Politics Explained: The Obamacare Disaster

Upon exiting the Oval Office, every president leaves behind a legacy made up of a few key issues and events. For Franklin D. Roosevelt, it is his management of World War II and the New Deal that is remembered instead of his other failures such as Japanese internment or the court-packing scandal. On the other hand, Jimmy Carter’s successes in brokering a peace between Israel and Egypt have been forgotten in favor of his failures in handling the Iran hostage crisis. With President Obama, it seems fairly obvious that his legacy will rest on the success or failure of the Affordable Care Act (ACA). Indeed, unless Democrats retake the House in 2014, the ACA may be Obama’s only major legislative achievement in office. Yet right now, the ACA is in danger of harming both President Obama’s legacy and the millions of American who might not get the health care the bill promised them.

The process of passing universal health care reform used up most of the political capital Obama had gained with his groundbreaking 2008 election. After an ugly battle in Congress ultimately ended with the bill passing without a single Republican vote, Obama’s approval ratings have steadily fallen and the Republican controlled House has continually stymied Obama’s liberal initiatives. Given the gridlock in Congress, one of the Obama administration’s top priorities should have been ensuring that the ACA functioned properly. The bill itself is thousands of pages and in many cases has created a messy set of regulations and subsidies for certain special interest groups. Nonetheless, the idea behind the ACA is fairly straightforward: create laws against increasing rates of people with preexisting conditions or charging different prices based on gender, race, and other characteristics; establish a mandate to purchase health insurance to prevent only the sickest citizens from signing up for health insurance under the new rules; and subsidize health insurance for those who can’t afford it. The federal government was tasked with creating an online marketplace for people to purchase insurance if they cannot or choose not to use employer-provided health insurance. And in the first month since this exchange went online, the website has been an unequivocal disaster on the part of the Obama administration.

There are a few major problems with the federal exchange website. In the first few weeks after the site opened on October 1st, the site gave error messages when users tried to create accounts. However, these problems have mostly been fixed. I got to the point of being able to submit an application by around October 15th. This was a minor problem that gave the marketplace bad press, but it underlies bigger problems. The most significant problems thus far have come from faulty information. Erroneous data used to calculate how much each individual is eligible for subsidies are currently being submitted through the application process. Additionally, the application is also submitting incorrect information about spouses, addresses, and more to the insurance companies that are selling policies on the federal marketplace. These are serious problems that have been fixed in the interim by the fact that a relatively small number of people have actually gotten as far as enrollment – one can only enroll in an insurance plan after the submitted application has been verified by the government – and thus the applications have been processed by hand.

I’ve given a lot of details about how the federal marketplace hasn’t worked thus far, and a lot of it may seem technical. But it is very important that the exchanges work smoothly for a simple reason – the people willing to put up with these error messages and return day after day are the people with preexisting conditions or the people that need insurance immediately (“high-risk” consumers). In any insurance plan, insurers need “low-risk” customers, who pay in more than they pay out, to offset “high-risk” customers. If not enough “low-risk” customers do not buy insurance to offset the high-risk customers, it could increase health insurance costs, which in turn would lead to more healthy people dropping out, effectively creating a health insurance “death spiral”. So can the Obama administration fix the marketplace before it is too late? I am fairly optimistic on that count. The White House is fully aware of the website’s problems – they have initiated a “tech surge” bringing in the brightest minds they can find from Silicon Valley to fix the problems – and the marketplace should be mostly functional by early December.

However, I do think that the ACA’s failures have robbed Democrats of a key opportunity in the 2014 elections. Following the government shutdown, Democrats were leading Republicans on the generic Congressional ballot by 8-10 points, and the possibility of a Democratic takeover of the House seemed a distinct possibility. One year is a long time in politics, but the shutdown had the potential to remain a decisive issue in the 2014 midterms. Nonetheless, the failures of the ACA have given Republicans room to maneuver. They can point to the many people whose health insurance has been dropped for not meeting the new requirements of the ACA and compare it to Obama’s false claim that, “If you like your coverage, you can keep it.” Even if the law is working well by the fall of 2014, they can point to the failures of the exchanges early on and argue sufficiently that the law has not succeeded. The ACA probably won’t end up creating a massive swing, but it will offset some of the potential Democratic gains due to the shutdown, especially in the conservative-leaning districts Democrats will need to win. I don’t want to argue at this point about whether the failures of the ACA thus far will prevent Democrats from retaking the House or will allow Republican to take the Senate but it is fair to say at this point that it is more likely the ACA will hurt than help Democrats in the 2014 elections.

On the whole, it’s entirely possible that the problems that have plagued the ACA over the last month will be a minor glitch in the long-term success of the program, or it could be a sign of things to come; it’s too early to tell whether the law will succeed or not. President Obama and national Democrats need the former to be true if they want to continue to implement their progressive agenda over the next decade and beyond.


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