Could Obamacare’s Failure Lead to Single Payer?

Ezra Klein and Ross Douthat have both written pieces recently arguing that the failure of the Affordable Care Act could lead towards a more liberal form of universal health care. The idea goes that if HealthCare.gov doesn’t become feasible, people will begin looking at which parts of the law were successful and which weren’t. The Medicaid expansion has thus far been a success in the states that have expanded. Government-run online marketplaces? Not so much. That’s a problem for conservatives, because many of their leading health care plans would require those online marketplaces. If those are deemed a failure, what’s their next proposal? Meanwhile, the liberal fantasy – Medicare for all – is much closer to the Medicaid expansion. The appetite for universal healthcare would still exist and now single payer would be the clear solution. Klein and Douthat both see this as a distinct possibility. Is it?

There are a couple of reasons to be skeptical.

First, if Obamacare fails, it’s going to hurt Democrats badly. Time and time again House and Senate Democrats have thwarted government opposition to Obamacare. They’ve refused to defund or delay the law or the individual mandate. Republicans, of course, have done the opposite. If the exchanges don’t work, Republicans will earn major points with voters. This has been the leading battle for years now. Democratic candidates will have a lot of trouble fighting off attacks that they stuck with a partisan, unpopular law only to watch it collapse under its own weight once enrollment began. Like Klein, I don’t believe many things affect elections. This would.

Second, Klein and Douthat’s argument assume that Americans will be able to distill HealthCare.gov’s failure from the other parts of the law. Will they understand that the Medicaid expansion succeeded while the complex public-private partnership that created the exchanges failed? It’s not clear. Klein is one of the leading proponents that Americans don’t follow politics closely. They don’t know what’s going on in D.C. Obamacare’s failure would be a big story. But would it be big enough for people understand the causes of it? The CBO projects that only seven million people will sign-up on the exchanges next year. They will all undoubtedly see the website’s issues, but the vast majority of people will never try to login to HeathCare.gov. They may hear that Obamacare failed without knowing the causes.

Third, many Americans may see Obamacare’s failure as symbolic of government’s inability to regulate the health care market. Whatever the causes, Americans may conclude that getting government involved in the health insurance industry is a bad idea. They won’t spend much time thinking about why Obamacare failed and simply decide that enough government disruptions in the health care market.

Klein and Douthat’s argument is not impossible. Maybe Americans will be clamoring for single payer if the exchanges fail. But there are also a number of reasons why that won’t be the case. Klein and Douthat give Americans a lot of credit for understanding the root causes of Obamacare’s failure, evaluating the competing conservative and liberal health care ideas and using the Obamacare analysis to guide their decision-making. I believe most Americans will think more simplistically and see Obama’s failed law as nothing more than a failed program epitomizing the government’s inability to regulate the health care market. Let’s hope that the administration can get the exchanges working and we never have to find out.

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It’s All About Obamacare

Wonkblog’s Ezra Klein penned a piece this morning that misses the main reason why we are rapidly heading towards a government shutdown. Klein compares the current negotiations over the continuing resolution to the ones that took place in 2011 and sees two main differences:

1) In 2011, the White House knew whom to deal with. Back then, House Speaker John Boehner actually did seem reasonably in sync with his party on these issues, and so the White House was able to negotiate with Republican leadership on a deal. Today, the relevant negotiations are happening in the Republican Party, with GOP leadership trying to fight conservatives who want to shut down the government, and no one knows who actually has the power to cut and close a deal.

2) In 2011, the White House was willing to deal. The White House believed, in its gut, that Republicans had been given a mandate in the 2010 elections to extract exactly the kind of concessions they were demanding. In addition, the White House believed President Obama would be a likelier bet for reelection if he could cut a “grand bargain” with the newly resurgent Republicans, taking their key issue away from them.

This year, it’s the White House that won the last election, and so they see no popular legitimacy behind Republican demands. In addition, they are deeply, fervently committed to the proposition that they will never again negotiate around the debt ceiling, as that’s a tactic history will judge them harshly for repeatedly enabling. So even if Boehner could cut a deal on the debt ceiling, the White House isn’t open to negotiating.

Both of those points are correct, but they obscure the fact that for House Republicans, these fiscal fights are all about Obamacare. That’s been the key all along.

There is an inherent contradiction in the Republican belief that Obamacare will be an unmitigated disaster and their desperate, politically suicidal attempts to defund the law. If the law is going to catastrophically fail, the Republican Party should have no problem waiting for that to happen and use it to take back the Presidency and Senate in 2016. If they really believe it will be such a disaster, then they shouldn’t threaten a government shutdown over it. But House Republicans are making that threat and many are willing to follow through on it. That indicates that Republicans are worried that Obamacare will succeed and that’s why yesterday, Sen. Marco Rubio (R-FL) said, “this short-term budget represents our last chance to stop it.”

In fact, the Republican Pary’s last chance to stop the law was the 2012 election. This fight is over and Obama has won. He’s not going to delay the law or defund it, but House Republicans are so against it that they will do anything to stop it. As Rep. Lee Terry (R-NE) said today, “Obamacare is worth throwing yourself on the sword.”

The GOP doesn’t care about cutting spending, approving the Keystone XL pipeline or cutting taxes. Right now, it’s all about Obamacare.

Two year ago, the White House and Republicans could negotiate with each other because both had something the other wanted and were willing to compromise (barely). The same is true today, but the White House will never, ever defund the law and House Republicans will not accept any deal that doesn’t do that.

That’s what really makes the 2013 showdown different from 2011.

Delaying the Individual Mandate Isn’t A Real Possibility

One thing that Republicans have been clamoring about recently is for a one-year delay in the individual mandate in response to the Administration’s (unlawful) decision to delay the employer mandate a year. This morning, National Journal and Public Notice hosted an event at the Newseum titled “Fiscal Fallout: What is ‘Responsible’ in Today’s Fiscal Reality” with keynote addresses from Sen. Orrin Hatch (R-UT) and Center on Budget and Policy Priorities’s Robert Greenstein as well as a panel discussion on our fiscal situation. Near the end of the panel,  Bill Hoagland, the Senior Vice President at the Bipartisan Policy Center, discussed the possibility of delaying the individual mandate for a year:

You can’t defund Obamacare on a continuing resolution because 90% of Obamacare is entitlements so it doesn’t make any sense, but I do think Bob [CBPP’s Robert Greenstein] passed over one small thing. He mentioned that a delay would increase the number of uninsured by 11 million. Yet he did not mention that the CBO’s cost estimate on that was that it would save $35 billion too. I’m not here to propose a delay, but for the average person listening to this debate outside, [they may say,] ‘Wait a minute. You delayed the employer mandate. Why can’t we delay the individual mandate?” And I worked with some insurance companies also so I know that the argument will be that this will drive up premiums immediately. Quite frankly, premiums have been set here for the exchanges starting in a few weeks and the companies don’t know what the experience is going to be anyway. So I don’t find a delay necessarily to be bad. In fact, I would almost think the Administration would want a delay to get the exchanges ready [while] other provisions of the law remain in effect – no [rejecting people with] pre-existing conditions, [allowing young people to stay on their parents’ insurance] up until age 26. So I think one of the outcomes here will be that you hear more about a delay. And I’m not proposing it. I’m just suggesting you’ll hear more about a delay.

First of all, under no circumstance is the Obama Administration going to delay the individual mandate for a year. They’ve fought off challenge after challenge for the law to get to this point and they believe (as I do) that once it officially begins, it will be here to stay. Based on their desperate, stubborn refusal of House Republicans to fund the government unless the Administration agrees to defund the law, they seem to agree as well.

Second, just delaying the individual mandate would be a disaster. Hoagland says he understands the counter argument to such a delay, but he doesn’t seem to. The problem is that if you delay the individual mandate, but still require insurance companies to cover everyone with pre-existing conditions then the death spiral ensues. Only unhealthy people sign up for the law while healthy people forego insurance. Without the offset of those healthy people paying into the system, these insurers must raise premiums to cover the unhealthy ones. Hoagland notes this, but uses a bit of hand-waving to say that insurance prices are locked in and thus insurers won’t be able to raise premiums. Well if that’s the case, then insurance companies will go bankrupt. The companies came up with insurance premiums assuming that young, healthy individuals would purchase insurance. Their business model falls apart if those individuals aren’t required to sign up, but the firms are not allowed to revises their premiums.

Thus, if Hoagland wants to delay the individual mandate (which he never says he wants to do – he’s just suggesting it’s going to come up), then we must delay the pre-existing condition requirement as well. This would effectively delay the entire law and give Republicans another year to figure out how to repeal and undermine it. They can even try to delay it until the midterm elections where they will hope to win back the Senate and repeal it altogether (of course, the President would veto such a bill).

So, contrary to Hoagland’s suggestion, this isn’t something you’re going to hear more about. It would be an epic disaster policy-wise and the Administration isn’t going to consider it. Obamacare is the law of the land and that’s not changing.