Three Years Later, Obamacare Faces Its Biggest Challenge

Three Years Later, Obamacare Faces Its Biggest Challenge
March 21, 2013

Benjamin Domenech

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

Today’s the three year anniversary of the final House vote on Obamacare. It is one ugly toddler, and its first steps are turning out to be disastrous. But is it here to stay? 

From the beginning, there were three ways to replace Obama’s signature domestic policy achievement. The first and best option was that you could replace it by winning an election – and it would have to be a definitive win, not just the White House but the Senate, too. Republicans utterly failed to do this. Second, you could count on the Supreme Court to gut its central support mechanism, the individual mandate. Thanks to John Roberts, this also failed, but not utterly, since the surprise 7-2 decision allowed states the freedom to block the Medicaid expansion, a massive entitlement increase which made up the bulk of the coverage increase under the program. But after both of these failures, the general chorus in the media is that the right has to give up on repealing Obamacare altogether – that it should accept it and work to implement it. See the recent complaints from Nita Lowey and others about the lack of funding for implementation, who will certainly cite this as the reason for a clumsy launch of the online systems this fall.

They seem to have forgotten about the third path: the right can replace Obamacare if it fails. And thus far, it gives every indication of failing. It has contributed to growing premium costs. Its budget impacts have been revised only in a negative direction (indeed, the only positives have been from fewer states implementing the Medicaid expansion). It has already been stripped of one mathematically and actuarially unsound entitlement. Most Republican governors have no interest in helping implement a program they believe to be ill-thought from its inception, and even Democrats don’t want their fingerprints at the state level on exchanges and Medicaid expansions their systems can’t handle. 

The tea leaves from the implementers are not optimistic at all. Consider the latest lines from Henry Chao at CMS: 

“Chao was frank about the stress and tension of the compressed time frame involved in setting up the exchanges. “We are under 200 days from open enrollment, and I’m pretty nervous,’’ he said. “I don’t know about you,” he added, to murmurs from the insurance industry audience. Members peppered Chao and Cohen with many questions about the format for the health care policies they will submit to HHS for approval so the plans can be marketed in the exchanges. Chao said the main objective is to get the exchanges up and running and signing up the uninsured. “The time for debating about the size of text on the screen or the color or is it a world-class user experience, that’s what we used to talk about two years ago,” he said. “Let’s just make sure it’s not a third-world experience.”

You’ve had three years and billions of dollars to work with, and you’re talking about being fearful of a “third-world experience” in the exchanges?

Part of the problem is how much the Obama administration counted on the states to do the implementation job. Instead, you have 33 states where the administration must run the insurance exchanges in whole or in part. And this extends to Medicaid expansion as well: the primary motivation for the Arkansas compromise endorsed by HHS, for instance, was not just the coverage expansion – it was that Arkansas’ own health department staff, in a Democratic administration, said that they couldn’t handle the sheer bureaucratic lift of adding a quarter of a million people to a program already rife with problems. Laughably, today Bloomberg’s editors came out today against the Arkansas approach to Medicaid reform – because they apparently believe: “Medicaid is efficient, delivering a high standard of care at rock-bottom cost.” The divide between the national conversation and those at the state level is absurd on this score, and it’s one reason why the amount of balking at “free money” surprised so many people who don’t spend much time working with legislators.

So implementation is going to get messy, and in ways that will impact people’s lives far more directly than the instability of the early days of Medicare Part D. We’re not just talking about getting you a drug, keep in mind – we’re talking about births, limbs, surgery, transplants, life and death. That’s one reason Democrats have already shown themselves willing to be far more critical post-2012. They think this is fine because the law appears secure. But it’s also still very unpopular, with Democratic support dropping substantially since the election. Removed from the conflict of electoral politics, Obamacare requires less ideological fealty, and pointing out its flaws becomes less an act of betrayal than an admission of the obvious.

The central problem here is that Obama promised too much, and Obamacare will deliver too little. The Repeal Coalition will continue to work to undermine it at every opportunity, and the nature of its passage means that there is no foreseeable avenue for the normal bipartisan fixes and tweaks to make a sweeping law work better. Instead, Republicans are likely to seize on every sad story as justification for dramatic changes – and in 2016, mount presidential campaigns designed to replace the system in whole or in part with plenty of material to use in their cause. It’s very possible, perhaps even likely, that moderate Democrats will run in 2014 promising to “fix Obamacare” in one sense or another.

Democrats privately admit they’re worried about implementation, but they are counting on government largesse to insulate them. They figure once the funding for Medicaid expansion and exchange subsidies goes out the door in 2014, they’ll be just fine. Perhaps. But Americans dislike dramatic shifts in experience and disruption – one reason Obama promised, ridiculously, that if you like your plan and doctor you can keep them – and Obamacare is nothing if not disruptive. Confidence that it will endure beyond 2016 in its current form requires believing that it will work, that it will become more popular, and that premium costs will not continue to rise. If that happens, it will endure. If not, within a few years, it will be reformed in part or replaced entirely.

Benjamin Domenech

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