On occasion, a single piece of legislation captures the essence of a political movement. Such is the case with the Affordable Care Act, aka “Obamacare,” the signature piece of Obama era legislation now in its sixth year.
Passage of the historic bill marked the high point of progressive power, fueled by a Democratic president and Democratic control of both Houses of Congress. Though this full court press could not deliver the ultimate goal — single payer government-run healthcare — the next best thing was offered as a sound intermediate step. Here, Hillary Clinton’s (circa 1993) much maligned healthcare reform had come full circle – even if Speaker Nancy Pelosi could not quite describe the constituent elements of the bill. But, no matter — the content was deemed far less important than the fact of passage: “…[we] have to pass the bill so that you [the people] can find out what’s in it.”
Enough time has passed for most Americans to “find out what’s in” the over-hyped and under-delivering law. In other words, what do we know now that we did not know then?
Professor Jonathan Gruber, the architect of Obamacare, deliberately disassembled Obamacare’s fiscal impact to encourage the Congressional Budget Office (CBO) to produce a desperately needed “deficit neutral” report on the bill. We know this because the good professor admitted as much in a recorded, after-the-fact panel discussion wherein he bragged that the “tortured” way the bill was written was “to make sure the CBO did not score the mandate as taxes [which would have ensured] the bill dies.” Such manipulation was mandatory; the bill HAD to pass. Post script: The taxpayers paid Gruber $400,000 for his handiwork.
Nothing gets a progressive more upset than a group of elderly nuns insisting on their religious liberty. Hence, the Obama administration’s Supreme Court battle with the “Little Sisters of the Poor” over Obamacare’s “conscience clause” mandate to change their health plan to include contraceptive and reproductive procedures contrary to Catholic doctrine. Mr. Obama’s half-hearted attempt to accommodate the Little Sisters has led to a Supreme Court order to negotiate a compromise. Post script: The “Little Sisters” refused to bend even in the face of multi-million dollar fines; still a partial win for religious liberty.
More than half of Obamacare’s co-ops have failed, costing U.S. taxpayers over $1 billion in government-backed loans. Many pundits predicted just such a result since few experts believed these intended alternative options would attract enough customers to compete against more mature marketplace players. In some cases, state regulators have been required to move fast in order to shut down non-profitable players so that consumers could shift to other plans prior to year end. Post script: 21 of the original 23 co-ops were under water at the end of 2015. Post script #2: Democratic Members of Congress want to further subsidize insurers that lose money on the Obamacare marketplace. Post script #3: Some things never change.
Arguably, Obamacare’s worst provision was the medical device tax, effective January 1, 2013. The levy was solely intended to be a new revenue source for the federal government. It has cost jobs (195,000 direct and indirect jobs according to a 2015 study by the “Advanced Medical Technology Association”), slowed job creation, and reduced capital investment. Look at the reduction in research and development as a direct assault on new product creation — the same products that give us higher quality and longer lives. One measure of the tax’s dysfunction is that even Sen. Elizabeth Warren supports its repeal. This bad idea has no fans – other than the outgoing president of the United States.
Obamacare’s authors intended to leverage the consolidation of physicians into large practice groups in order to improve healthcare delivery. This they accomplished as recent hospital mergers have accelerated at a rapid pace. But even some of the law’s remaining fans see the flaw in their theory (see Bob Kocher’s “mea culpa” in the Aug. 1 Wall Street Journal) as smaller independent physician-led accountable care organizations outperform their larger, consolidated competitors. The reason is not surprising to fans of market competition: Smaller providers are more flexible, innovative, and responsive to consumer (patient) needs. Who would have thought…
“Risk corridor” payments were created to compensate carriers who lost money on Obamacare exchanges — which explains why some major insurance companies supported Obamacare in the first place. Now comes news of lawsuits filed by major carriers in order to recoup their losses. Recall these dollars were to be collected from carriers who
made money on the exchanges. But there is a problem: few carriers turned a profit AND congressional Republicans passed budget language that limits the corridor program to pay out only surplus (profit) — no taxpayer subsidies.
Fun Fact #1: In 2014, carriers requested $2.87 billion in risk-corridor payments, but only $362 million came in from profits.
Fun Fact #2: Major players such as Aetna, Anthem, Humana, and UnitedHealth Group are cutting back on their Obamacare participation.
Conclusion: Perverse incentives, cost shifting, increasing deductibles and co-pays, hurtful tax increases and consumer frustration define Obamacare. It just doesn’t work very well — a fact that should be front and center in the fall campaign.
Gov. Robert Ehrlich is a Washington Examiner columnist, partner at King & Spalding and author of three books, including the recently released Turning Point. He was governor of Maryland from 2003 – 2007.
