When I wrote a few days ago about the “Continuing Obamacare Disaster,” I didn’t realize I was understating the problems with the President’s boondoggle scheme.
Now that the law’s been passed and implemented, the American people are finally finding out what’s in it (per Nancy Pelosi) and they’re not happy.
Indeed, they’re so unhappy that our overseers in Washington are scrambling to mitigate the political fallout.
The Wall Street Journal opined today on the meaning of President Obama’s announcement.
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. …Now these mass cancellations are proving to be unpopular, and Democrats are panicking, so Mr. Obama is offering a temporary stay of execution. …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.
But even that’s not the full story. Here’s more of the editorial.
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. …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.
Megan McArdle also thinks the White House is brazenly disregarding legal requirements.
The administration is not changing the rules, just declining to enforce them against the insurers. This is becoming a pattern: Obama’s position on the law seems to be that it’s his law, and therefore the law is whatever he and his appointees say it is. That’s dangerous for all sorts of reasons.
I’ll be less polite and say that the President is acting like America is a banana republic and he’s the tinpot dictator who can arbitrarily decide the law.
Keep this going and we’ll eventually be Argentina.
Though maybe this isn’t a bad thing. If I can somehow magically become President, I can use the Obama precedent to suspend bad tax law and to unilaterally decide to shut down a bunch of wasteful government departments.
Returning to the real world, Veronique de Rugy gives us a very important reminder in the Washington Examiner that this mess was entirely predictable because of the inherent incompetence and inefficiency of government.
Washington is missing the bigger picture of what the rollout glitches represent. That’s the much deeper problem of government intervention in general. …government-program incentives tend to favor interest groups instead of rewarding success or punishing failure in the same way as the market. …In sum, the problem with the Obamacare rollout is…that government institutions themselves are inherently prone to bad decision-making, often choosing the interest of politically favored groups. …In fact, we can expect these types of negative consequences when the government intervenes in any market — not just health care. For proof, look no further than the flawed government policies that distorted the health care system and prompted the push for Obamacare in the first place.
The final sentence is spot on. Our healthcare system was dysfunctional when Obama took office. But it was screwed up because of government intervention. So Obama’s plan to add another layer of government was a very painful example of Mitchell’s Law.
In reality, you don’t solve government-caused problems with more government.
But this brings us to the big issue of what happens next. The statists will argue that the failure of Obamacare means we need single payer healthcare, which means the government has full control of everything, like in the United Kingdom.
Needless to say, that would be a disaster. More spending and more taxes would be one obvious consequence, but it would also mean that politicians and bureaucrats would decide who lives and who dies. If you think that’s an exaggeration, check out this horror story (as well as the other examples linked in the third paragraph).
For those of us who care about both taxpayers and good healthcare, we need to use the Obamacare meltdown as a springboard to push for policies that will actually make the system work better.
I actually wrote back in April that Obamacare wouldn’t work and that this would create precisely this opportunity. But making a prediction is the easy part (especially since I never remind people of the times when I make inaccurate predictions). The hard part is pushing the right policies and convincing the American people that we have the right ideas.
I’m a think tank wonk, so I’ll simply list the good policies.
As part of fundamental tax reform, we need to phase out the healthcare exclusion in the tax code – a perverse policy that encourages grotesque waste, inefficiency, and featherbedding in most parts of the medical industry.
We also should reform Medicaid and Medicare to help address the part of the third-party payer crisis caused by the direct government intervention.
If you want to get an idea of how a genuine market-based system would operate, watch this superb video from Reason TV. If you want more examples, here’s a report from North Carolina on free-market healthcare in action and here’s a similar story about capitalist healthcare in Maine.
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[…] The Obamacare catastrophe. […]
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[…] of me is glad the law is such a failure, but it’s tragic that millions of people are suffering adverse consequences. These are folks […]
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[…] a giant albatross for the President and his party. Yes, the law has helped more and more people realize that big government isn’t a good idea. Those are positive […]
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[…] I’ve since learned to be more careful with my language, and subsequent columns about Obamacare developments have used more direct rhetoric such as Obamacare disaster, Obamacare Schadenfreude, and the continuing Obamacare disaster. […]
[…] I’ve since learned to be more careful with my language, and subsequent columns about Obamacare developments have used more direct rhetoric such as Obamacare disaster, Obamacare Schadenfreude, and the continuing Obamacare disaster. […]
[…] I’ve since learned to be more careful with my language, and subsequent columns about Obamacare developments have used more direct rhetoric such as Obamacare disaster, Obamacare Schadenfreude, and the continuing Obamacare disaster. […]
[…] Next we have Henry Payne mocking the President’s desperate efforts to get people to climb on the sinking ship of Obamacare. […]
Fact. Supply side did not work thirty years ago when Ronald Regan shoved it down the nations throat,it is even more unworkable now.The theory is, give the rich more money,and they will allow some to “trickle down” to the people who do the real work,that made them rich in the first place. Problem is,it did not address how stingy rich people tend to be,which is how the GOT rich.All the “job creators” have created is bigger personal bank accounts,and the government sponsored employee abuse called “right to work”,which gives employer the legal right to lie,cheat and steal from workers,without consequences.
[…] to say, the disastrous unveiling of Obamacare basically confirms the cartoon’s message, so it’s hard to know where satire ends and […]
Recommnd that the Affordable Care Act be referred to as the Affordable Care Tax………….as defined by SCOTUS
While we should get rid of the healthcare tax deduction, Obamacare, Medicare, and Medicaid; the question is what will be the replacement?
No one wants to abandon seniors on Medicare and those with medical issues on Medicaid. Universal free market healthcare would be a great idea, but it will require some redistribution of wealth, to subsidize the poor.
Zorba mentioned Hayek. Sound advice. To paraphrase Hayek, “the poor must be helped, but such help must come outside market activities.”
Therefore, we must allow the free market to function without government interference. Government’s role should be to finance senior purchases of insurance, finance the cost of insurance on pre-existing conditions, and finance the purchase of insurance in lieu of a tax deduction.
For example, the average senior on Medicare costs $14,000 in benefits. Those funds would be better utilized by seniors buying their own coverage. My own brilliant nephew receives about $50,000/yr as a quadraplegic, but if he makes more than $14,000 he loses that life saving support. We would be far better off providing the money for a special insurance program, and allowing Ben to thrive in the internet. These are commitments already made, so net cost would be zero at worst.
For the average person, a cash payment to a Health Saving Account would provide the minimum cash needed for universal catastrophic coverage and would compensate for the lost tax deductability of a better but not premium plan. This cash payment would be mostly paid by not allowing tax deductability of healthcare and eliminating long term entitlement commitments.
Prices in the insurance market must not have a cross-generational component, but should reflect actuarial realities for each age group.
For an even better solution than third party payers see:
For those of you who have read Hayek, it seems like the moment when the benevolent people’s advocate strongman comes to sort al this mess out is getting closer and closer.
However, trying to sink ObamaCare on procedural glitches, however spectacular, is a red herring hope — and likely to fail. The central tenet of ObamaCare, “dear middle and lower class: you don’t have to worry about paying for your healthcare at some point in your life, go ahead and upgrade your Toyota Corollas to Audis, add another 400sqf to your average 2000sqf (mansion by world standards)” is here to stay. These types of promises cannot be retracted. It’s a one way valve. People will learn to live with whatever glitches and aspire to them one day going away, so long as the redistribution engine keeps chugging along.
Even if republicans modify ObamaCare — to save face and claim they did something — the core redistributive tenet of the law will remain. That is what I mean when I say that America’s path to decline has been cast. Americans are not only far from meaningful entitlement reform, but the pendulum is still swinging in the opposite direction: More entitlements! Falling behind in world growth, Americans seek solution in further flattening of the effort-reward curves. It is obvious that the vicious cycle has closed.
So, the “change” is a change to decline. That is the “change I can believe in” ….because I have seen it unfold in virtually every European country, and Americans seem to have finally caught up and the dumb happy go lucky Americans seem to have finally figured out how democracy really works. Welcome to Europe –> France –> Greece, now apparently the common fate of most western world voter-lemmings.