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The Parlous Prospects of Obamacare

As October 1, 2013 dawned, stunned Congressional Republicans were still reeling from their well-earned humiliation in the “debt-ceiling war.” Were the standing of the two parties reported at that time to endure until the November 2014 elections, Democrats would wrest control of the House of Representatives from Republicans and retain or enlarge their Senate majority. Then, the disastrous debut of HealthCare.gov began. Over the next month, as the full dimensions of the administrative debacle became clear, the political prospects of the two parties reversed.

Watching shifts of public opinion careen in response to transitory events such as the initial paralysis of HealthCare.gov provides pundits with rich rewards. But what usually counts is whether a program eventually works, not whether glitches sully its initial days. There is little doubt that with sufficient time and money, the initial administrative problems can be solved. But whether the Obama administration will be given the time and resources it will need to do the job remains unclear.

In fact, ACA implementation went reasonably well in many places. Those successes prove that the law can be administered and that the mess in the federal site was avoidable. The exchanges in California, Massachusetts, Kentucky, Connecticut, Washington, and the District of Columbia were generally successful. In each of these places, people were able to select from many options the plan that will best serve their needs. The exchanges determined whether each applicant was eligible for tax credits to help make coverage affordable and could compute how much those credits should be. In all, enrollees are on track to receive affordable health care. To be sure, none of these sites was free of problems. None was able to deliver all of the services that each intends to provide in the future. But gradual administrative improvement characterizes the birth of any complex new law.

These are not niche successes. Those six jurisdictions have a combined GDP about as large as Germany’s.

But the dreadful initial weeks raised a number of major questions.

  • First, what went wrong?
  • Second, what needs to be done to enable the reforms in the Affordable Care Act to take root and deliver on the promise of access to affordable health care.
  • Third, will the public be patient long enough to give the health reform time to succeed? Specifically, will the storm of start-up glitches so skew the 2014 mid-term elections that ACA opponents will be able to permanently derail implementation?

Whether the ACA succeeds or falters is certainly important for the 50 million who are currently uninsured. But the stakes are far larger—for the $3 trillion U.S. health care system and for the 325 million people who depend on it. The future of the ACA also has vast political implications. The fate of the largest and most important piece of domestic legislation passed since enactment of the Social Security Act seventy-eight years ago will not only influence the 2014 elections but could also bend the course of U.S. political debate for a generation.

The answer to the first question—what went wrong with the federal web-site?—is straightforward: everything. Managerial oversight was lodged with an overburdened, agency, badly understaffed even for its core functions, administering Medicare and Medicaid. Its personnel lack the experience needed to deal with challenges of the kind and size posed by implementation of the new law. They made serious blunders in designing the architecture of the new web site. Fears regarding the political sensitivity of key regulations led the administration to delay their issuance until after the 2012 presidential elections. These delays girdled software development in impossible time constraints. The refusal of ACA opponents to treat enactment of the law as a legitimate event made it impossible to enact the usual technical corrections legislation, a normal sequel to any complex legislation. The same scorched-earth opposition by ACA opponents prevented Congress from appropriating sufficient funds to implement the law effectively. But even allowing for the poisonous political environment, it is appalling that an administration which had gambled everything—its political survival and historical legacy—on such landmark legislation and had fought with such canny tenacity for its passage could have so fecklessly mismanaged implementation.

The answer to the second question—what needs now be done to carry implementation forward—also has a clear and simple answer—in theory. The administration should create clear lines of authority with full backing of the White House to command staff throughout the federal government to correct the initial flaws in software design and execution. And Congress should appropriate sufficient funds to increase staffing and hire contractors to fill gaps in specialized skills. Recognizing belatedly that it performed poorly, the administration has moved to create the administrative structure that it should have set up at least two years ago. But Republicans in the House of Representatives are so bent on undermining a duly enacted law that, far from being willing to increase appropriations for implementation, they have repeatedly tried to cut off all funding.

The late start and insufficient resources mean that solution to problems that are already apparent will come more slowly than had sufficient resources been available. Even so, currently recognized problems, such as the inability of many people to sign up for plans or even shop for them, seems now to be well on their way to being solved. New problems, however, are bound to emerge.

For example, once applications have been completed, the information has to be sent to an insurer, an invoice must be issued, and applicants must pay that bill before they are officially insured. Concern has been increasing that the information flow may break down before the insurers get paid and receive correct information on which plan enrollees have selected. If invoices are never sent and paid, people who have completed applications and think that they are insured may try to see a doctor or seek admission to a hospital only to learn that they do not have coverage. Some such mistakes are bound to occur. Were they to be widespread, however, they would intensify public doubts about the Affordable Care Act.

An additional issue concerns the amount and price of insurance that may be available on the insurance exchanges. Premiums next year will depend on who enrolls now. If enrollees are broadly representative of the U.S. population, future premiums will reflect the average health care use of the nation. If initial enrollees are mostly the old and sick, future premiums—which will be based on the expected costs of initial enrollees—will be high and will discourage future enrollment. That could lead to the much-discussed but seldom-observed "death spiral" in which progressively higher premiums lead to progressively smaller enrollments. These and other possible problems, not yet visible to the public, pose major latent risks, both administrative and political.

The third question—will the public will be patient long enough for the health reform law to take root and succeed?—cannot be answered with confidence. While there is no doubt that the troubling start-up problems of the new health law can be fixed that additional vexing problems will emerge that can also be eventually solved, political developments could intervene. The Republican majority in the House of Representatives has passed scores of bills to repeal, defund, or otherwise undo the Affordable Care Act. These House bills stood no chance of passing the Senate. And even if, perchance, a repeal bill passed both houses of Congress, the president would surely veto the bill, and there is no chance that two-thirds of both houses in the current Congress would vote to override him. These House votes, to date, have been futile political gestures.

Should continuing discontent with implementation of the Affordable Care Act cause Democrats to lose control of the Senate in the November 2014 election, a politically united Congress could assert that hit has a "mandate" to stop "Obamacare." Simple repeal would remain impossible at least until a new president is sworn in. Nonetheless, opponents of the law would be well positioned during the final years of president Obama’s administration to hamstring implementation. To the extent that they succeed, continuing and possibly growing discontent with the law and with the incumbent Democratic president would shadow the 2016 presidential elections.

Even with Republican wins in 2014 and 2016, complete repeal of the ACA is improbable. Taken individually, every element of the Affordable Care Act, other than the mandate that individual carry insurance, is quite popular. But various steps could gradually extinguish the vision of near-universal insurance coverage and systemic transformation of the U.S. health care delivery system. Tax credits, meager to start with, could be lowered, perhaps in the name of "deficit reduction." If so, many people would become exempt from the individual mandate because it does not apply if insurance is unaffordable. The various insurance market reforms could be changed from federal requirements to state options. The fraction of the cost of expanding Medicaid paid for by the federal government—now 100 percent and set to go to 90 percent—could be lowered so that Medicaid expansion would stop and could even be reversed.

What all this means can be summarized briefly: whether the Obama administration, after a bumbling start, can enroll the millions of Americans who want affordable health insurance, whether the states that have been doing a competent job can continue to do so and are recognized as harbingers of a well-functioning law, will not only shape the future of American health care but could also redirect the course of American politics for many years to come.