ObamaCare's future after law's disastrous debut, low enrollment

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ObamaCare working the way it was supposed to?

Debate over health care law fallout

President Obama’s signature legislative achievement, the Affordable Care Act, has been off to what can be described, at best, as a rocky start.

Thanks to a terribly designed website, far from the Amazon.com-like experience promised by the administration, the first day of open enrollment saw a grand total of six people enroll. By day two, that number had jumped exponentially to an “astounding” 248.

Glitches, crashes, problems with the payment system, less than stellar enrollment by millennials and all sorts of other tech failures have led to the administration paring down its estimate of 7 million enrollees by the end of March, 2014.

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And, make no mistake, the myriad delays (including two delays of the employer mandate, a minor extension of the “effective” open-enrollment period and a “fix” to allow non-compliant policies to be sold for two more years) of various parts of the law are the result of a White House in perpetual damage-control mode.

The politics are almost absurdly transparent.

Yet, for all of ObamaCare’s rollout misfortunes, Republicans’ hopes that the law collapses into a flaming, actuarial death spiral are unrealistic and politically dangerous.

By March 31 there will likely be between 4 and 5 million people enrolled in health insurance plans through ObamaCare’s exchanges. If the current numbers hold out, between 3.2 and 4 million of these people will have access to subsidies.

By 2018, the Congressional Budget Office estimates that about 25 million people will have exchange-purchased coverage – 20 million with subsidies.

This represents just under 9 percent of the projected total insured population – a small but not insignificant share. Add in the beneficiaries of ObamaCare’s Medicaid expansion (and they are beneficiaries – regardless of whether Medicaid improves health in the general population, as a 100 percent actuarial value product, Medicaid does protect against financial ruin from medical bills), and you’ve a small but powerful constituency that will fight tooth and nail to protect its newly bestowed entitlements.

Moreover, the law takes many lessons from Republican health reforms – the high-deductibles allowed with many of the plans (as high as $6,350 for Bronze plans), for instance, encourage greater consumer cost-sharing; this is an undeniably conservative principle.

All of this isn’t to say that that ObamaCare is perfect. There are major problems with the law, including disincentives to work and unnecessary burdens on businesses.

Bureaucratic micro-management of plan design has led to premiums skyrocketing in some areas, at the same time that physician networks have tightened (higher premiums should be associated with broader networks).

And, for the most part, those who don’t qualify for subsidies (according to HHS’ latest enrollment report, just under half of the exchange-eligible population won’t be eligible for subsidies) or who qualify for a paltry subsidy (say $10 or $20), will either be on the hook for an expensive plan they don’t want, or will have to pay a penalty to avoid getting coverage.

For many young, relatively healthy people, the choice between expensive (even if subsidized) coverage and paying the penalty will be simple – the penalty will often pale in comparison to the cost of premiums and deductibles they would otherwise be paying.

Indeed, had ObamaCare been passed with bipartisan support, it’s likely that some of these pitfalls could have been addressed early on.

Instead, the administration and congressional Democrats engaged in closed-door negotiations, and rather than engaging in honest debate about the law, used back-of-the-envelope calculations (the typical family won’t save $2,500 under ObamaCare) to make claims about it that even left-of-center analysts knew were false.

Republicans aren’t innocent in all of this, however. Indeed, much of the past four years were spent railing against the law and voting 40 times to repeal it, without (until recently) bringing forth a credible plan to fix America’s badly broken health care system.

The lesson is this: all entitlement programs need fixes.

The Great Society-era programs have all gone through changes, fixes, alterations and amendments. Medicare Part D and Medicare Advantage, some of the more recent additions to the Great Society programs, are favorites even of Republican politicians, thanks to their clever use of market mechanisms to deliver government benefits.

ObamaCare – and health reform in general – is no different. Changes are, and always will be, necessary.

The onus is on both parties to help make these fixes possible – the president and Senate Democrats will need to allow Republican compromises to the law, and Republicans will need to accept that ObamaCare is here to stay and leverage the law’s framework to propel conservative reforms.

With luck, such bipartisanship can offer more affordable coverage to those who need it while also tackling the system’s real problems of cost and transparency.