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The continuing…and continuing…Obamacare disaster

The President is acting like America is a banana republic and he’s the tinpot dictator who can arbitrarily decide the law. What a fiasco

Obama_frown
Good reason to frown
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Daniel J. Mitchell
On 16 November 2013 11:50

When I wrote a few days ago about the “Continuing Obamacare Disaster,” I didn’t realize I was understating the problems with the President’s boondoggle scheme. Now that the law’s been passed and implemented, the American people are finally finding out what’s in it (per Nancy Pelosi) and they’re not happy.

Indeed, they’re so unhappy that our overseers in Washington are scrambling to mitigate the political fallout.

The Wall Street Journal opined today on the meaning of President Obama’s announcement.

"In a major political reversal, the President announced at a surprise press conference that he is suspending the regulations that he now admits are the reason that millions of health insurance plans have been terminated. …Now these mass cancellations are proving to be unpopular, and Democrats are panicking, so Mr. Obama is offering a temporary stay of execution.

"  …There is less reprieve here than Mr. Obama claims. It’s hard to un-cancel insurance. The rules Mr. Obama is repudiating were written in 2010, and insurers have been adapting to them for years. They will now have to scramble to revive the policies they can while throwing all of their actuarial assumptions out the window. The faux reprieve also lasts for only one year and applies only to anyone who was covered in 2013."

But even that’s not the full story. Here’s more of the editorial.

"The burden will also now fall on state insurance commissioners to decide if they want to try to reapprove old plans, or something similar to the outlawed products. But even the insurers that want to exercise this option will need to resuscitate plans in a mere six weeks. The first they heard about the President’s “fix” was at the press conference. …Such regulatory rewriting is also probably illegal.

"The Administration claims it has “enforcement discretion” to suspend the regulations. But like the employer mandate Mr. Obama also delayed for a year, their hard start-dates are defined in the statute—January 1, 2014. The black-letter law of the Affordable Care Act does not say the rules apply whenever they are politically convenient."

Megan McArdle also thinks the White House is brazenly disregarding legal requirements.

"The administration is not changing the rules, just declining to enforce them against the insurers.This is becoming a pattern: Obama’s position on the law seems to be that it’s his law, and therefore the law is whatever he and his appointees say it is. That’s dangerous for all sorts of reasons."

I’ll be less polite and say that the President is acting like America is a banana republic and he’s the tinpot dictator who can arbitrarily decide the law.

Keep this going and we’ll eventually be Argentina.

Though maybe this isn’t a bad thing. If I can somehow magically become President, I can use the Obama precedent to suspend bad tax law and to unilaterally decide to shut down a bunch of wasteful government departments.

Returning to the real world, Veronique de Rugy gives us a very important reminder in the Washington Examiner that this mess was entirely predictable because of the inherent incompetence and inefficiency of government.

"Washington is missing the bigger picture of what the rollout glitches represent. That’s the much deeper problem of government intervention in general. …government-program incentives tend to favor interest groups instead of rewarding success or punishing failure in the same way as the market. …

"In sum, the problem with the Obamacare rollout is…that government institutions themselves are inherently prone to bad decision-making, often choosing the interest of politically favored groups. …In fact, we can expect these types of negative consequences when the government intervenes in any market — not just health care. For proof, look no further than the flawed government policies that distorted the health care system and prompted the push for Obamacare in the first place."

The final sentence is spot on. Our healthcare system was dysfunctional when Obama took office. But it was screwed up because of government intervention. So Obama’s plan to add another layer of government was a very painful example of Mitchell’s Law.

In reality, you don’t solve government-caused problems with more government. But this brings us to the big issue of what happens next. The statists will argue that the failure of Obamacare means we need single payer healthcare, which means the government has full control of everything, like in the United Kingdom.

Needless to say, that would be a disaster. More spending and more taxes would be one obvious consequence, but it would also mean that politicians and bureaucrats would decide who lives and who dies. If you think that’s an exaggeration, check out this horror story (as well as the other examples linked in the third paragraph).

For those of us who care about both taxpayers and good healthcare, we need to use the Obamacare meltdown as a springboard to push for policies that will actually make the system work better.

I actually wrote back in April that Obamacare wouldn’t work and that this would create precisely this opportunity. But making a prediction is the easy part (especially since I never remind people of the times when I make inaccurate predictions). The hard part is pushing the right policies and convincing the American people that we have the right ideas.

I’m a think tank wonk, so I’ll simply list the good policies.

As part of fundamental tax reform, we need to phase out the healthcare exclusion in the tax code – a perverse policy that encourages grotesque waste, inefficiency, and featherbedding in most parts of the medical industry.

We also should reform Medicaid and Medicare to help address the part of the third-party payer crisis caused by the direct government intervention.

If you want to get an idea of how a genuine market-based system would operate, watch this superb video from Reason TV. If you want more examples, here’s a report from North Carolina on free-market healthcare in action and here’s a similar story about capitalist healthcare in Maine.

Daniel J. Mitchell is a Senior Fellow at the Cato Institute, the free-market, Washington D.C. think tank. His articles are cross-posted on his blog by agreement

Read more on: Obamacare, barack obama, and obama
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