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Obamacare’s Implosion

Posted by Steve Markowitz on October 27, 2013

October has been an amazing month on the political front.  It began with the government shutdown, the result of a foolhardy attempt by Republicans to tie the budget talks into shutting down or delaying Obamacare.  This attempt was destined to fail and took the focus off of the miserable implementation of Obamacare and its nonfunctioning website.

After Obamacare’s passage, Republicans took a convoluted strategy.  On the one hand they correctly concluded that the economics behind Obamacare could not work and the program would significantly drive up overall healthcare costs.  This economic reality guaranteed the ultimate failure of Obamacare that would to the choice of substantially changing the program or watching it significantly add to America’s deficit.  Given this the strategy should have been to let Obamacare proceed as quickly as possible to implode on its own.

After the government shutdown defeat, Republicans once again take the wrong strategy with Obamacare.  Given the failure of the website portal and the news media panning Obamacare’s implementation, Republicans now attempt to delay the program for a year.  This will not kill Obamacare, but instead delay it until after the November congressional elections.  This delay will lessen the political damage to Democrats who supported the program.  Those that supported Obamacare must take ownership and responsibility for its failure.  The day of reckoning is in November 2014, unless the Republicans continue to step on their own toes.

Economists Larry Kudlow posted an article titled Don’t Delay Obamacare, Let Democrats Hang Themselves that correctly lays out how Republicans should be responding to Obamacare, as posted below.  Kudlow correctly concludes that “If your opponent is determined to hang himself, for Heaven’s sake, don’t take away the rope”.  Amazingly, Republicans in Congress cannot see what’s so obvious.  And that is one example of why Washington does not work.

Don’t Delay Obamacare, Let Democrats Hang Themselves, By Larry Kudlow

One huge political question surrounds the catastrophic launch of Obamacare:  Will the cancelled insurance contracts for millions, terminated doctor-patient relationships, sticker shock from higher premiums and deductibility, damage to job hiring and economic growth and the administration’s double-talk get the GOP off the shutdown hook for the 2014 midterm elections?

That is the question. Donald Rumsfeld would call it a known unknown. And right now nobody knows the answer.

But Christopher Ruddy, founder and CEO of Newsmax, makes an interesting point about this:  “The key to stopping Obamacare is for its opponents to win in congressional elections in 2014.  Delaying Obamacare only helps the Democrats who support this boondoggle.”

So far, with all the problems plaguing the Obamacare website, Senator Marco Rubio is leading the Republican charge to delay the March 31 enrollment deadline and tax penalty.  And a lot of Republicans are lining up behind him. But is that the right tactic?  On the Democratic side, Senator Jeanne Shaheen of New Hampshire and nine of her colleagues are urging the White House to push back the same deadline.

But is that just to save their re-election hides next November?

Now, Obama recently appointed a new team to fix the website.  And that team promptly predicted a successful fix by the end of November.  So if that happens, it’s possible the whole Obamacare-disaster issue dies.

But according to highly respected health-industry expert Bob Laszewski, the chances of that are low.  He says it will take at least a year to fix the “backend” problems — the technical links between the website, the HHS, and most importantly the insurance companies, which are receiving massively error-laden information.

Laszewski says this is more important than the front-end disaster, where somebody in the Obama administration — literally at the last minute in mid-September — gave the order that the website require a detailed account registration process before a user can shop for insurance.

Nobody knows why that decision was made. Perhaps it was to stop the media from seeing unsubsidized premium prices that undermine Obama’s promise for cheaper insurance. Or maybe the Obama folks wanted to block potential registrants from pricing-structure sticker shock. Either way, the decision to put registration ahead of shopping blew up thewhole system.

And it may also have blown up Obama’s attempt to break the Republican Party in half and carry a Democratic House in 2014.

And that’s Ruddy’s point: If Republicans hold the House and win the Senate next year, there’d be two houses to repeal Obamacare. But if the March 31 delay effort works, will voters forgive and forget a botched website launch?

Experts like Laszewski are now talking about the possibility of 16 million people getting pink slips for their current insurance. That’s no insurance. No doctor. Nothing. Already, more than one 1 million people have lost their insurance, with cancellation notices actually soaring above Obamacare enrollment rates.

Of course, President Obama said none of this would happen. Remember?

But everything has changed. And unless the system gets fixed by Jan. 1, a lot of folks are going to be very angry as they’re left out in the cold.

Holman Jenkins of the Wall Street Journal calls the whole Obamacare effort a con job.  By that he means a key Obama constituency, the young and healthy, are not going to buy overpriced insurance policies. They are the losers.  And the winners are the older and sicker shoppers who allegedly are going to be subsidized by the young.

But the young are not stupid. They’d rather pay the minor tax penalty to stay out of this mess.

And that means the system may go bankrupt because older and sicker customers will experience soaring premiums if the young and healthy don’t show up to subsidize their care.

And guess who’s going to do that subsidizing? We are.  The taxpayers.  And the whole cost structure of Obamacare will take another giant leap upward — above the CBO’s already tripled cost estimates.

The net economic effects of Obamacare also will become more apparent as large companies with heavy numbers of low-wage workers cut back on hiring, reduce hours worked, take on part-timers whenever possible, and send their workers into the Obama exchanges.  But those workers won’t wind up in the exchanges. They’ll end up in Medicaid, which is already going bankrupt.

And who’s paying for that bailout? We are. The taxpayers.

The mainstream media have in large part turned against Obamacare, and all these factoids are going to be reported. So that raises the question regarding 2014:  Do Republicans really want to bail out Obama by handing him a year’s delay? If all the flaws in Obamacare do pan out, they may well overshadow the shutdown negatives suffered by the GOP.

I think I am lining up on Chris Ruddy’s side. There’s an old political adage:  If your opponent is determined to hang himself, for Heaven’s sake, don’t take away the rope.

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