The End of Obamacare

To read Robert Pear, longtime health-care policy reporter for The New York Times, over the last year is to know that Obama's signature achievement, the Affordable Care Act (ACA), also known as Obamacare, is in real trouble. I'm not sure if the Gray Lady's shift from booster to skeptic happened last year or the year before, but the conversion is now fully upon us. Paul Krugman, who for many years would devote at least one column per week to the wonders of Obamacare, has largely gone silent on the issue.

For a good overview of why the ACA is headed for the dustbin read "Obamacare: The Neoliberal Model Comes Home to Roost in the United States—If We Let It," by Howard Waitzkin and Ida Hellander, which appeared in the May issue of Monthly Review. In a nutshell, the Affordable Care Act is not affordable. There is no way to control costs. Premiums, deductibles and co-pays are all on the rise, and the increases in costs are not sustainable.

Pear's story in yesterday's paper, "Obama Offers Ways to Improve His Health Care Law," dealt with the lengthy, academic apologia for the ACA penned by Obama and which appears online in the Journal of the American Medical Association. "United States Health Care Reform: Progress to Date and Next Steps," was too long for me to ingest. But the conclusion from the abstract reads as follows:

Conclusions and Relevance Policy makers should build on progress made by the Affordable Care Act by continuing to implement the Health Insurance Marketplaces and delivery system reform, increasing federal financial assistance for Marketplace enrollees, introducing a public plan option in areas lacking individual market competition, and taking actions to reduce prescription drug costs. Although partisanship and special interest opposition remain, experience with the Affordable Care Act demonstrates that positive change is achievable on some of the nation’s most complex challenges.

My coworker asked me incredulously yesterday after seeing the story online, "Can you believe Obama is backing public option now?" Pear shares her incredulity:

White House officials said that Mr. Obama’s purpose in writing the article was to start a discussion and suggest a direction for elected officials and future policy makers, but that he would not be offering detailed new legislative proposals to carry out his ideas. 

Based on his experience in the last few years, Mr. Obama said, Congress should establish “a public plan to compete alongside private insurers in areas of the country where competition is limited.” 

Most of the country has benefited from competition in the marketplaces, and 88 percent of the people who have enrolled live in counties where at least three insurers offer plans, Mr. Obama said. But, he said, the remaining 12 percent are in areas with only one or two insurers. 

Jason Furman, the chairman of Mr. Obama’s Council of Economic Advisers, said, “A public option would be one way to make sure that there was competition everywhere.” 

In the debate on health care in 2009 and 2010, Mr. Obama said he supported the idea of a public option, but he did not always insist on it, and the administration sent mixed signals about how important it was.

Besides the expansion of Medicaid, the key component of Obamacare is the provision of federal subsidies for people to purchase insurance in the online marketplaces:

The online exchanges will be a viable source of coverage “for decades to come,” Mr. Obama said, but “further adjustments and recalibrations will likely be needed.” 

Of the 11 million people with marketplace coverage, 85 percent receive tax credits that, on average, cover nearly three-fourths of their premium costs. But for some, said Kristie Canegallo, a deputy chief of staff at the White House, the “tax credits aren’t big enough.”

Obama is whistling past the graveyard on this one, as Carl Hulse reports in "How an Arcane Spending Fight Could Alter the Federal Balance of Power." The Obama administration has been funding the health insurance subsidies without Congressional authorization: "The final word may come in federal court, where a district judge has already found the spending to be unconstitutional. The administration is appealing that decision."

The administration is likely to lose. Even with the premium subsidies, health insurance is too expensive for most because of the high deductibles and co-insurance. Without the subsidies the online marketplace collapses. All that will remain of Obamacare is the Medicaid expansion for those states that opted in.