Obama Admits That Obamacare is Unworkable

This president’s
announcement today
that the White House will allow health
insurance companies to continue selling plans that do not meet the
Affordable Care Act’s minimum criteria—millions of which have
already been subject to cancellation notices—is likely to be a
pivotal moment in the political fight over the 2010 health law.
It’s the moment in which President Obama, prodded by his own party,
is making his first, tacit admission that Obamacare is

It may not seem that way at first, because the most immediate
impact of the move is to stave off political pressure. The
announcement comes in response to growing urgings from
congressional Democrats to take action in response to health plan
cancellations that have occurred, and are expected to continue
occurring, as a result of Obamacare. Sen. Mary Landrieu (D-La.) and
five other Senate Democrats
this week that they backed a bill that would require
insurers to continue offering plans into 2014. A separate bill
offered by Rep. Fred Upton (R-Mich.) would have simply allowed
insurers to keep offering plans that do not meet Obamacare’s

Today’s announcements gives Democrats a response to complaints
about plan cancellations. The White House has heard their
complaints, they can say, and is doing something about it.

What the administration is really doing, though, is attempting
to shift the blame. Insurers have spent months if not years
preparing for the changes and requirements enacted under Obamacare.
They will have a difficult time turning on a dime and extending
cancelled policies.

But now when people lose their plans, the White House and its
Democratic allies in Congress will be able to argue that this isn’t
a result of their law. It’s the insurers fault. As one insurance
industry source
tells Buzzfeed
, “This doesn’t change anything other than force
insurers to be the political flack jackets for the administration.
So now when we don’t offer these policies the White House can say
it’s the insurers doing this and not being flexible.”

Yet this isn’t just a political fix. It’s also a major policy
concession—and a potentially serious problem for the law’s
operating scheme. Allowing healthy people to stay on their current
low-cost health plans will mean that the pool of people who get
insurance through Obamacare’s exchanges will be sicker and more
expensive. This year’s premiums were set on the expectation that
noncompliant plans would be cancelled, and that the cancellations,
in combination with the mandate to purchase coverage, would create
a market for plans sold in the exchanges.

So Obama is creating a long-term policy problem in order to
solve a short-term political problem. Even if this temporarily
reduces some of today’s political pressure, those long-term policy
problems will rebound to create additional political problems as
time goes by.
Premiums will rise
, and plans may withdraw from the market. At
the same time, insurers, who have been targeted by the
administration for blame and had their assurances about the state
of the law upended, will be less likely to cooperate with the
administration. They are already frustrated with the
administration, and this will hasten the break between them. The
opposition of insurers will add a new layer of opposition that the
administration must contend with in order to make the law—which is
built around the goal of making insurance coverage

The White House is making this fix unilaterally, as an
“administrative fix” without Congressional approval, and probably
without clear legal authority. Even ignoring legal questions, it’s
an admission that the health law cannot work as designed,
especially in light of the now-lengthy history of administrative
tweaks of dubious legality.

But more than that, the tweak highlights the fundamental tension
between the law’s politics and its policies.

The law was sold on the repeated presidential assurance that
anyone who wanted to keep his or her existing health plan could do
so. That promise was made so often and so forcefully because it was
necessary to build enough support to pass the law, and—as we’ve
seen in this week’s Democratic defections—to maintain sufficient
political support for the law after it passed. Administration
political aides
rejected more nuanced, accurate language
because they believed
it wouldn’t help sell the law.

But the result of keeping that promise is the destabilization of
the law’s fundamental policy scheme, which requires healthy people
on low-cost insurance to purchase more expansive, more expensive
coverage in order to balance out the costs of sicker

In other words, the law can’t work if it does live up to its
presidential promises. But it can’t maintain political support if
it doesn’t. The two are incompatible. Obama’s announcement today is
an implicit acknowledgment of that incompatibility—an admission not
only that the law doesn’t work, but that it can’t and won’t.

from Hit & Run http://reason.com/blog/2013/11/14/obama-admits-that-obamacare-is-unworkabl

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