Economics, Health Care

It’s time to delay Obamacare

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As the implementation of the major provisions of Obamacare approaches, it is increasingly clear that no one involved is prepared, and that the unintended consequences of the law’s conflicting objectives will be painfully compounded by a rushed and poorly managed effort to put it into effect.

Opponents of the law should not relish the coming chaos because the damage it will do to our underlying health-care system will be lasting and significant. And supporters should not underestimate the damage that the coming fiasco will do to their credibility. This mutual dread at the law’s 2014 rollout should point to a mutually appealing response: Congress should delay the law’s implementation by at least a year.

Everyone should now understand that, if there is not a delay, next year will be the scene of an epic disaster for American health care. The trouble started, as it often does, at the top. The president insisted on passing a reform with only Democratic support. That guaranteed large-scale public opposition, which has persisted. It also left the nation’s Republican governors less than enthusiastic about becoming the law’s enablers.

The president compounded the problem by stalling on key implementation decisions in 2011 and 2012 to avoid controversy before the election. States could not get answers to basic questions about what the law’s “exchanges” would involve or what their options were for Medicaid. And insurers even now remain unclear about the regulatory environment they will confront. With so much uncertainty, states, employers, and insurers all delayed their decision-making as long as possible too. The result is that implementation of the largest social-welfare policy change in a generation is far behind schedule.

As of now, only seventeen states and the District of Columbia have committed to building exchanges, though news reports indicate that the actual number of states ready to enroll people on October 1 of this year will be even lower. The federal government is supposed to operate the exchanges in the other states, but the prospects for that fallback, shrouded in administration-imposed secrecy, appear no better. Recently, a top administration official overseeing the process suggested that the best he was hoping for at this point was avoiding making the exchanges “a third world experience” for Americans.

The latest evidence that the exchanges are not ready for prime time came in the form of an administration announcement that a key feature of the exchanges – multiple insurance options for workers in small businesses – has been postponed for at least a year due to “operational” difficulties.  This is no small matter.  In 2010, some key votes in support of the law were based on the supposed benefits of it for small businesses.  Now the administration is admitting that, with three and half years available to them, they still can’t get it done.

The problems of implementation are further compounded by the law’s contradictory design. It imposes regulations on insurance premiums that will dramatically increase prices for younger, healthier Americans. Oliver Wyman estimates that existing policyholders between the ages of 21 and 29 will see premium increases next year averaging 42 percent. Many of them will likely opt out of insurance, driving up premiums further for those who remain.

Supporters are counting on the “individual mandate” to force the young and healthy to buy insurance despite the jump in premiums. But last summer’s Supreme Court decision transformed the requirement to buy coverage into a mere tax for failing to do so. And since the tax is exceedingly low – just $95 per adult in 2014 – many will pay it instead of thousands of dollars in premiums, especially since, under the new rules, they can opt back into insurance later without a penalty. But if mostly the sick and old enter the exchanges, then the premiums will be so high they will further discourage younger and healthier Americans from joining. Everyone understands such a system cannot survive.

It is simply clear, in other words, that Obamacare’s launch will be a slow-motion train wreck. Conservatives argue this is because the law is terribly designed and based on unsound economics. Liberals argue it is at least in part because GOP governors are purposefully undermining it and there is not enough time to build a proper work-around.  Regardless, both parties should see value in delay.  Democrats have a strong interest in avoiding an epic fiasco of their doing in a congressional election year.  Republicans, meanwhile, should see that a delay will give them more time to build the broader argument against the law and to advance their alternatives.

Delaying the implementation of the law’s exchanges and Medicaid expansion would also cut federal deficits substantially. Starting the exchanges in 2015 instead of 2014 would reduce federal spending by about $160 billion over the 10-year budget window, based on the latest estimates from the Congressional Budget Office.

The Obama administration will resist a move to delay the law’s key provisions, of course, but the states, employers, Americans who about to face large premium increases, and even some congressional Democrats would welcome it.

Delay is far from an ideal option for anyone, but it’s far better than just letting a perfectly foreseeable debacle befall us next year. If we can’t agree about how to fix American health care, perhaps we can at least agree about how not to make the situation needlessly worse.

James C. Capretta is a visiting fellow at the American Enterprise Institute and a senior fellow at the Ethics and Public Policy Center. Yuval Levin is editor of National Affairs and the Hertog Fellow at the Ethics and Public Policy Center.

14 thoughts on “It’s time to delay Obamacare

  1. We have learned over and over again that government cannot handle efficiently taxes much less complicated than Obamacare. Why would there be ANY expectation that it would be able to handle something this large? This is why markets work well. They weed out players who cannot do something well. If government had to actually compete in the health care market, they would be weeded out as well.

    • If I understand the facts correctly, Medicare has very low overhead compared to our current insurance companies.

      • Lol. A government sponsored plan is cheaper to run than a private plan? Do you not see the conflicts? the government gets to write the rules, cook the books, and punish its competitors. Of course Medicare looks cheaper on its face, until you actually pull off the mask. The reality is the government doesn’t cover its costs and providers stick the consumers with private insurance with a bigger bill to compensate.

  2. “Republicans, meanwhile, should see that a delay will give them more time to build the broader argument against the law and to advance their alternatives.”

    So says someone more versed in policy than politics.

    Most people don’t react strongly to things that might happen sometime in the future. We prefer to wait until such time as we get kicked in the teeth (Pearl Harbor, 9/11, saving for retirement, global warming, etc.).

    The only way to get enough people riled up enough to force through either a repeal or a substantial revision of Obamacare is to wait until they get kicked in their teeth. Let the law take effect, let people lose their insurance and access to the doctor of their choice. Watch companies cancel coverage. Wait for doctors to quit over cuts in reimbursements. Apropos of the old line, an anti-Obamacare voter is a pro-Obamacare voter who was told she had to wait three months for an appointment.

    Deferring Obamacare will only delay the day of reckoning. And only at their time will there be broad support and pressure to repeal it.

    • If “broad arguments against the law” actually had much effect, Mr. Obama would not have been reelected. The Oprah Nation requires videos of sympathetic people weeping and wailing over being charged more for insurance — or having to pay for their own contraception.

  3. just last week, two big components were already delayed till 2015; the Federal Basic Health Plan Option (FBHPO) and the Small Business Health Options Program (SHOP exchanges)

  4. Nah, let the health law implementation train wreck proceed apace. We should have given Obama ALL of his requested tax increases too with no opposition.

    Obama is a one man wrecking ball for the economy and he is also ruining any remaining social cohesion in this country. It’s time for the truth to be so plain that even idiots (of which we have plenty) can see it.

    Check out my blog “Small Businesses Create the Most Jobs and ObamaCare is Killing Them” http://gulfcoastcommentary.blogspot.com/2013/03/small-business-creates-most-jobs-and.html

    Thanks.

  5. I commend Messers L & C on their insight into the ills of the ACA

    Now, all they have to do is come up with an alternative to extend medical coverage to those who can’t afford it, and we’ll consider them truly inspired. Until then, they’re just rehashing the same “we can’t” and “we won’t” that the GOP has been blathering for 3 years.

    • Your premise is absurd. Just because the democrats come up with a bad idea doesn’t mean the republicans have to offer an alternative other than “Hell no!”
      A great deal of people you say “can’t afford” insurance some how can afford two cars and cable t.v. Can’t afford it my ass.

  6. So if after the ACA is in full implementation and this coming train wreck you claim of does not come to fruition,what to blame then?

  7. when the writers of this article and their financial backers can present an alternative which will extend health coverage to the currently uninsured, then their criticisms of the ACA will carry a lot more credibility

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