The Obamacare Train Wreck

Just when I thought I was out… they pull me back in.

Michael Corleone, The Godfather lll

That’s kind of how I feel about Obamacare today. I’m tired of reading about it, tired of watching the talking heads opine about it and tired of writing about it. Still … it’s fascinating in the same way as watching a train wreck in slow motion loop over and over again is fascinating. Today, the President just added one more segment to that loop.

You know the details. The President basically tried to reinstate his promise that, “If you like your insurance you can keep it. Period.” He did so by suspending the requirement that the insurance companies discontinue insurance policies not grandfathered by the ACA. Whether he has the legal authority is problematic and is probably going to be the subject of some litigation, but for the time being cancelled health insurance policies can theoretically be reissued for one year only.

I say theoretically because there is a general consensus that putting this particular genie back in the bottle is a bit of a problem. Bob Laszweski anticipated something like this a few days ago. Here’s what he said about the difficulty of going back to the future:

Cancellation letters have been sent. Their computer systems took months to program in order to be able to send the letters out and set up the terminations on their systems. Even post-Obamacare, the states regulate the insurance market. The old products are no longer filed for sale and rates are not approved. I suppose it might be possible to get insurance commissioners to waive their requirements but even if they did how could the insurance industry reprogram systems in less than a month that took months to program in the first place, contact the millions impacted, explain their new options (they could still try to get one of the new policies with a subsidy), and get their approval?

The Obama administration told the carriers to be ready on October 1 and they are ready. You just can’t waive a magic wand and put Humpty Dumpty back together again.

Not to mention the fact that about 50 insurance commissioners have to OK all of this. So far at least one, an ardent supporter of Obamacare, has said no way am I signing off. You can expect him to walk back his statements and probably his position after the phone calls but that doesn’t mean that a lot won’t adopt the same attitude. Some of them aren’t liberals and won’t be susceptible to White House entreaties and some might take their duties to insure a safe and affordable insurance market in their state seriously and decide that the risks of a rollback are unacceptable. A chaotic situation thus proceeds to a whole new level.

That the insurance companies are getting thrown under the bus is beyond question. The fact that they carried so much water for the President during the passage of the law makes this move particularly callous. Still it’s hard to summon much sympathy for them. They willingly allowed themselves to be turned into semi-regulated public utilities in exchange for millions of new customers and the assurance of stable, government supported revenue for eternity. Too late are they learning a lesson they probably already knew; there is no such thing as an equal partnership with a government. Rent seeking is inherently risky and as they say, “the wages of sin …,” well you know the rest.

I still think this law will survive pretty much as written but I’ll get to that in a minute. What I do wonder is what this means for government constructed and directed by folks variously referred to as “elites”, “wonks”, “technocrats” and “policy experts”. Washington is awash in these self-described experts, in think tanks, in lobbying firms and shuttling back and forth from academia. Their influence reached its zenith with the ACA. They conceived the structure, wrote the law and oversaw its implementation. The political class, at least the Democratic political class, was more than happy to act as a rubber stamp and produced a  product which was more fill in the blanks than operative law. The technocrats, not concerned with trifling things like getting reelected, proceeded to produce an extraordinarily complex piece of regulatory architecture which of necessity resulted in winners and losers. You have to break a few eggs and so on, after all.

The process of change in a democratic society is generally messy and drawn out, however compromise and consensus, albeit sometimes grudging, usually accompany new directions. That the new program or policy might not be as optimal as could be designed is a necessary sacrifice to securing the buy-in of the majority. The perception, and often the reality, of winning or losing is diminished while the sense of communal action is enhanced. The business of politicians going about debating, negotiating, horse trading and comprehending the implications of their efforts is the process that allows for accepted change. With luck the political class will realize that the animosity and blind alleys the ACA has led to was much the result of their abrogation to, well, do politics, and refrain from ceding their power to a technocracy in the future.

Having gone on too long let me just reiterate the position I took here, which is essentially that the ACA will pretty much survive intact. The current fix is really a sham. Most of those whose policies have been cancelled will stay cancelled and make their way, angrily, to the exchanges. The insurance companies have been set up as the bogeymen which will suffice for the time being. Politically, it might be a catastrophe for the Dems in 2014 but they can comfort themselves by remembering that there are winners and losers, broken eggs if you will. You know, the sort of things they’ve been preaching these last few months.

About Tom Lindmark 401 Articles

I’m not sure that credentials mean much when it comes to writing about things but people seem to want to see them, so briefly here are mine. I have an undergraduate degree in economics from an undistinguished Midwestern university and masters in international business from an equally undistinguished Southwestern University. I spent a number of years working for large banks lending to lots of different industries. For the past few years, I’ve been engaged in real estate finance – primarily for commercial projects. Like a lot of other finance guys, I’m looking for a job at this point in time.

Given all of that, I suggest that you take what I write with the appropriate grain of salt. I try and figure out what’s behind the news but suspect that I’m often delusional. Nevertheless, I keep throwing things out there and occasionally it sticks. I do read the comments that readers leave and to the extent I can reply to them. I also reply to all emails so feel free to contact me if you want to discuss something at more length. Oh, I also have a very thick skin, so if you disagree feel free to say so.

Enjoy what I write and let me know when I’m off base – I probably won’t agree with you but don’t be shy.

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