ObamaCare on the Brink

ObamaCare on the Brink
July 12, 2013

Benjamin Domenech

Benjamin Domenech (bdomenech@heartland.org) is a senior fellow at The Heartland Institute. Domenech... (read full bio)

I hope you will forgive me for assuming the Obama administration was merely  bumping their normal Friday news dump forward to before the July 4th holiday, with their  announcement that they would effectively delay the employer mandate’s  implementation for a year. This was not the case – instead, the much bigger  news, and far more devastating to any remaining claims that Obamacare is being  properly implemented, was buried on Friday: the news that the most significant  entitlement increase since the Great Society will be operating on the honor  system.

Sarah Kliff and Sandhya Somashekhar report:  “The Obama administration announced Friday that it would significantly scale  back the health law’s requirements that new insurance marketplaces verify  consumers’ income and health insurance status. Instead, the federal government  will rely more heavily on consumers’ self-reported information until 2015, when  it plans to have stronger verification systems in place… After encountering  “legislative and operational barriers,” the federal government will not require  the District and the 16 states that are running their own marketplaces to verify  a consumer’s statement that they do not receive health insurance from their  employer… The federal government will, however, conduct an audit for the states  where it is managing the new insurance Web portal. The rule also scaled back  states’ responsibilities to double-check the income levels that consumers  report, which determine any tax subsidy they receive.” Note the fun quote from  Timothy Jost about how this is all totally cool.

Subsidize first,  ask questions later. “We have concluded that the…proposed rule is not feasible  for implementation for the first year of operations,” say the Centers for  Medicare and Medicaid Services. “The exchange may accept the applicant’s  attestation regarding enrollment in an eligible employer-sponsored plan…without  further verification, instead of following the procedure in  §155.320(d)(3)(iii).” And it’s not just there. The feds will also allow people  to gain means-tested subsidized coverage on the exchanges without having to…test  their means. “For income verification, for the first year of operations, we are  providing Exchanges with temporarily expanded discretion to accept an  attestation of projected annual household income without further  verification.”

So now we finally have the answer we’ve been waiting for about the failed  implementation of the massive data verification system they have been building  to serve the exchange model: never  mind. The government’s inability to build a system which interfaces with  states and takes the necessary steps to check for eligibility has led the Obama  administration to just throw in the towel for at least the first year. And this  serves their aims in multiple ways: first, it makes it much easier to sign as  many people up as possible to avoid rate shock, which is what they’re worried  about; second, it means the administration allies can target their sign-up  efforts on the 16 states where no verification is necessary; and third, it  creates as significant a subsidy constituency as possible prior to the problems  we’re likely to see during rollout.

Of course, the incentives it creates are completely warped. A modest lie  about your income can push people who would’ve been on Medicaid, most of whom  don’t file tax returns, to the far more generous exchange subsidies. The  resemblance to the “Liar’s Loans” approach to the housing market collapse is  uncanny. Never mind that CBO never scored an “honor system” version of  Obamacare, or that the authority for such a step is dubious at best. House  Republicans are certainly going to come back into town yelling to high heaven  that the delays of the employer mandate and any eligibility checks amounts to a  remarkable rejection of the rule of law. And many Democrats are quietly  admitting that this implementation effort has turned into a giant cluster. But I  see no incentive on the Obama administration’s part to go along with efforts to  delay the law for a year, even though such a step would be more responsible.

Here is where the technocrat’s mask slips, and the ideologue smiles through.  If the Obama team can get away with picking and choosing what parts get  implemented and when, flaunting the law to satisfy their electoral aims, why not  do it? Who cares if it explodes so many of the promises made during the law’s  passage? (Of course, don’t think too hard about what the press would be saying  if a Romney administration was undertaking similar steps.) Josh Kraushaar argues that Obama’s facing a crisis of competence. But who cares about competence so  long as the lights go on for the one major domestic policy of Obama’s tenure?  Give me implementation, or give me death.

[First Published by Real Clear Politics]

Benjamin Domenech

Benjamin Domenech (bdomenech@heartland.org) is a senior fellow at The Heartland Institute. Domenech... (read full bio)