The End of Obamacare

GOP candidate reiterates pledge to get rid of controversial health care law
AP Images

AP Images


Mitt Romney reiterated his pledge to repeal Obamacare during the first presidential debate on Wednesday while the two candidates sparred over healthcare.

“If the president’s reelected, Obamacare will be fully installed,” Romney said. “In my view that’s going to mean a whole different way of life for people who counted on the insurance plan they had in the past.”

Since the U.S. Supreme Court voted to uphold the law as a constitutional tax increase, the president and his Democratic allies have sought to declare the health care debate over once and for all.

However, the jerry-rigged nature of the law suggests nothing could be further from the truth, healthcare and budget experts say.

Obamacare itself is structurally flawed, will cost far more than the administration says it will, and contains a number of unpopular provisions scheduled to go into effect after the November election, these experts told the Washington Free Beacon.

As a result, the law will face significant challenges in the years ahead even if President Obama wins a second term, not least because of the increasing burdens it will place on middle class Americans.

“I think Democrats never completely thought it through,” Grover Norquist, president of Americans for Tax Reform, said of the health care law. “They threw everything at the wall to get it passed, and just assumed that they would keep editing the mess as they go.”

Many of Obamacare’s major provisions, such as the creation of state-based health care exchanges, do not take effect until 2014. Already, however, the earliest features of the law are failing to live up to expectations.

The temporary “high risk” pools created to provide coverage for those with pre-existing conditions are way over budget, even though enrollment in the pools is less than 20 percent of what the administration projected.

The long-term care insurance program, known as the CLASS Act, has been scrapped after Health and Human Services Secretary Kathleen Sebelius was forced to admit the provision was “totally unsustainable” from a budget standpoint. In doing so, the administration added $86 billion to the estimated cost of Obamacare.

“The bill’s true cost never really added up,” said Douglas Holtz-Eakin, former director of the Congressional Budget Office and president of the American Action Forum. “It was full of gimmicks, it doesn’t bend the cost curve down.”

Health care premiums, meanwhile, have increased by more than $3,000 since Obama took office. Passing heath care reform, the president promised, was supposed to decrease premiums by $2,500.

“It’s a function of very poor design,” said Yuval Levin, a fellow at the Ethics and Public Policy Center. “The economics of it just don’t work. The law creates a health care system that’s not built on economic sense.”

Conservative writer Reihan Salam recently argued in a Reuters op-ed that Obamacare did little to solve the underlying health care crisis in the United States—most glaringly evidenced by “the slow-motion collapse of employer-sponsored health insurance.”

A recent Deloitte survey found that at least 10 percent of employers plan to stop offering health coverage due to rising costs under Obamacare. The White House has ultimately been forced to back track on the president’s pledge that those who like their health insurance plans will be able to keep them under Obamacare.

That process is likely to accelerate once the Obamacare exchanges are implemented in 2014. Eugene Steuerle, an economist and senior fellow at the Urban Institute, has argued that many employers likely will have a strong financial incentive to drop insurance coverage for their employees—thus pushing more people onto the exchanges.

The cost to the federal government of subsidizing these expansive exchanges would consequently become “cripplingly expensive,” Salam wrote.

“This law is going to cost way more than advertised,” political analyst Jay Cost told the Free Beacon. “It has some cost control elements, but they’re extremely unpopular politically.”

Most of the savings in the law, Cost noted, come from imposing strict caps on the annual growth of Medicare spending, on top of more than $700 billion in direct cuts to Medicare providers over the next decade.

Under the law, if Medicare growth exceeds the predetermined caps, a 15-member board of political appointees will be given sweeping powers to make additional spending cuts. Congress, meanwhile, has little power to stop those cuts from taking effect.

Medicare’s chief actuary Richard Foster has expressed considerable skepticism regarding the president’s approach, in terms of its ability to rein in costs and the possibility that it could lead to health care rationing.

Foster has also estimated that Obama’s proposed Medicare cuts would result in about one-fourth of hospitals and other health care facilities becoming unprofitable by 2030, and that they would be forced to cut benefits or restrict access to care.

“The federal government is going to be in charge of deciding who gets what care and how,” he said. “Some people win and other people are going to lose. Unfortunately, most of the winners are those who are part of some politically connect special interest group.”

All of the generally unpopular provisions are scheduled to take effect in the coming years.

One of the biggest problems with the law, Holtz-Eakin said, is that if fails to adequately address the fiscal problems with Medicare.

“We’re going to have to reform [Medicare] again, sometime in the very near future,” he said. “Republicans and Democrats are going to have a choice between cutting Medicare and cutting Obamacare and I have a pretty good idea which one they’ll choose.”

Obamacare is also likely to face further legal challenges. Ramesh Ponnuru wrote at Bloomberg that the law only authorizes tax credits for individuals who get insurance from state-based health care exchanges. But some states will opt out of establishing those exchanges.

Levin said he would “be surprised if more than 15 states” actually go ahead with the exchanges.

The federal government is supposed to set up exchanges for states that do not do so themselves, but the Obamacare law as passed did not provide tax credits for those exchanges.

The Internal Revenue Service (IRS), however, decided in May that it would issue tax credits for these federal exchanges anyway. This is certain to invite lawsuits going forward.

“The law is not ambiguous on this point,” Levin said. “That’s a huge problem.”

“There will be many more court battles over the health care law, because it involves so many legally dubious expansions of bureaucratic power,” Ponnuru wrote. “In addition to the IRS move, there are lawsuits against the administration’s ruling that almost all employers provide coverage for contraception and sterilization, a decision that conflicts with the Religious Freedom Restoration Act.”

Even if Obama wins a second term, Levin said, the practical impact of the law is likely to inspire popular outrage, which could prompt Congress to make changes.

“Congress won’t want to, but they’ll probably have to reopen this even if Obama is reelected,” he said. “I think you’ll see very high premiums very quickly, especially in the individual insurance market. In a year or two federal costs would be astronomically higher than the Congressional Budget Office originally projected.”

The CBO’s estimated cost of the law has nearly doubled since the time it was passed, from $940 billion to $1.8 trillion over the next decade.

Obamacare also contains 20 new or increased taxes on individuals or small business, totaling more than $500 billion over the next 10 years, which Norquist said are unlikely to survive in the coming years, when many are scheduled to take effect.

“I think Congress is unlikely to fund all pieces that they need to make this law work,” he said. “They thought it was going to become more popular, that Democrats would keep their majorities. That didn’t happen.”