The Obamacare plot twist

July 18, 2013

For months, we’ve been told that the impending implementation of the Affordable Care Act (aka Obamacare) will lead to soaring healthcare costs and more expensive premiums. That narrative has taken hold, even for those who otherwise support the suite of reforms. And that’s why the recent front-page article in the New York Times, reporting that premiums in New York State may actually fall 50 percent or more, came as such a surprise.

Only a few weeks prior, the Wall Street Journal announced that “Healthy consumers could see insurance rates double or even triple when they look for individual coverage under the federal health law later this year.” Their analysis did acknowledge that ailing individuals could see rates fall, but the driving point was one that has been made ad infinitum by critics of the reforms: costs will soar.

So entrenched is that view that the Republican-controlled House of Representatives continues its quixotic quest to repeal the bill, and voted this week for the 38th and 39th times to repeal parts of the bill, including the “employer mandate” that the Obama administration has already decided to delay. Paul Ryan said about the latest vote: “This law needlessly raises healthcare costs. And this law will cause millions of people to lose the health insurance that they have, that they want to keep.”

The debate distills to this: Can a bill that depends on an uneasy blend of free-market incentives and government regulation succeed in providing universal access to healthcare at a reasonable cost? The premise of the act in the first place was that a system of healthcare exchanges would encourage competition and keep prices moderate even as the pool of insured people expanded.

But that assumes that states implement it in good faith. The staunch opposition of Republicans has meant that many states with little regulation of insurance companies or healthcare are delaying or actively resisting many aspects of the bill. What’s clear is that opposing the bill is a good strategy if you want the reforms to fail. The success of the legislation depends on the cooperation of state governments, insurance companies and federal regulators. That is hardly unusual, but the complexity of the reforms make it all the more imperative.

Yet the divergences over the bill and its consequences mask a rather severe rift between federal actions, state conviction and popular opinion. Despite laws passing at the federal level, the reality is that the United States remains a federal system that requires vast efforts of compliance by states and by individuals. One of the great gripes of state-level politicians is that Washington is forever passing “unfunded mandates” and assorted vague and complex laws, and then leaving it to states to pay for and figure out the implementation. The Affordable Care Act is Exhibit A for these tensions.

Yet for the American system to work, some level of compliance and trust are essential. That is true for paying taxes, and it’s true for healthcare reform. There is no way the government could actively force every single person to pay taxes without creating a coercive police state. And healthcare reform will not work unless multiple segments of society work jointly and cooperatively. Even the vaunted aspects of the bill that encourage competition require some level of cooperation. Various insurance companies and state agencies have to hash out the details of the proposed exchanges for the currently uninsured and provide alternatives for those currently insured under different plans.

In short, the bill requires what Silicon Valley firms have called “coopetition,” which acknowledges the tensions and competition inherent in various enterprises but recognizes that there are joint needs that demand collective action. Coopetition as applied to healthcare implementation would mean different states would have thicker or thinner regulatory regimes, and more or less competitive pricing of insurance, but that all would make a good faith efforts to implement healthcare exchanges and honor the federal mandates for universal coverage.

Yet opponents have been set against the act. Unlike other examples of intransigence in the face of a national bill, obstructing the Affordable Care Act might fatally undermine it. Southern opposition to the Civil Rights Act of 1964 and the Voting Right Act of 1965 triggered federal responses that forced compliance, but there the moral issue was widely settled, and there were clear mechanism to force compliance. You can’t do that with the Affordable Care Act. There is no scenario where Obama could call out the national guards to force states to open functional healthcare exchanges.

That’s why the news from New York is so potent. The primary fuel against the act is that it will expand the scope of government at the expense of prosperity and good healthcare. That is why there have been so many stories of businesses threatening to lay off workers if the bill is implemented, and so many tales of soaring costs directly harming already stretched individuals whose incomes have stagnated. But if the bill actually lowers costs and delivers care that is at worst not much different than now, then the opposition begins to fracture.

The most likely scenario, of course, is that states that work with the bill will find a way to contain costs and perhaps lower premiums for individuals and for companies. State governments that oppose the bill might succeed in driving costs up. That could in turn keep the ideological fires nicely tended. Opponents and supporters can claim victory, and blame negative outcomes on the other.

That said, if even a handful of larger states can demonstrate lower costs and expanded care, that will be a body blow to opponents who have relentlessly promulgated the story that expenses will soar and the quality of care will plummet. Ultimately, almost everyone wants universal care and good care, even as there are adamant conflicts over how to provide those. Others states could well look at how pricing in New York unfolds and then demand the same for themselves.

If this much-reviled bill proves to work for tens of millions in select states, it will change the current narrative dramatically. It will demonstrate that collective action is not just desirable for optimal collective outcomes; it is essential. Fight all you want to prevent laws you dislike from passing; work all you wish to amend laws that have passed; but once those laws exist and have been validated, work together to implement them. Sounds oddly naïve in today’s jaded world, but it’s the only way forward.

PHOTO: A combination file photo shows opponents (L) and supporters (R) of Affordable Healthcare Act rally on the sidewalk at the Supreme Court in Washington on March 28, 2012 and on June 28, 2012 respectively. REUTERS/Jonathan Ernst (L) and 

REUTERS/Joshua Roberts (R)


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Excellent op-ed, but I must take issue with one statement you make that simply is not true: “Ultimately, almost everyone wants universal care and good care, even as there are adamant conflicts over how to provide those.”

I ask Mr. Karabell to provide us with the Republican plan for universal healthcare. If the Republicans really wanted universal healthcare for Americans this would be the plan. After all, it’s a market-based plan that originated at the Heritage Foundation, a conservative think-tank. It’s also the plan implemented by the Republicans’ latest Presidential nominee, Mitt Romney, when he was governor of Massachusetts. Now the plan, which goes by the name the Affordable Care Act, or Obamacare, is the worst piece of socialist legislation in our history, according to the GOP and their parrots…er, I mean, supporters. The Republicans have tried to repeal it 39 times now and I’ve yet to hear what they want to replace it with. So if I’m missing something, Mr. Karabell, please point me to the GOP plan for universal healthcare.

Posted by flashrooster | Report as abusive

Let me mention how screwed up the federal government is even before the Affordable Care Act came into being.

My wife needs oxygen which is called DME (Durable Medical Equipment). In order that Medicare does not pay excessively for this equipment, they decided that in major metropolitan areas, companies in that business would have to submit competitive bids. So far so good.

June 30th of this year was the cutoff date whereby patients who had previously used companies that did not make the cut with competitive pricing, must switch to companies that made successful bids.

But in their infinite bureaucratic wisdom, Medicare did not notify either the medicare patients nor their physicians who prescribed the oxygen in the first place. So the mad scramble is just now beginning to be felt. Those companies that did not make competitive bids called the patients saying that they were picking up their oxygen equipment. This makes sense since Medicare would no longer reimburse them for the equipment.

In addition to the confusion, Medicare had an internet-based list of oxygen companies. BUT, the list included companies that did not qualify in the bidding process. And to make matters worse, the one company that my wife initially used had been sent the physicians’ oxygen prescription THREE TIMES before getting it right!

Things like this happen to many private-sector companies and those that operate in a slovenly manner simply don’t survive. Meanwhile, the Health and Human Services incompetent bureaucrats 1) Continue to remain in their jobs, and 2) Continue to accrue their ‘guaranteed pension benefits.

The simple fact is that NOBODY CARES. HHS does have an ‘ombudsman’ function. However, it is virtually impossible to get hold of one directly.

Let’s face it: America is following the same road as the socialist countries in Europe has done where everyday citizens are pitted against their federal bureaucracies. this is no way to run a country.

Posted by neilc23 | Report as abusive

neilc23: If Medicare is so bad for you and your wife, I would recommend that you put your money where your mouth is and take her off Medicare immediately. Problem solved.

Posted by flashrooster | Report as abusive

You’re an idiot, and an insensitive one at that!

Posted by JRTerrance | Report as abusive

Excellent Piece! I agree with @flashrooster that not everyone really wants universal healthcare, at least not for everyone. But @flashrooster, people are on Medicare because they have to be, not because they want to be. Unless f course you personnel know @neilc23 and that he has plenty of money to spare every month.

Posted by tmc | Report as abusive

Hi, tmc. I was just making a point. I refer you to the poster’s first sentence. He feels that Medicare is so terrible, “even before the Affordable Care Act came into being.” So apparently he likes neither Medicare nor the ACA. I’m sure Medicare isn’t perfect, but most people like it. I’m simply saying to the poster that if it’s so terrible, don’t use it. As my mother used to say, there’s simply no pleasing some people.

In the meantime the Republicans want to cut funding for Medicare. Cut funding, cut administrators, lower the amounts Medicare will pay, etc., and, yeah, it will make it harder to properly run Medicare, which is what the Republicans want. They don’t want any program that will make it easier for Americans to have access to affordable healthcare.

It doesn’t help that the Republicans added a clause to Bush’s Medicare Prescription Drug Plan that forbids Medicare administrators from negotiating with pharmaceutical companies for lower drug prices. I think that so unbelievably crazy. Why is this acceptable to anyone? Where’s the outrage?

Anyway, the ACA is far from perfect, but we finally got a President that was unwilling to accept doing nothing about the healthcare crisis in this country. Whatever one thinks about the ACA, it’s the best plan that we can get right now. No one has offered a better plan that stands any chance of passing. My biggest complaint about the ACA is that it does nothing to bring down the spiraling cost of healthcare. Unfortunately, because of the corruption in our government, there’s nothing we can do to bring down the cost of healthcare until we clean up our government. The healthcare industry and its lobbyists are just too powerful and have too much influence. They like things just the way they are minus the ACA. Heck, they did everything they could to prevent the ACA from passing and are still trying to kill it, spending millions of dollars on a smear campaign trying to convince Americans that the ACA, this conservative, Republican plan, is terrible. But it actually does a lot of good things. If Republican governors and state legislators would try to make it work for the people we could actually bring down insurance rates. That’s important. But just think what we could do if we had a free nation and were able to actually take steps to bring down the cost of doing healthcare in the US. Too bad our Republic no longer functions as a democracy. It could be so great.

Posted by flashrooster | Report as abusive

We refuse to admit that medical schools, universities and hospitals are businesses that should not be accorded tax-exempt status. Suggest we look for better approach to turn out medical doctors avoiding roundabout production methods. Medicare was much more expensive that LBJ imagined because no one in Washington D C understood accident and sickness insurance is meant to avoid financial ruin, not finance preventive care. Also, if Medicare had been a true insurance plan those persons living in states such as South Dakota and North Dakota would be paying less than persons living in New York City or San Francisco. Cost of living varies by region as does cost of medical care. The federal government should have been competing against private insurance companies in same manner as First and Second Banks of US, precursors to Federal Reserve, competed against private banks.

Posted by zylon | Report as abusive

Please explain how adding 20M new people to “free” healthcare with a new middle class entitlement and 200,000 pages of regulation to the US Code will possibly lower the cost and improve the quality of medical care and related insurance ?

What you call “cooperation” is actually just more layers of approval by bureaucrats that can only be bought off with one thing: more money sucked out of the young and healthy and the responsible. The death of Obamacare is not some vast right wing conspiracy. It is the death that ever single attempt to bureaucratize and centralize an essential service has always suffered and always will suffer. From Mao’s Great Leap Forward to Johnson’s Great Society, centralized planning schemes always fail.

Posted by Fechtmeyer | Report as abusive

I think there are some parts of the economy that should not be under the free market model. Healthcare, government (including the Military), Social safety net (retirement) and I dare say Energy should be under a more social model. China is proving this theory pretty well. Other countries are following their lead now, not ours. Obamacare is a step in the right direction. We all know it will fail as it is, but it was the only thing we could get passed with our corporate government. When it fails we will likely move to socialized medicine like every other respectable country in the world.

Posted by tmc | Report as abusive

A group of Democratic Senators have introduced legislation that would allow Medicare to negotiate for lower drug prices, currently forbidden by law. It’s called the Medicare Drug Savings Act. This is common sense and every senator, no matter the party, should be in full support. Unfortunately, it probably won’t go anywhere because our government is corrupt and too many legislators are being paid off by big pharma that, in the course of maximizing its profits, had struck up a deal with legislators that forces tax payers to pay more for our drugs (through Medicare) than anyone else on the planet. I wish everyone would contact their senators and Congressman and demand that they support this: icare-drug-savings-act-2013.html

Posted by flashrooster | Report as abusive

The simple solution to health care is free coverage for all Americans but how do we pay for it? That’s equally simple. Start by eliminating congress’ lavish pension, cut all subsidies to ethanol, big oil, corn, farming, and a zillion other giveaways brought to you by the best government money (in the form of lobbyists) can buy.

Posted by MrNomad57 | Report as abusive

What’s worse than contracting cancer? That’s when the insurance company whose premiums you’ve been paying for years tries to squirm out of their obligation to pay for your treatments. Ask me how I know.

But until every (so called) conservative experiences this crisis, they will fight universal medical care for all US citizens. Recently, a Tea Party person (I use the term “person” loosely) said that people with cancer who don’t have insurance coverage can receive the care they need at an emergency clinic for free.

Can u imagine a more out-of-touch, insensitive, inhumane, callous disregard excuse for a human being?

Posted by MrNomad57 | Report as abusive

Of course there is an incentive to implement insurance exchanged from the federal government. Federal aid! For example, if states had not implemented the seat belt law, the federal government threatened to stop or cut federal funding for highway construction. Since most major highway construction could not be done without a large federal match (80/20 or 90/10 federal/state), the states realized that their self interest was to pass the seat belt law. The President has the power to slow pay or no pay for federal largesse to the states. I believe the states are naive when it comes to how much they depend on the feds for funding and that funding will play a role in implementing the Affordable Care Act at the state level.

Posted by Grand1 | Report as abusive

There were the same rabid attacks on the Democrats when Social Security was enacted under Roosevelt, yet no elderly Republicans turned down their SS checks then, nor do they turn them down now. No Republican surviving spouses turn down their SS checks when they’re eligible for them. And…the American way of life didn’t end. The same will hold true with ACA.

When State A realizes that State B is enjoying proportionately lower health insurance payments, for the young and old alike, State A will be all over it. What politician wants to be the one who refuses its constituents lower health insurance premiums at election time?

Then, during their local campaigns, the same politicians who are obstructing the ACA in their state now will talk about how they really were for it all along.

The ACA is coming and it will likely be a viable, if not very successful, alternative to the healthcare insurance system we have in place now.

Posted by JL4 | Report as abusive

@Fechtmeyer, they have “free” healthcare now. They go to the county clinics for medical care. They go to the Emergency Rooms for immediate care. The taxpayers pay 100% for that.

Remember, of those 20M you refer to, I’m guessing a very large percentage of them are employed, not deadbeats, but have no medical benefits through their employer. This way, they can have insurance coverage and be paying into the system.

As the healthcare insurance system is now, the young and healthy carry the weight of the elderly and ill.

Posted by JL4 | Report as abusive

@JL4, I think the illegals will still have free healthcare. They won’t get penalized since they don’t file federal or state taxes, and no hospital will refuse emergency care. It’s both the law, and a moral obligation of doctors.

Posted by tmc | Report as abusive

@tmc – I’m not for a healthcare policy that would withhold healthcare from millions of Americans just to penalize illegal immigrants. Besides, if illegal immigrants are already getting free healthcare, how will helping millions of Americans get healthcare *prevent* illegals from continuing to get it? Doctors and ERs will still have to provide care, or take another oath.

Illegal immigrants are a separate issue.

Posted by JL4 | Report as abusive

The Affordable Care Act is pretty lame and watered down. But one good function is that it requires insurance companies to spend at least 80% of their collected revenues on…. the patients. Not on overhead or advertising, or executive bonuses for themselves. Rather…. on medical care for the people who paid the premiums to begin with. I think that’s a good start. It’s no surprise the insurance companies fought this all the way.

Posted by AlkalineState | Report as abusive

When Obama came into office, everyone agreed that the medical economy was broken with escalating costs and diminishing care. People wanted affordable care and insurance cos off their backs. So Obama gives us UNIVERSAL health care, that will greatly increase the demand for health care, while promising to lower payouts, which will greatly diminish the amount of care available (since many doctors won’t want to continue working under those conditions.) By the law of supply and demand, this will greatly increase the ultimate cost of care while reducing it’s availability *by allowing insurance cos to manage who gets what care.*
He has done the exact opposite of what most people wanted.
Additionally, now that he has (illegaly) suspended the employer mandate [which is the easy part of ObamaCare to implement] while keeping the individual mandate, he will be forcing millions more into his “insurance exchanges” since their employers won’t be forced to provide them insurance. This will only accentuate his STATED goal to get *everybody* into a “single-payer system” (i.e. completely socialized government run medical care).
This has ruined (Argentina) or is in the process of ruining (Canada, Europe) every country that has attempted it.
Our medical care system IS broken, but its Rx is less restrictions, less mandates and less federal dollars which is the primary driver in escalating costs and the drive toward for-profit medical care.

Posted by theedgeview | Report as abusive

theedgeview writes: “So Obama gives us UNIVERSAL health care, that will greatly increase the demand for health care, while promising to lower payouts, which will greatly diminish the amount of care available…”

Universal health care? Do tell. Who said it was universal health care? Glenn Beck? Good one.

Posted by AlkalineState | Report as abusive

This is not a dilemma. Obamacare is mot a great system by default. The non existence of a Republican health as harped on on by roosterlemming. does not mean Obamacare is acceptable by default; that’s fallacious reasoning (and no, roosterlemming, that’s not a sexual term).

The bill wasn’t even read before it was signed. This bill creates 73 unknown new agencies with unknown powers, gives unlimited power to Health and Human services. It funnels 17 million people into a system that is going to implode on itself resulting in limited services.

You have a group of bureaucrats,, probably with the same moral fiber as the libs in general, i.e. none, who will determine the medical fate of anyone whom they may or may not think deserves it. And then you have the corrupt IRS enforcing it? This is a bad bill for America.

‘ The ACA is far from perfect’. Oh, you think? What gives you the first clue?

ACA is just a euphemism for withholding care from the elderly and disabled.

This is a bad and immoral bill backed by people of the same ilk.

And for the record, JRTerrance, you’re the insensitive idiot.

Posted by BSBee | Report as abusive