Obamacare’s problems are more than just a website

Grant D. Bosse

October 28, 2013

As Originally Published in the Concord Monitor

There’s a very easy way to tell if you’ve been the victim of one of the many scam websites that popped up this month to take advantage of people trying to sign up for Obamacare. It worked. If you’ve tried to buy insurance through HealthCare.gov, you almost certainly couldn’t log on, couldn’t enter your personal information or couldn’t get accurate pricing for your limited insurance options.

President Obama says “the product is great” and that “it’s more than just a website.” But he’s scapegoating the online disaster for problems with the law that we’ve known were coming for three years.

New Hampshire Sen. Jeanne Shaheen led the charge this week to extend the open enrollment period, citing the failed website and insisting that she was not changing her opposition to delaying the individual mandate to purchase insurance.

But that’s exactly what she wants to do, and it has nothing to do with the internet. Obamacare’s individual mandate requires all of us to have a certain level of health insurance in 2014 or face a fine of $95 or 1 percent of our income, whichever is greater. The IRS is in charge of collecting this fine, which allowed Chief Justice John Roberts to declare it a tax and slip most of the law through the eye of his constitutional needle.

The penalties were designed to kick in if you went without insurance for three months, and that’s why Health and Human Services Secretary Kathleen Sebelius set the open enrollment period to run through March 31, 2014.

But the law actually taxes you if you are without insurance for a single day in any three months, moving the actual deadline to get coverage up to March 1. Since you need to complete your application two weeks before coverage takes effect, the real deadline to avoid Obamacare penalties in Feb. 15.

President Obama is going to waive enforcement of the penalties for six weeks, moving the enrollment deadline back to March 31.

Obama and Shaheen still oppose efforts to delay the individual mandate through legislation but are perfectly willing to ignore the existing law through executive fiat.

Perhaps we should blame former Massachusetts senator Scott Brown for the law’s sloppy drafting. His special election to the Senate in 2010 gave Republicans enough votes to filibuster the controversial bill.

Democrats feared that any attempt to fix the mistakes baked into the law would erode the fragile party unity needed to get the bill to the president’s desk, so they just voted for it, warts and all. These errors would inevitably sabotage the law’s implementation.

Undermining the plan

But there are structural problems that Democrats built into the law on purpose. Two of the most popular provisions are guaranteed coverage for pre-existing conditions and a mandate that adult children be allowed to stay covered under their parents’ policies through age 26.

We needn’t debate the merits of these two policy choices to see how they are undermining the entire scheme. In order for the insurance companies offering plans through the exchanges to be profitable, they need to get many young, healthy people to buy more insurance than they currently do. Keeping people in their mid-20s on their parents’ plan keeps potential customers out of the exchanges. Many more will wait to buy insurance until they need it.

The Obama administration is trying to convince these “Young Invincibles” to purchase coverage. But the reason young people don’t buy as much health insurance as the rest of us is because it’s a bad deal. It’s much cheaper for health people with lower incomes to pay a 1 percent Obamacare penalty and sign up for insurance after they get sick. Imagine if you could go without car insurance, and call State Farm after your accident to cover the repairs. Economists call this a moral hazard, and it’s ObamaCare’s biggest flaw. But not it’s only one.

Health insurance policies have to strike a balance between coverage, access and price. Obamacare pushed that balance toward comprehensive coverage, forcing people to insure against risks that they’re unlikely to face. That choice forces premiums much higher, and many insurers, including Anthem in New Hampshire, have compensated by limiting their coverage network.

Court complication

The Supreme Court’s decision leaving Medicaid expansion up the states has also blown a hole into the law. Congress planned on shifting everyone below a certain income level into Medicaid and made them ineligible for subsidies under the exchanges. This creates a perverse situation where you might earn too little money to qualify for federal aid.

Congress also failed to anticipate states declining to set up their own exchanges, so it only authorized federal subsidies in state-based exchanges.

The Washington, D.C., District Court last week refused to dismiss a lawsuit challenging subsidies under the federal exchange.

The Obama administration delayed the employer insurance, and companies all over the country have responded by dumping their employees into the exchange. Others have already dropped coverage for spouses, or cut back hours to avoid the mandate next year.

The White House will almost certainly try to further delay the pain of Obamacare past November 2014. If Republicans really want to get rid of this law, they should get out of its way and let it destroy itself.

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