That’s the theme of my column for The Week today, but before we get there, Investors Business Daily has a great example of the problem. Earlier this week, Barack Obama tried to make the case that activist government is smart governance, but the administration’s biggest legislative victory proves the opposite. After more than three years of preparation, the Affordable Care Act’s implementation is being hamstrung by these kinds of hurdles — at least according to the White House:
But the very next day, AP reported that a “computer system problem” has caused his administration to delay yet another piece of ObamaCare for at least a year.
The delay stems from a conflict between the law’s premium penalties for smokers and its restrictions on insurance rates. While ObamaCare forbids insurance companies from adjusting rates based on health status, it does let insurers impose a significant premium penalty on smokers.
At the same time, the law forbids insurance companies from charging older people more than three times what they charge younger people. The problem is that the premiums for an older smoker can end up more than three times that of a young smoker once you include the penalties.
Late last month, Obama’s tech-savvy regulators quietly told insurance companies that they simply couldn’t figure out how to get their computers to square the two.
“The system currently cannot process a premium for a 65-year-old smoker that is more than three times the premium of a 21-year-old smoker,” it explained.
And a fix could take at least a year.
Meanwhile, the administration tacitly admitted last week that its promise of real-time verification of a consumer’s eligibility to buy subsidized coverage at an ObamaCare exchange wasn’t exactly panning out.
Under ObamaCare, only those who don’t have access to “affordable” insurance at work can buy coverage in an exchange, and only those below certain income levels are eligible for tax subsidies.
Rather than a high-tech instant check, the administration told states they could simply take the applicants’ word for it when it comes to their employer-provided coverage, as well as their “projected annual household income,” without the need for “further verification.”
The smoker penalties are a relatively minor issue. Taxpayer subsidies go to the heart of the law. That’s how the administration and Democrats sold ObamaCare in the first place as a cost-neutral benefit to the working and middle class. They claimed that the subsidies would allow only those who needed assistance to buy their own health insurance in state exchanges, balanced by the fines imposed on businesses for not providing health coverage and taxes paid by everyone else. Now the administration proposes to allow anyone to claim subsidies without any check on those claims, which will create a Mack truck-sized opening for fraud, abuse, and waste.
If the Obama administration couldn’t get its own legislative priority in shape for on-time implementation in three-plus years, what does that say about its performance in other areas? And why not delay the individual mandate until this verification system is ready to protect taxpayers against waste, fraud, and abuse? To do so would be to stiff supporters of their long-awaited subsidies just before the midterm elections, that’s why:
The individual mandate will get a waiver of its own, one likely to cost taxpayers billions in unneeded subsidies. The ACA offers public assistance to taxpayers at certain income levels to make the mandated health insurance more affordable, predicated on proof of income levels and insurance requirements. The law requires the exchanges to verify those income levels, but at least for the first year, the White House wants to waive verification. Instead, taxpayer subsidies will get assigned on an honor system.
Bear in mind that the IRS, which knows practically every detail of taxpayer income, will have the role of enforcer in this mandate. Why, then, does the administration need a delay in verification when taxpayer money is on the line? They have had more than three years to develop a system that communicates between state exchanges and the IRS to expedite verification so that qualifying applicants can get the necessary subsidies to buy the required insurance. National Journal provided a handy chart to explain the complexity involved as a way to defend the delay.
Interestingly, the White House didn’t go as far on the individual mandate as it did for businesses. If the administration can’t handle the verification process for the individual mandate, why not delay the imposition of it along with the employer mandate until 2015? Perhaps they don’t want the political headache of suspending the subsidies they’ve promised for more than three years to a significant chunk of the electorate right before the 2014 midterm elections. Instead, they seem more than happy to open the system up to at least a full year of potential fraud and abuse in a system that’s supposed to reduce both through greater governmental intervention.
This series of retreats after three years of preparation make it clear that the law’s critics were correct. The ACA creates far too much complexity for government to handle, even a government that made this the crowning achievement of its administration. The Obama administration’s serial admissions of incompetence on the rollout of its signature legislation not only calls into question the future of the health-insurance industry under the provisions of ObamaCare, but also the competency of the administration on tasks with lower priorities for the White House.
These delays and choices are entirely driven by midterm politics — which is another danger of activist government. It’s one reason that the founders chose to limit the power of the federal government, a decision that seems wiser with each passing day. To paraphrase Thomas Jefferson, that government which governs least governs smartest.
Speaking of smart, Ramesh Ponnuru offered an intelligent take earlier this week on ObamaCare’s six big problems, none of which have to do with Republican “sabotage,” as some of its defenders have now taken to claiming. I take that back — one of the problems does address that point:
Fourth, the administration is not following previous norms about how to build public support for a new program. Instead, it has adopted a whatever-it-takes mentality to overcome the opposition. It will use force or stealth as needed to get its way. The delay in the employer mandate should quiet business opposition until after the 2014 election; the IRS decision should keep non-cooperating states from opting out of exchanges.
Unlike most previous social-policy milestones, this law was jammed through Congress over the opposition of all Republicans, some Democrats and most of the public. The financial crisis had delivered the Democrats such large majorities in 2008 that they could accomplish longstanding ideological goals that had nothing to do with that crisis. Nor did Obama himself have a mandate for the law, having campaigned against some of its most controversial features — for instance, the individual mandate and the new taxes on health insurance — during his 2008 presidential run.
Fifth, the law’s problems aren’t simply the result of Republican sabotage, as many of its supporters say. It is an odd defense of a law — especially one that most people oppose — to say that it would work well if only the country were uniformly behind it. And last week’s delay undermines this defense. The administration simply flinched from the economic consequences of the law; Republicans had nothing to do with it.
Sixth, opposition to Obamacare is reasonable. Democrats have been portraying any disagreement with the law as pathological, a break from the standard practice in which the losing side of a legislative debate reconciles itself to defeat and works with the winners. But the law is itself a break from standard practices in several respects, it remains unpopular, and the administration has now effectively conceded that it’s seriously flawed and not set in stone.
The administration flinched from both the economic and the political consequences of the bill, which are tightly intertwined. That’s no one’s fault but this administration’s, and the Democrats in Congress that shoved it down the throats of American voters who have always been opposed to it, and are now as opposed than ever.