The Daily Debate - 10/23/2013

By Robert Tracinski

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October 22, 2013

1. Planning to Fail, ObamaCare Edition

2. Dispatches


1. Planning to Fail, ObamaCare Edition

An old saying reminds us that when you fail to plan, you plan to fail. But the opposite is also true: if you plan to fail, you fail to plan. If the success of a project is not important to you, if you secretly hope that it will fail, then you will not be bothered to exercise the due diligence necessary to make it succeed.

Does this explain the disastrous rollout of ObamaCare? Was the system designed to fail from the beginning?

ObamaCare has always been based on an untenable contradiction. President Obama's rhetoric when he pushed through his signature law was laced with hatred and contempt for the health insurance industry—yet the law itself establishes a vast new government-run marketplace for health insurance.

But if you look at the structure of this marketplace, you can see how its design is built to create a "death spiral" for private health insurance, leading many of us to predict that this would be its result. As I wrote shortly before the law was passed:

"This bill so comprehensively wrecks private health insurance that pretty soon a 'public option' will seem like the only alternative, and they will already have put into place one of the new taxes needed to pay for it. If the left's goal is to impose socialized medicine in America, this bill does it in the most callous and destructive way possible. It smashes private health care-then leaves us stranded in the rubble, at which point we will be expected to come crawling back to the same people who caused the disaster and ask them to save us."

We can claim some grim vindication for these predictions with the news of hundreds of thousands of people being booted off of their existing insurance plans.

"Health plans are sending hundreds of thousands of cancellation letters to people who buy their own coverage, frustrating some consumers who want to keep what they have and forcing others to buy more costly policies.

"The main reason insurers offer is that the policies fall short of what the Affordable Care Act requires starting Jan. 1. Most are ending policies sold after the law passed in March 2010. At least a few are canceling plans sold to people with pre-existing medical conditions....

"[T]he cancellation notices, which began arriving in August, have shocked many consumers in light of President Barack Obama's promise that people could keep their plans if they liked them....

"Florida Blue, for example, is terminating about 300,000 policies, about 80 percent of its individual policies in the state. Kaiser Permanente in California has sent notices to 160,000 people—about half of its individual business in the state. Insurer Highmark in Pittsburgh is dropping about 20 percent of its individual market customers, while Independence Blue Cross, the major insurer in Philadelphia, is dropping about 45 percent."

Note that a large number of these plans are for people with pre-existing conditions, who will now go into the government-run exchanges, making the economics of these new insurance plans even more untenable by loading up the risk pools with people who are already sick.

A little over two months ago, Harry Reid gave us the smoking gun quote to tell us where all of this was headed.

"In just about seven weeks, people will be able to start buying Obamacare-approved insurance plans through the new health care exchanges. But already, Senate Majority Leader Harry Reid is predicting those plans, and the whole system of distributing them, will eventually be moot.

"'What we've done with Obamacare is have a step in the right direction, but we're far from having something that's going to work forever,' Reid said. When then asked by panelist Steve Sebelius whether he meant ultimately the country would have to have a health care system that abandoned insurance as the means of accessing it, Reid said: 'Yes, yes. Absolutely, yes.'...

"Reid cited the post-WWII auto industry labor negotiations that made employer-backed health insurance the norm, remarking that 'we've never been able to work our way out of that' before predicting that Congress would someday end the insurance-based health care system."

By "ending the insurance-based system," he means replacing insurance with a straight welfare-state entitlement, i.e., socialized medicine. So its supporters always anticipated that at some point, ObamaCare was going to fail—as Reid put it, it was not "something that's going to work forever"—and they were planning to pin the blame on insurance companies and on the very concept of insurance itself.

So if that was the goal—if they were planning to make insurance the enemy eventually—then you can see why they wouldn't focus all of their energies on making sure that they create a well-functioning insurance market. You can see why they would turn management of the program over, not to a CEO with successful experience in the health-insurance industry, but to the Center for Medicare and Medicaid Services, which manages a welfare-state entitlement, not an insurance system.

The objection to this line of argument is that President Obama clearly stands to pay a political price for his signature program's failure to launch. But this doesn't mean ObamaCare wasn't designed to fail. It only means that it wasn't designed to fail immediately. It was designed to fail at an appropriate remove of five or ten years, long enough for the left to claim that the system was working fine until those greedy insurance companies broke it.

But the fact that ObamaCare always had the huge risk of a "death spiral" built into it—the process in which older and sicker customers flock to the exchanges, but younger and healthier people stay away—meant that an enormous amount of pressure was put on its initial launch, which had to be perfect if the system had any chance of even momentary success. And it means that it will probably be too late to fix it after its initial failure. The death spiral will already be locked in. As many people are pointing out, the only people who will have the persistence to slog through ObamaCare's malfunctioning data system will be those who really need subsidized insurance, meaning those whose medical expenses will further drive up premiums and drive out healthy young people.

As my friend Jack Wakeland put it to me: "Obamacare can't be fixed because it was designed to break."

"Obamacare was designed to fail; to fail slowly and incrementally; to fail in a way that would convince people that private, for-profit health insurance companies are the reason why America's catastrophically overpriced and malfunctioning health care system hasn't worked, doesn't work, and will never work. The architects of the Affordable Care Act wanted to 'prove' that third-party private insurance should be scrapped entirely and replaced with a single-payer system: straight socialism.

"The ACA was supposed to fail slowly and painfully over the course of two or three or four presidential election cycles (which is why Obamacare's namesake, Barack Obama, saw to it that it wouldn't be implemented until the second half of his second term). When the backlash came, it was supposed to come on some other president's—preferably a Republican president's—watch.

"But instead of failing on schedule, four or eight or twelve years from now—it has failed instantly, upon contact with reality.... Obama, Reid, and all of the other architects of the Affordable Care Act have created a problem for themselves that was designed to be insoluble."

There are a lot of lessons to be learned from the ObamaCare debacle, but one of them is the danger of creating a system that you yourself do not believe in, that you regard as a temporary stepping stone to a goal that you can't quite sell to the public yet. If your heart isn't in it, you are likely to design a system that is planned to fail.


2. Dispatches

Never fear. The Obama administration is hard at work—trying to "change the narrative" on the ObamaCare launch.

Megan McArdle lists all the things that won't save ObamaCare, which pretty much covers everything the administration is doing.

China's political establishment declares war on the Starbuck latte.

Was traditional Chinese medicine a con-job foisted on the world by Mao Tse-Tung?


—Robert Tracinski

The Daily Debate

edited by Robert Tracinski

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Robert Tracinski is also editor of The Tracinski Letter.

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