Delayed Consequences

An elder Democratic congressional leader, one of the most powerful politicians in the country, is chased down the street by constituents after he refuses to talk to them about federal health insurance. The crowd chants: “Coward! Recall! Impeach!” The congressman responds to the press: “These people don’t understand what the government is trying to do for them!”

Shortly thereafter, his congressional career comes to an ignominious end, defeated on election night by a no-name Republican. The healthcare law is repealed by a Congress in full retreat. 

Is this a flash forward to 2014? An affirmation of the warning from Senate Finance Committee Chairman Max Baucus, D-Mont., who says he sees a “huge train wreck” coming with the rollout of Obamacare?

No, that was 1989, when House Ways and Means Committee Chairman Dan Rostenkowski, D-Ill., was getting berated for his role in passing, a year earlier, the Medicare Catastrophic Coverage Act. That law set up a supplemental insurance medical plan for seniors, including a new tax that badly backfired. Conventional historic wisdom says that any newly granted entitlement is never reversed. In the case of the Catastrophic Coverage Act, historic wisdom did not hold. Congress put the toothpaste back in the tube.

So, too, the Affordable Care Act? In the post-Supreme Court, post-election world, most Republicans in Washington aren’t trying to figure out how to live with it, but how to end it—and to reinforce their ranks on the backs of it. Says Brad Dayspring, communications director of the National Republican Senatorial Committee: 

“There are very few issues that are as personal and as tangible as healthcare, and the implementation of the law over the next year is going to reveal a lot of kinks, a lot of red tape, a lot of taxes, a lot of price increases and a lot of people forced into healthcare that they didn’t anticipate. It’s going to be an issue that’s front and center for voters even in a more tangible way that it was in 2010.”

Democratic knees are knocking, even as their spokespersons say everything is going to be just fine. President Obama has launched another Obamacare charm offensive and opened an office solely to lead a White House team on ACA communications strategy. But as countless regulations remain unresolved, there are tremendous challenges.

Some challenges are well known and a source of endless media reports. Will the exchanges be open for enrollment in October and operational in January? Will recalcitrant red states get with the program on Medicaid expansion when, say, poor folk in Texas realize that they’re subsidizing poor folk in Massachusetts and yet receiving no benefits? As implementation draws nearer, will the red states blink on the offer for “partnership” with the federally facilitated exchange? There’s no lack of debate and speculation on these critical questions.

But there are other problems that rarely get ink and are potentially just as problematic, both short- and long-term. Who is going to pay the piper for rich minimum essential benefits? With ineffectual penalties that bear no correlation to the actual cost of health insurance, what will motivate the young invincibles to sign up for exchange coverage with age bands that penalize them in favor of the older and sicker? What will be the fallout when small businesses start dumping full-time employees to beat the 50-and-over mandate? 

And what about that core promise: If you like your health insurance, you get to keep it? Federal and state authorities are already suspiciously eyeing self-insured plans and stop-loss reinsurance. Jurisdictions like the District of Columbia have figured that their exchange won’t work unless all businesses with fewer than 50 employees are compelled to buy through it. That includes me and my 30-odd colleagues at The Council. We like our insurance. We want to keep it. Aside from me and a couple other old farts, we are young and invincible, and we aren’t feeling the need in this taxed-to-death jurisdiction to be subsidizing many more of those who aren’t as young and cool and invincible as us.

And let’s not forget some really tricky problems for the administration in effectuating this. For example, a strong constitutional challenge is going to be mounted because the statutory language of the legislation doesn’t allow for people to get subsidies in a pure federal exchange. If there are no subsidies in those states, there is no mandate for coverage, because employer penalties are only triggered when employees access the subsidies. What about the fact that legal aliens, under the statute and in the aftermath of the Supreme Court decision on Medicaid, could receive benefits that citizens cannot?

Train wreck? Perhaps. As (my favorite columnist) David Brooks wrote in The New York Times in April, there is a minority who think the whole situation is a complete disaster. They predict Obamacare will collapse and do serious damage to the underlying health system.

I think Brooks is right, though. “The clear majority, including some of the law’s opponents, believe that we’re in for a few years of shambolic messiness, during which time everybody will scramble and adjust, and eventually we will settle down to a new normal.” His conclusion is right on: “Regulatory regimes can be simple and dumb or complex and sprawling. When you build complex, it takes a while to work through the consequences.”