Obamacare reforms could doom Dems in 2014

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  • Obamacare fixes may lead to mroe political trouble for Dems in 2014

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  • Political troubles ahead for Dems on Obamacare - @stanveuger

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  • Would Obama have been better off today if he had agreed to delay the mandate a year?

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Things aren’t exactly looking up for President Obama these days. The rollout of the Affordable Care Act’s central feature, the exchanges where people without employer-provided health insurance are meant to purchase plans, has been disastrous, marked by IT problems and astonishingly low enrollment numbers. The President’s promise that “If you like your plan, you can keep it” has been shown to be knowingly false. The number of people losing coverage is so far rapidly outpacing the number of people gaining coverage. And the administration’s haphazard fixes may only be worsening the situation, promising even deeper political trouble down the road.

First the administration delayed the employer mandate, which, now starting in 2015, will force employers with more than fifty quasi-full-time employees to provide health insurance or pay a new tax. The administration’s decision to delay the mandate, welcome as it may have been to businesses that gained an additional year to deal with the new regulations and obligations they will face, will almost surely lead to political damage at a very unhelpful time. Right before the 2014 midterm elections, about half of all employer plans would have to be canceled or replaced. This would show an immense number of Americans, more than ten times as many as those who are now receiving individual-market cancellation notices, that the administration’s promises that you can keep your doctor were false, and it will show them this in a direct, personal manner. It seems unlikely that congressional Democrats would be willing to deal with the political fallout from such unpleasant news right before facing reelection.It seems unlikely that congressional Democrats would be willing to deal with the political fallout from such unpleasant news right before facing reelection. - Stan Veuger

Having delayed the employer mandate, the administration then had to deal with the individual mandate, and the exchanges on which individuals were supposed to purchase health insurance policies to comply with it. All was working wonderfully well in the President’s mind until October 1, when the glory of Kayak, the beauty of Amazon Prime, and the convenience of Uber would converge, creating Healthcare.gov, a website that would win the Internet instantly and put Facebook and Google to shame. That didn’t happen, and after initially downplaying the problems with the infrastructure sustaining the exchanges the administration announced that it had finally found a shovel-ready project: by December 1, the website should be working for 4 out of every 5 people looking for health insurance—a pretty high bar, given how things have gone so far. The problem, of course, is that millions of people will now have only a two-week window to ensure that they have health insurance starting on January 1. And quite a few of those people will find that the prices and policies available to them are not particularly wonderful, especially those who had individual coverage already.

Ah yes, the people who had managed to navigate the individual market before the exchanges came into being! A lot of their plans got canceled. After attempts to spin their loss as a victory for Western civilization failed, President Obama saw himself forced to introduce yet another potentially damaging fix. During an impromptu press conference, he announced that in his infinite benevolence he would give insurance companies the chance to uncancel canceled insurance policies. This was certainly not planned for, and involves the following risk: if relatively healthy people choose to stay on their preexisting plans, and relatively unhealthy people join the exchanges, insurers will have to deal with a much costlier group of people buying new ACA-approved policies. And that will inevitably lead to rising premiums and significant sticker shock… again, right before the 2014 elections.

None of this bodes well for Democrats, either politically or in terms of getting their central domestic policy initiative of the twenty-first century off the ground. In retrospect, president Obama probably should have accepted House Republicans’ reasonable, and, seen in the light of recent developments, generous offer to raise the debt limit and fund the government in exchange for a delay in the individual mandate. The federal government would have remained open for all of October, and many an inconvenient political problem would have been avoided.

Stan Veuger is a resident scholar at AEI. His academic research focuses on political economy and applied microeconomics.

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