The Collapse of Obamacare, Part 2

Three months ago I argued that the “hodge-podge, cobbled-together, bureaucratic-bloated, corporate-handout monstrosity” known as Obamacare was already beginning to unravel. Since then, the cracks have only continued to widen.

State Exchanges

The last deadline has finally passed for states to get involved in setting up their healthcare exchanges. Over half the states are declining to set up anything at all, and seven more are opting for some sort of federal “partnership.”

Remember, originally, the Obama administration was expecting all fifty states to set up their own exchanges. However, only about one-third of them are complying, due to a combination of resistance by Republican governors and too many delays by the Obama administration in giving them sufficient details and instructions.

I haven’t found any more updates about the pending Oklahoma lawsuit, so let’s assume for now that it won’t affect anything. Secretary Sebelius says the exchanges will all be ready by October to promote plans beginning in January. Sounds to me like a prime setup for another delay.

But that’s just an implementation detail, right? Once the exchanges get going, no matter which level(s) of government get them set up, the glorious goal of affordable health care will finally start raining down from the sky, right?

More Business Responses

Businesses, remarkably, are continuing to respond to the new incentives Obamacare is giving them. A few months ago we had a trickle of stories about owners in competitive industries threatening to cut employee hours to avoid enormous healthcare costs.

We now have a steady stream that is beginning to show up in the data; average weekly hours for retail workers have been dropping for over a year and are now hitting three-year lows. Furthermore, this entirely predictable response may be rather difficult for the IRS to counter.

Ballooning Cost Estimates

Why are all these businesses accepting penalties instead of happily providing their employees affordable plans? Maybe it’s because the estimated costs of such plans are still growing. Unsurprisingly, the CBO estimate of those who will lose coverage from their employers has jumped from 4 million to 7 million. (How many times did Obama say “If you like your plan, you can keep it?”)

We do seem to be seeing a slowdown in the rise of actual healthcare costs, but while that’s good news for the deficit, it’s unclear whether or not that’s related to early Obamacare effects, and whether or not it will continue.

In fact, one of the only facets of Obamacare that has actually been fully implemented already – as opposed to delayed, waived, or cancelled – is turning into a colossal failure. The temporary high-risk pools are closing to new applicants because they are already running out of money.

The people overseeing the program are making encouraging remarks like, “What we’ve learned through the course of this program is that this is really not a sensible way for the health-care system to be run.” Optimistically, the unplanned gap will only exist until January – unless the state exchanges are delayed, of course. Either way, that’s not exactly an encouraging sign for the upcoming changes.

Even Obamacare Supporters Are Turning

The ballooning costs are expected to affect one of Obama’s coveted demographics: young adults. Premiums are rising for everyone, but they could double for the young due to arbitrary minimum coverage requirements and limits on rate proportions. Libertarians saw this coming months ago, but now it’s hitting the national news.

This may cause the young to sour on Obamacare eventually, but other groups are already turning. Some Democrats in Congress wanted to delay the new tax hike on medical devices once they realized it would affect their constituents. Unions are getting antsy as they are finally starting to realize that expensive plans may force them to drop coverage and thus undermine a touted benefit of union membership.

The delays, costs, and other surprises are piling up so quickly that Democratic senators are looking frantically for somewhere to shift the blame. “I want somebody to be accountable for this,” says Bill Nelson, but certainly not himself. All he did, you know, was vote it into law.

What If It Does Collapse?

But so what if this overly ambitious, interventionist, uber-gimmicked bonanza continues cracking, eventually collapsing under its own weight? (I am beginning to see this as inevitable, regardless of whatever good intentions some of its supporters may have had.) Whether the collapse is a “bug” or a “feature,” won’t it just lead to even more ambitious and interventionist meddlings, including, but not limited to, “single payer”?

Possibly. But I do not see such a path as inevitable. It is true that government interventions in markets often lead to failures that are unfairly attributed to capitalism, serving as an excuse for further intervention.

However, the ACA has been, from its beginning, touted as a glorious achievement of government. It has even been (perhaps unfairly) attributed to socialism. The post-collapse spin will no doubt be strong, but it seems at least possible to me that the failure will be considered by many as a failure of socialism, or at least of government intervention more generally.

With that future uncertainty in mind, combined with the definite negative present effects of the law, I continue to view the signs of collapse in an optimistic light.

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