Category News

Delaying Obamacare May Be Necessary To Save It

Danny Vinik 1 Comment

There are a couple of new stories out today that give more details on the troubles of HealthCare.gov, the federal health exchange. It’s a mess. From a New York Times article today:

Administration officials approached the contractors last week to see if they could perform the necessary repairs and reboot the system by Nov. 1. However, that goal struck many contractors as unrealistic, at least for major components of the system. Some specialists working on the project said the online system required such extensive repairs that it might not operate smoothly until after the Dec. 15 deadline for people to sign up for coverage starting in January, although that view is not universally shared.

That’s the worst case scenario and it looks like it may be the most likely one too. Starting January 1st, the individual mandate takes effect. That means that millions of Americans must sign up for health insurance before then. The law gives everyone a three-month grace period, but because of processing delays, you need to purchase insurance by Feb 15. After that, you’ll have to pay the prorated fine of either $95 or 1% of your income for not having insurance. That’s why that February 15 date is so important. What happens though if you spend months trying to sign up for Obamacare, but the website doesn’t work properly? Surely, the federal government can’t force you to pay a penalty for its failure. Without changes to the law though, we’re heading that way.*

The Obama administration has been adamant that it will not delay either the law or the individual mandate. It does not want to give any more time for Republicans to attempt to dismantle it, but time is running short. What happens if in a month, the exchanges are still not working? Will the administration have the political courage to stand up and say we need more time? Will Republicans allow a delay?

There’s another important point here: we can’t only delay the individual mandate. It shocks me how many conservatives have pushed for an individual mandate delay. That would eliminate the stick meant to bring young, healthy people to the exchanges to offset the influx of old, unhealthy people. It would likely bring about the dreaded death spiral where too many old, unhealthy people sign up for health care forcing insurance companies to raise premiums, which then scares away the most healthy people and forces insurance companies to raise premiums again and so on. The entire point of the individual mandate is to force those young people on to the exchanges. Without them, the law will fail.

As that February 15 date approaches, Republicans will see the political value of calling for an individual mandate delay. Imagine how easy it will be for any GOP congressmen to argue that the federal government is going to fine you for the failure of the exchanges. It’s a perfect talk point. Simple, easy to understand, and dead right.

That’s why the administration needs to get out ahead of this. If there is a decent probability that the exchanges won’t work in December, it’s time to take HealthCare.gov down and give the contractors an extra 3-6 months to work on it. The longer they wait, the worse it will look politically and the greater the chances that political pressure from the right will stop the law before it has a chance to get going. In the end, Democrats have control of the Senate and White House. If Obamacare is delayed until June, the Republicans will still have no leverage to attempt to stop it. Only Obama and Senate Democrats have the power to block the law. For the past two years, using that power to defeat the GOP’s attempt to undermine Obamacare was vital. Right now though, it’s looking more and more likely that the opposite is true. The greatest threat to the Affordable Care Act is no longer the Republican Party. It’s the law itself. Democrats need to start looking at that power as a way to save Obamacare, not a way to thwart the opposition.

*Thanks to Adrianna McIntyre for helping clear up some mistakes I made about the timing. Important date is February 15 for signing up for health insurance and avoiding the penalty, not December 15,

Were Mainstream Conservatives To Blame for the Shutdown?

Danny Vinik 2 Comments

The post-mortem of the McConnell-Reid deal to open the government and avoid a default has focused a lot on who is to blame on the Republican side. Many have laid the blame at Speaker Boehner’s feet – something I have pushed back against a number of times. House Republicans blame Senate Republicans. Senate Republicans blame Ted Cruz and Co. The Tea Party blames the establishment. The Washington Post’s Jonathan Bernstein has narrowed it down more, specifically focusing on mainstream House Republicans:

There’s plenty of blame to go around for the shutdown and debt-limit fiasco, but any account which focuses mainly on Boehner is probably letting both the moderates and the mainstream conservatives — in other words, most House Republicans — off far too easy.

Bernstein has named this group the ‘Fraidy Cat Conference:

These 175, too, are mostly paranoid about renomination, even if they want reporters to know that they’re not actually nuts. They’re the ones who drive what Boehner does. They’re the ones who have to bear the brunt of the responsibility for this shutdown. They’re the ones who are the ‘fraidy cat conference — so paranoid about renomination, and more broadly about allowing any distance to appear between themselves and the “conservatives” who they probably honestly have contempt for, that they’re willing to run their party right into a ditch.

The problem with this argument is that the ‘fraidy cat conference is right to be afraid. They have seen the power of the Tea Party and how tough primaries can be. They’re right to be paranoid about renomination.

This gets to a larger problem with diagnosing who is to blame for the shutdown. It’s important to look at the incentive structure for all of the actors involved.

Mainstream conservatives – the ‘fraidy cats – have an incentive to put as little distance as possible between themselves and the right wingers. Many are part of the “hope yes/vote no” conference that is glad the shutdown is over with and a clean CR passed, but couldn’t vote for the legislation themselves for fear of conservative blowback. I imagine that for many, this was an easy decision. Stick with the Tea Party through and through.

Like Boehner, these members had the power to end the shutdown anytime they wanted. Like Boehner, they had both individual and group incentives to keep the shutdown going until the 11th hour. Supporting the shutdown reduced the chances that these mainstream conservatives would face a primary challenge while also keeping the party unified. This point cannot be repeated enough: the GOP cannot allow a civil war to break out between the establishment and the Tea Party. It must do everything in its power to avoid that.

The reason that Boehner and the mainstream conservatives are incentivized towards making extreme demands and shutting down the government is because the Tea Party sets those incentives. The far-right members are the ones willing to jump ship from the Republican Party and commit political suicide. In doing so, they would take the Republican Party down with them. That gives them the power to set the framework of the House Republican strategy. If the Tea Party wants to fight, then Boehner and mainstream conservatives must listen. They have every incentive to do so. These are rational decisions.

The Tea Party is being irrational. They chose a strategy guaranteed to fail, forced their fellow Republicans to use those futile tactics, and caused needless suffering and economic harm. Their incentives are shaped not by outside forces, but by themselves. Yet, they decided on this radical plan to shut down the government if the president did not make drastic alterations to his greatest legislative achievement. It was bound to fail and blow up in their face. Yet, the Tea Party irrationally chose to take this route anyways.

Ultimately, they are the ones to blame.