Republicans Are Not Sabotaging Obamacare

November 1, 2013Danny Vinik 3 Comments

There is a belief amongst liberals that not just are Republicans rooting for Obamacare’s failure, but they are actively trying to make it happen. The argument was put forward today by Todd Putnam in Politico. He argues that a big reason why Obamacare has had such a rough first month is “calculated sabotage by Republicans at every step.” He proceeds to run through a number of reasons demonstrating this, but most of his piece does not provide evidence of actual sabotage. Instead, it simply proves that Republicans have done everything in their power to not help the law.

Sabotage is a loaded word. It means that the Republican party is taking an action to deliberately interfere with and disrupt Obamacare to ensure its failure. It’s actively undermining the law. That’s a serious charge. Republicans have long argued that Obamacare will fail because it’s a bad law. They have not argued that it will fail because they will make it fail. So, when liberals claim that Republicans are sabotaging Obamacare, it’s important to determine the veracity of those claims. And they simply don’t pass the smell test.

Here is Putnam’s evidence of Republican sabotage:

Republicans wouldn’t pass any fixes to the law
Most Republican governors declined to set up their own exchanges.
Republicans would not appropriate dedicated funds to HHS.
Nearly half the states refused to expand Medicaid.
Many states refused to educate their constituents about the law.
Republicans hampered hospitals that were helping educate consumers about the law.

Out of these six claims, two of them are legitimate claims of sabotage. Republicans not dedicating the already approved funds to HHS and overloading hospitals with queries were both actions deliberately taken to undermine the law. Those are sabotage efforts.

But the remaining four pieces of evidence are not. They simply are Republicans refusing to buy into the law whatsoever. Not allowing fixes to Obamacare certainly makes it worse, but as Democrats have said repeatedly, Obamacare is the law of the land. Republicans have no obligation to pass legislation to improve it. In addition, just because the architects of the law envisioned all states setting up their own exchanges doesn’t mean that they all have to. That was a choice that the states had. By choosing to let the federal government do it, these states are making a legal decision.

The refusal to expand Medicaid, on the other hand, was not part of the law’s original intent, but the Supreme Court opened up that possibility and states have every right to do so. Once again, this is not sabotage. It is simply Republican states refusing to help the law in any way. The same is true about educating their constituents. Republicans are under no obligation to do that as well.

If Republicans bought into the law and pushed for its success, it would certainly work better. There would be less stress on the federal government and more people would be covered thanks to the Medicaid expansion. There would be less confusion about the law and more people would know how to navigate the exchanges. But Republicans – and states in general – are not required to support everything the federal government does. States have their own rights for a reason.

The other side of this is that Republicans are taking a huge risk by vehemently opposing the law. If it does succeed, they will have a lot of questions to answer as to why they refused to help set it up. States who didn’t expand their Medicaid programs will feel increasing pressure to do so. This opposition to Obamacare is a high-risk, high-reward strategy. If the law fails, Republicans will reap massive political and electoral benefits. If it succeeds, the opposite will be true. That gives Republicans even greater incentive to root for the law’s failure. However, don’t confuse that for sabotage. There is an important difference between state’s using their own agency to make political and policy choices and actions done deliberately to undermine the law.

The Incoherency of Republican Obamacare Tactics

October 31, 2013Danny Vinik Leave a comment

Greg Sargent has a smart post today that steps back from the current Obamacare fights and looks at what happens to the GOP if the law succeeds:

All of which is to say, again, that all that really matters in the long run is whether the policy works.

…

Republicans will have spent weeks expressing outrage on behalf of Americans who have been unable to tap into the benefits of Obamacare because of administration incompetence, and on behalf of people who are “losing” coverage because of outrageous liberal Big Government overreach. At that point, though, the web site will be working, and untold numbers of people will be shopping for real, tangible plans. Many on the individual market will find plans that are better, and potentially even cheaper overall — whether because of subsidies, or because the plans don’t disguise their true long term cost, as the current, crappy ones do – than their previous ones. None of this is a given, obviously; again, it all turns on whether the law works.

But if it does, what is the Republican argument at that point? Continue to push for full repeal, which would wipe away the benefits that these Americans — the very same people Republicans were professing to speak for in expressing outrage over the web site — are now enjoying?

This problem has always existed for the GOP. They have spent the past three years doing everything they possibly could to stop Obamacare. They took it to the Supreme Court. They made it the focal point of the 2012 election. They risked an international financial crisis, shutdown the government and sent their poll numbers to historic lows, all in the name of blocking Obamacare. It’s been more than a policy goal for Republicans. It’s been everything the party has worked for since the law passed.

But what happens if they’re wrong? What happens if the law is a success and millions of Americans love shopping on the exchanges and picking a new plan? Obviously, this outcome would be disastrous for the Republican party, but even if the law fails, the GOP has been betting for a while that it will be disastrous for their party as well.

Think about it. Why did Cruz & Co. shut down the government over Obamacare? Because they thought it was their last chance to stop the law. There has always been a contradiction here though. If they thought the law was going to fail so badly, why not just wait until it took effect and then use it to win elections? After all, if it was going to be such a disaster, surely that would reap political benefits for the GOP. The problem is, they argued, that once the law takes effect, it will be tough to stop. Whether or not it succeeds on policy grounds, it will succeed politically as it grows a new base of support. This is the GOP position. The law is going to fail, but it will still be a political success so we must do everything in our power to stop it before it takes effect.

If the Republicans are right about this, then their last hope is that HealthCare.gov fails. Otherwise, no matter if Obamacare succeeds or fails on policy grounds, it will succeed politically. At least that was the reasoning behind the entire shutdown. In addition, it is still likely that the administration gets the exchange up and running in time so that Americans can purchase health insurance on it. If Republicans believe that too, then they have already lost. The law will take effect January 1st and it will be impossible to stop due to the political support behind it.

This is what is so incoherent about their argument. Based on their actions, the Republican Party expects Obamacare to succeed politically and fail on policy-grounds. But no matter what, that’s a failing political argument. Yet, at the same time, they are pushing that argument harder than ever by vehemently denouncing Obamacare’s “rate shock” and plan cancellations. They expect the law to succeed politically, but are hoping that they’re wrong. The contradictions within this strategy seem to multiply by the day and the overarching theme is one of desperation. Cruz & Co. are so worried about the law’s political success that they are frantically trying to secure a base of opposition to it. But if they are right that the law will succeed politically, then their current tactics are only going to make the political backlash that much worse.

A Better Conversation Needed About Paternalism and Health Insurance

October 30, 2013Danny Vinik 10 Comments

Americans have reacted angrily the past couple of days after many have found out that their health insurance plans have been cancelled due to Obamacare. These are plans in the non-group market which comprises about 5% of Americans and do not live up to the minimum standard of coverage that the Affordable Care Act requires. Any plan that existed before 2010 was grandfathered in, but insurers could not continue selling these plans after the law passed. Thus, while Obamacare did not force insurers to change their plans, it offered a strong incentive for them to do so. Millions of Americans around the country are now receiving notices that their plan has been cancelled.

This is contrast to President Obama’s often repeated line that if you like your health plan, you can keep it. This was a complete lie and Americans are rightly furious at him for it. Many liberals have responded to this by arguing that the new plans will offer more comprehensive coverage that will be less expensive for many people, especially when the subsidies are factored in. It will only be a select few that truly have to pay more – and Obama never denied that there would be some losers from health reform.

This argument is exactly correct, but it hides a larger disagreement that lurks beneath the surface and which conservatives have jumped on. By increasing the standards that health insurers must live up to, Obama has decided what constitutes adequate insurance for Americans. He limited their choices by outlawing plans that do not meet those standards. Worse, the president lied about it. He told Americans if they liked their insurance, they could keep it, but in reality, Americans can keep their insurance only if Obama deems it satisfactory. In 2009 and 2010, Americans would never have supported such an open case of paternalism and limitations on consumer choice. This lie was critical in the passage of the Affordable Care Act.

The revelation of this lie has created a lot of anger and finger-pointing from the right. This is entirely justifiable, but that anger will fade as time passes. Americans will finally log on to the federal exchange, see their options are not that bad and be even happier when they factor in the subsidies. Obama knows this anger will pass. The more important question is whether this paternalism is appropriate for the health care sector.

A fundamental problem with health insurance is that people have a difficulty predicting their expected future costs when the risk of catastrophe is low. They choose plans with high deductibles, high out-of-pocket limits and low monthly premiums. These plans may cover limited services and have no lifetime cap. It leaves people open to huge financial risk, but it’s tough for people to take that risk into account when the odds of it are so low, particularly for people who haven’t had to deal with many medical issues.

Think about it this way: the whole point of health insurance is to provide a safety net if something goes wrong. After all, it’s insurance. That means that if nothing goes wrong (i.e. you’re healthy), health insurance won’t save you money. However, if something does go wrong, the opposite is true. That’s why people value health insurance so much. However, having insurance that provides minimum benefits and does not prevent financial catastrophe doesn’t do that. It still leaves you open to financial ruin. That’s not the point of insurance. Many Americans have plans like that though. These are the plans that Obama is looking to effectively eliminate with the new regulations in Obamacare.

The law forces insurers to cover 10 essential health benefits, limits out-of-pocket expenses and bans lifetime caps. All of these rules are there to ensure that a severe injury or illness will not lead to a financial catastrophe as well. These requirements raise the price of coverage, but this is partially offset by the subsidies.

Conservatives may not approve of these regulations, but they have not addressed them in their arguments the past couple of days. Here is the Daily Caller’s Matt Lewis:

The proles were happy with inferior plans. They were too stupid to know what’s good for them. Obama’s lie was necessary in order to bring about the greater good for the most people. The ends justify the means.

For those looking to draw grander conclusions, this is a teachable moment. The hubris necessary for this kind of vast undertaking — impacting nearly 20 percent of the economy! — is patently unconservative. And I don’t need to trot out some fire-breathing or controversial conservative to demonstrate why this sort of chutzpah is a fundamental affront to basic conservative philosophy.

It’s fine to consider paternalism in general as an “affront to basic conservative philosophy.” The problem is that this sweeping generalization prevents Lewis from evaluating whether this instance of paternalism is justified.

Now, some on the right adhere strictly to a philosophy that freedom of choice is important to a person’s welfare than the welfare-improving effects of any paternalistic policy. Motorcycle helmets may save lives, but the welfare lost by requiring them – and thus the restriction on freedom – is more important. I respect this view, but I don’t subscribe to it. If that is your opinion, then nothing I can say after “Obamacare is a paternalistic law” will convince you that it’s justified.

But if you are open to the idea that paternalism has it’s place in the government, then simply declaring that the law represents a unique form of hubris due to its paternalistic features is not enough. You must explain why it is beyond the level of paternalism that you deem acceptable. This is the stage that conservatives have not tackled yet. They have crucified the president for setting minimum health insurance standards for Americans, but have yet to demonstrate why this is bad.

Why should insurers be able to impose lifetime caps or set exceedingly high limits on out-of-pocket expenses? Why shouldn’t they have to cover hospitalization? Should Americans be able to purchase insurance that leaves them open to financial ruin?

Smart conservatives differ on these questions and have ideas to address them, but the arguments so far have centered on the fact that any paternalism in the law is unacceptable. That generalization does nothing to answer those questions. It’s time to break out of that limited mindset and address the actual issues.