage with $1,000 deductible. Your one other choice was HMO and the cost for it also doubled. These were your only two “choices.” And this is a good thing, how? If you went with the HMO, you had to go to physicians signed up for that HMO – and if your previous doctor was not on the list, well, you had to choose a new doctor. If you doctor decided to not accept a particular insurance anymore, you had to change your doctor or pay out of pocket. All of the yelling about reducing “choices” has never made sense to me since you have never had any real choices in the first place.

  21. Would kudos be misplaced, Mr. Graham, were I to offer them for recognition of the ways in which ObamaCare might be a success? I feel as though you are simply strategizing about which parts of the plan will be most difficult to kill. If the health care legislation is truly “bad law,” as you say, I have to ask for whom it is bad, because it does not appear to be universally detrimental for all concerned.

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