February 12, 2014
RALEIGH — Barack Obama was right about health insurance mandates.
Back in 2008, I mean, when he was competing with Hillary Clinton for the Democratic presidential nomination. The two senators disagreed about whether, as part of comprehensive health insurance reform, the federal government should require people to buy health insurance or else.
Sen. Clinton was for the idea, as she was back in 1993-94 during her abortive attempt to pass ClintonCare. Sen. Obama was against it, comparing a health insurance mandate to combating homelessness by forcing everyone to purchase a home. He even ran a TV ad asking “what’s [Hillary Clinton] not telling you about her health care plan? It forces everyone to buy insurance, even if you can’t afford it, and you pay a penalty if you don’t.”
After winning the presidential election, however, Obama’s actions differed dramatically from his promises — it’s just his way. His health care plan attempted to use both individual and employer mandates to keep Washington’s new, costly regulations from chasing healthy consumers away and destroying the insurance market. These mandates are the most unpopular provisions of the law, and were deemed constitutional only after Chief Justice John Roberts shamelessly and retroactively redefined them as taxes rather than mandates.
The mandates are also fundamentally unworkable and, at this point, seem unlikely ever to be enforced. The law requires employers with 50 or more workers to provide federally approved health plans to nearly all their employees for 2014 or else pay a stiff fine — um, I mean, tax. It also requires individuals to obtain federally approved health plans for 2014 or else pay a sizable fine — darn it, a tax, I’m having trouble using the Supreme Court’s Newspeak.
So far, neither mandate is sticking. First the president issued a diktat delaying the employer mandate until 2015. Then, as panic set in about the implementation of the insurance exchanges in late 2013, the Obama administration started poking holes in the individual mandate. Now the president has issued another diktat that delays the employer mandate until 2016 for many businesses and softens the mandate for others.
It’s time for everyone debating the merits of Obamacare to get real. It’s now highly likely that for the foreseeable future, no one will be fined — ugh, taxed — for failure to comply with the mandates. With Democrats facing the prospect of losing the U.S. Senate in 2014 and the presidency in 2016 over the issue, will the administration really enforce the individual mandate on middle-income families while refusing the enforce the employer mandate on businesses?
Furthermore, if the mandates aren’t enforced, how long can the ramshackle Obamacare exchanges be propped up by tax subsidies and regulatory adjustments? They’ll be subject to severe problems with adverse selection and moral hazard as people with expensive preexisting conditions sign up and people perceiving no immediate need for medical care save money by not signing up.
By his repeated delays and adjustments, President Obama is conceding a lot of policy ground, whether he wants to admit it or not. His plan simply isn’t going to survive in its original form. Now, if Republicans concede that a simple repeal without a replacement policy is also unworkable, there may be a way forward out of this mess.
Here are the elements of a new and truly bipartisan health care reform: 1) deregulate the insurance exchanges to allow a wider variety of less-costly products, and to allow for competing exchanges; 2) convert the tax penalties and subsidies into a new, universal, fixed-dollar, refundable tax credit for the purchase of private health plans, including consumer-driven plans with health savings accounts; and 3) convert the Medicaid expansion dollars into a block grant for states to use to fund indigent care networks and clinics, subsidize private health plans for the poor, and sustain viable high-risk pools for those with preexisting conditions.
Each of these elements has either been implemented successfully elsewhere or supported by lawmakers of both parties in the past. These policies also have the virtue of embracing reality. The idea that Obamacare will ever be implemented in its original form is a fantasy.