Quotes of the day

The implicit promise of Barack Obama’s presidency, delivered during the 2008 campaign and again repeatedly since then, was that government would not face a debacle like the recent malfunction of the technology behind the president’s new health care marketplaces.

In his biggest and most important speeches, the president often talks with passion about a “smarter, more effective government.” He has called on Congress to embrace and pay for a “21st century government that’s open and competent.” And he has vowed to work to “rebuild people’s faith in the institution of government.” …

The breakdown of the federal HealthCare.gov Web site could emerge as a test of Mr. Obama’s philosophy, with potentially serious implications for an agenda that relies heavily on the belief in a can-do bureaucracy. Michael Dimock, the Pew center’s director, said that the longer the problems persist, the more they could bolster what he called the “almost American value that government is inefficient.”


“We would have done this” for a fraction of the price, “and it would have been working perfectly,” Marc Benioff, founder and CEO of Bay Area global cloud provider Salesforce.com, said in an interview. “But we were turned away.”…

Certain companies may be able to provide services on a volunteer basis as long as they don’t stand to gain from the project. If they don’t sign a contract or require compensation, businesses might not even have to disclose their participation. But even then, it’s not so easy to play savior.

“The skill that is needed most for someone to come in is the knowledge of how the system works,” said Eric Ries, a Silicon Valley startup founder and creator of the popular “Lean Startup” philosophy. “Even if you got Google up to speed on the crazy architecture that makes no sense, … it’s like if you have a pre-digital clock and you want to hire a hotshot. You need someone who knows how an antique clock works.”


For White House veterans, this week has reminded them of the intensely negative publicity, scrutiny and skepticism that surrounded the administration’s initially plodding response to the Gulf oil spill. In those difficult days, Obama and senior officials realized nothing could be communicated about cleanup efforts or economic intervention to assist affected states until, as several officials phrased it then, someone “plugged the damn hole” spewing oil into the Gulf.

Now, officials here privately concede, the White House cannot convey anything memorable about the new healthcare law until someone “fixes the damn web site.”

The great difference with the web site, unlike the drilling platform that exploded in the Gulf, is the administration created the healthcare law and the web site.

“We built, we own it and it’s all ours,” said one official. “We can’t escape it and we will have to face all the criticism until we get it right.”


Fullerton resident Jennifer Harris thought she had a great deal, paying $98 a month for an individual plan through Health Net Inc. She got a rude surprise this month when the company said it would cancel her policy at the end of this year. Her current plan does not conform with the new federal rules, which require more generous levels of coverage.

Now Harris, a self-employed lawyer, must shop for replacement insurance. The cheapest plan she has found will cost her $238 a month. She and her husband don’t qualify for federal premium subsidies because they earn too much money, about $80,000 a year combined.

“It doesn’t seem right to make the middle class pay so much more in order to give health insurance to everybody else,” said Harris, who is three months pregnant. “This increase is simply not affordable.”…

Pam Kehaly, president of Anthem Blue Cross in California, said she received a recent letter from a young woman complaining about a 50% rate hike related to the healthcare law.

“She said, ‘I was all for Obamacare until I found out I was paying for it,'” Kehaly said.


What will they find? One way to understand what is being offered is to think in terms of three “mores.” Insurance à la Obamacare will be more expensive, more subsidized and more comprehensive than what was previously available on the individual market…

If we ever get beyond the follies of HealthCare.gov, the politics of the rollout will probably be defined by how (and how vocally) middle-class Americans just above the subsidy threshold react to this “pay more, get more, subsidize other people” deal.

Some of them will be buying for the first time, spurred by the mandate’s penalties; many others will be shopping for a new plan because their previous ones no longer meet Obamacare’s requirements. Will they be grateful for more comprehensive coverage, even though it’s being forced on them and has higher premiums attached? Or will they feel they were misled by the president’s “if you like your insurance plan, you will keep it” rhetoric, and drive a further backlash against the law in 2014 and beyond?…

This is why the law’s critics believe Obamacare might be a long-term failure even if it survives its launch troubles and works on its own terms for a while. It’s not about the good things the reform delivers: those are real enough. It’s about whether there are too many other goods, for too many people, that the law’s three “mores” end up crowding out.


It’s “just simply factually untrue,” said Goldberg, at-large editor of National Review Online, when discussing the President’s prior statements on how the Affordable Care Act would allow people to keep their insurance and that premiums wouldn’t go up.

“From the beginning, President Obama’s statements about how you can keep your insurance, your premiums won’t go up will go down in history, conceivably at least, it looks like it, as the biggest single domestic policy lie in presidential history. It is just simply factually untrue and there is copius data, copius video of him saying these things.”


In almost half the states with exchanges, the overwhelming majority of enrollments are coming from Medicaid, not the new insurance markets — 87 percent in Washington, 82 percent in Kentucky and, last time I looked, 100 percent in Oregon (which delayed opening its insurance exchange in order to work out technical bugs). The Medicaid expansion side of the bill seems to be working fine in the states that opted for the expansion. But the private insurance side doesn’t seem to be getting a lot of pickup.

That’s a problem for three reasons. First, signing up for Medicaid is a comparatively simple process, which means that we don’t really know how well things are going on the private side in many of these states. Second, insurance products need a pretty big pool of customers in order to be stable; otherwise, there’s too big a risk that you’ll have a wildly disproportionate number of sick people. Obamacare has risk-adjustment mechanisms to try to mitigate this problem, which I discussed the other day, but they only defray some of the expenses for an insurer that gets too many sick people. Besides, the mechanisms are only temporary; they go away after 2016.

The third reason to worry is our old friend adverse selection. If relatively few people are buying insurance in the private marketplace, those people are likely to be older and sicker than the population that was projected to enroll. That makes it likely that premiums will rise quite a bit next year, scaring off young, healthy people even more.


Over at The Incidental Economist, Adrianna McIntyre explains part of the health care law that many people probably did not know was in it. (I know I didn’t — at least not in detail.) Even if the individual mandate is delayed for a year, she points out, the private insurance market won’t immediately be destroyed by the so-called “adverse selection death spiral” — the crash that occurs when health plans contain too many sick people (net-users of the money in the pool) and not enough net-payers (healthy people).

The short version? Obamacare contains a partial bailout for insurers with losses greater than 3 percent in any of the first three years…

What if the mandate is not delayed, but the current enrollment “glitches” cause an adverse selection problem anyway (i.e., the most desperate uninsured are more likely to have the persistence to enroll and enrollment of healthy people just never catches up)? An industry-wide bailout might be needed anyway.

Either way, next fall, if higher premiums are announced for exchange plans in 2015 and it becomes clear around the same time that a bailout of insurers is on its way, it isn’t going to go over well with the public.


Why not delay the penalty, just in case? Attacking the so-called individual mandate makes for great politics but following through on the delay would destabilize the new and vulnerable insurance market. Next year, the law will oblige insurance companies to accept pretty much anyone, regardless of age or health. The trade-off is that everyone will be required to buy into the system so that insurance companies can have enough healthy customers to keep premiums for everyone reasonable. The penalty against individuals lacking health-care coverage is a crucial tool in the effort to drive people into the new system. Delay it, and you’ll get fewer people signing up in the first part of next year, and insurance companies will demand, with good reason, to renege on the rates they are offering for next year’s coverage. At present, lawmakers do not need and should not attempt to make that outcome any more likely.

On Friday, Jeffrey Zients, the site’s new point man, said the HealthCare.gov system will work by December. He and everyone else had better hope that its bungled rollout hasn’t turned off too many people permanently. If Congress wants to help, it could make sure the necessary funds are appropriated to complete the Affordable Care Act’s implementation.


Romney’s heathcare plan in Massachusetts included the same mandate to purchase private insurance. “We got the idea of an individual mandate from [Newt Gingrich], and [Newt] got it from the Heritage Foundation,” said Romney, who thought the mandate “essential for bringing the health care costs down for everyone and getting everyone the health insurance they need.”

Now that the essential Republican plan for healthcare is being implemented nationally, health insurance companies are jubilant…

So why are today’s Republicans so upset with an Act they designed and their patrons adore? Because it’s the signature achievement of the Obama administration.

There’s a deep irony to all this. Had Democrats stuck to the original Democratic vision and built comprehensive health insurance on Social Security and Medicare, it would have been cheaper, simpler, and more widely accepted by the public. And Republicans would be hollering anyway.


Via NRO.


On State of the Union Sunday morning, a panel debated whether the Affordable Care Act’s federal exchange website problems might cripple the law, with New York Times’ Ross Douthat arguing that if young, healthy, middle class people don’t sign up, which they currently can’t, Obamacare will fail.

“The entire presidency is riding on [Obama’s] ability to do that,” Douthat said.


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