The ObamaCare death spiral
Congress is trying to get Health and Human Services Secretary Kathleen Sebelius – who in any sane government would be “former HHS secretary” by now – to testify about the disastrous ObamaCare rollout. She is reportedly resisting these demands, which again should be grounds for dismissal. In the Obama era, top officials have become entirely too comfortable with refusing to testify, invoking the Fifth Amendment, and committing perjury.
But you can see why Sebelius would be reluctant to answer questions from Congress, because on previous occasions, it hasn’t gone well for her. One of her most memorable performances came during May 2012 testimony, when Rep. Peter Roskam (R-IL) asked her about Barack Obama’s famous promise – now revealed as one of the greatest lies in American political history – that people who liked their existing health care plans would be allowed to keep them under ObamaCare. Even a year and a half ago, it was already obvious that existing coverage was being wiped out left and right, even though Obama swore that “no one will take away your plan, period.”
Sebelius responded by claiming the plans murdered by ObamaCare were doomed anyway, so it was basically a Kevorkian-style assisted suicide. (Just wait until the ObamaCare IPAB starts literally recommending those! It will happen, if ObamaCare is not repealed. You can make book on it. And I’ll give you a sneak preview of how the Left will handle it: they’ll pose as noble defenders of the civil right of suicide, which they’ll portray as a lifestyle choice not unlike abortion, rather than a brutal cost-control measure from a rationing board. Who are you to tell people they can’t have a graceful and painless exit from an unwanted life, you Bible-thumping teabaggers?)
But I digress. Here’s what Sebelius told Rep. Roskam: “t wouldn’t have mattered if we had passed the Affordable Care Act or not. The private market is in a death spiral.”
At the time, I noted that (a) it wasn’t true – the private insurance market had its problems, many of them caused by clumsy government regulations, but it wasn’t dying; and (b) ObamaCare was more reasonably described as being in a death spiral, as sizable chunks of the law were already rotting away, and the math for its long-term sustainability was dismal.
But here we are, three weeks into the ObamaCrash, and an even more pronounced, fast-moving death spiral is under way. After shutting down the government to resist efforts at ObamaCare repeal, defunding, and delay, President Obama might have to violate the Constitution again and delay most of the program for at least a year, and not just because of the junktastic software he paid a few hundred million dollars of our money to design. That’s certainly part of the problem, but it’s really not a big worry for Obama’s arrogant government – they couldn’t care less about private-sector peons wasting hours trying to log into a crappy website. Your time and convenience mean as little to them as your money or liberty. Actually, all three of those are one and the same, but I digress again.
ObamaCare, you may recall, is heavily premised on fooling healthy young people into paying exorbitant prices for insurance they don’t really need, socializing the cost of providing less expensive insurance to older people, and those with pre-existing conditions. This is why the ObamaCare commissars have recruited so many hip celebrities to tell young people how awesome it is that they can get signed up for health insurance in just ten minutes from the comfort of their keyboards. (Stop laughing, I’m serious – they’re really doing that. To date, no celebrity has accepted my challenge to sit down at a computer, on camera, and show us all how easy it is to create an account and buy one of those insurance plans from Healthcare.gov.)
Now, you might be thinking that if ObamaCare can’t rope in enough young suckers, the government will just print up some more funny money to cover the difference, and then in a few months Obama will be telling us how we absolutely must raise taxes and/or the debt ceiling to pay the bills Congress has already incurred, or we’ll be like a deadbeat diner trying to skip out on his supper tab. But that’s not strictly true. It’s not the government that will lose money from a shortage of youthful sheep toddling into the program. It’s insurance companies. They still exist under government control, just as certain countries noted for the authoritarian style of their governments still had private industry in the early decades of the previous century. (Ask your Grandpa how that worked out for them, kids!)
And those insurance companies can’t survive if the agonizingly slow pace of Obama enrollment keeps up. Three weeks in, there are still states reporting zero ObamaCare purchases, while others show only dozens or hundreds. There’s a grimly accurate joke going around the Internet that more people have signed up for a proposed one-way mission to Mars than have signed up for ObamaCare.
The total is, of course, a carefully held secret of the Most Transparent Administration In History, which obviously doesn’t want to fuel political backlash and industry panic by releasing them. The Obama surveillance state is watching every move made by every Internet user, but not even the NSA can tell you how many people have bought ObamaCare policies – a number that any halfway-decent computer system could cough up in a matter of seconds, or even display in real time through a widget on Secretary Sebelius’ desktop.
Megan McArdle lays out the stakes at Bloomberg News, observing that ObamaCare is going to develop a very real “drop-dead date” that is pretty much impervious to political manipulation:
If the exchanges don’t get fixed soon, they could destroy Obamacare — and possibly, the rest of the private insurance market. The reason that the exchanges were so important was that they were needed to attract young, healthy people into the insurance system. The worry was that if insurance is hard to buy — if you have to do your own comparison shopping and then call the insurance company, and fax in some paperwork and two years of tax returns — that the young and the healthy simply won’t do it. Sick people and old people who were getting huge subsidies — and maybe the ability to buy insurance on the private market for the first time in a long while — would overcome any obstacles, because if you’re spending $15,000 a year on health care, it’s worth a lot of your time to make sure that you have insurance. But if your biggest annual health-care expense is contact lens solution, you may just decide to skip it and pay the fine.
The administration estimates that it needs 2.7 million young healthy people on the exchange, out of the 7 million total expected to apply in the first year. If the pool is too skewed — if it’s mostly old and sick people on the exchanges — then insurers will lose money, and next year, they’ll sharply increase premiums. The healthiest people will drop out, because insurance is no longer such a good deal for them. Rinse and repeat and you have effectively destroyed the market for individual insurance policies. It’s called the “death spiral,” and the exchanges, like the mandate, were designed to keep it from happening.
I wonder if McArdle remembered Kathleen Sebelius’ rhetoric about the alleged private-sector health insurance “death spiral” when she wrote that.
By McArdle’s reckoning, we might be able to set a drop-dead date as late as November 15 for near-total Healthcare.gov functionality; after that, a crush of last-minute year-end enrollments will hit, accompanied by the usual holiday season chaos, leading up to the January 1 dawn of the Individual Mandate Terror. Even if the individual mandate is pushed back six months or a year, to give the Sainted Middle Class relief from paying its tax/penalty, the cost and revenue calculations at insurance companies will enter apocalypse territory. ObamaCare would have to be postponed in its entirety, or repealed, to give them a fighting chance. Otherwise, they’ll soon be asking for a gigantic taxpayer bailout.
That’s far more likely to happen, because it was Barack Obama’s political greed and callous arrogance that created this mess in the first place. As McArdle notes, he held off on issuing rules for the exchanges until the last minute, because he didn’t want to give Republicans any political ammunition during the 2012 election. That’s right, voters: Barack Obama created this disaster on purpose, because he needed to fool you into re-electing him. For similar reasons, he’s not going to delay his health-care boondoggle into the middle of the 2014 midterm elections. That’s why he already violated the Constitution to move the employer mandate back. Imagine Republicans running against a rickety ObamaCare system with a hand-painted “Closed For Repairs” sign hanging on its shuttered ticket booth, like a dilapidated amusement park.
McArdle provides exhaustive documentation of deep-rooted computer problems that make full functionality by mid-November extremely unlikely. The system is already resorting to manual paper shuffling – there are reports of insurance companies hiring extra staff to call individual consumers on the phone, and work out all the details Obama’s bug-riddled software gets wrong. There is word that the Maryland exchange – once touted as ObamaCare’s flagship – won’t truly be ready until mid-December at the earliest. “Once you get beyond the slick-looking front page, it looks like something a college kid may have put together in an afternoon. It’s rife with weird programming, verification errors and dead ends,” was the judgment of a web-savvy ObamaCare supporter.
All of this is going to come off as a repulsive hassle to the young suckers ObamaCare requires. They’re already making sarcastic jokes about the crash-a-palooza Katy Perry told them all the cool kids are checking out. The premiums and deductibles they find waiting for them when they do manage to log in are frightening. The terrible calculus at the heart of ObamaCare failure is the point at which consumers decide it’s cheaper to just pay the tax/penalty and make do without insurance. Cumbersome enrollment procedures make the opt-out look more attractive, and if a dearth of enrollees causes premiums and deductibles to rise even more next year, it’s only going to get worse.
Based on my conversations with young people, they’re not enthusiastic about placing their trust in the hands of an authority that can’t bring itself to fire even the most clearly incompetent managers. They know very well what the evasion of responsibility looks like. Besides, as McArdle notes, one of the much-touted features of ObamaCare is the option for parents to keep those highly desirable healthy young people on the family plan until they’re 26… or until the family plan gets too expensive for Mom and Dad to afford.
Sooner or later, computer techs can resolve programming and data issues. But the geniuses who figured they could just throw taxpayer money at all of ObamaCare’s problems appear to have greatly miscalculated the point at which “later” becomes “too late.”
Update: The Wall Street Journal reports that “health-department officials have pressured insurers to refrain from commenting publicly about the problems, according to executives at four health plans, who asked not to be named.” That should tell you everything you need to know about how things are going backstage at this fiasco. Political goons leaning on captive private-sector vassals to keep the people in the dark? Yes, I do seem to recall that sort of thing happening a lot in certain precincts of Europe, seventy or eighty years ago.
Update: The Heritage Foundation makes a convincing case that, based on the current pace of enrollment, ObamaCare could actually cause a net loss of insurance coverage in the individual market… and that’s not even counting the employer-provided insurance plans that have been dropped because of the Affordable Care Act and its mandates. That’s a pretty steep death spiral.