Obamacare poses political problem
President Obama's Affordable Care Act is having its intended effect — but that's the problem.
There is mixed news these days on the Obamacare front, where administration officials tout small advances, minimize setbacks and do their level best to avoid any negative political fallout by making unilateral changes in the law.
The good news for President Barack Obama is that, according to administration figures, nearly 3.3 million Americans have signed up for coverage under the Affordable Care Act. That's a substantial improvement from the initial numbers, which were low because of the problem-ridden Obamacare website consumers were required to use. Although the numbers have increased, the 3.3 million sign-up figure is still more than 1.1 million people short of where the administration hoped it would be — 4.4 million — by the end of January.
Unfortunately, the administration continues to be vague about what those numbers represent. Federal officials won't reveal how many of those who have signed up have actually paid for their new coverage.
In the real world, a transaction is not complete until payment is made. Under Obamacare, sign-ups are considered final — at least until they are not final.
As for the demographics, the administration stated that 27 percent of those who signed up are between 18 and 34, the so-called young-healthies who will be paying higher-than-market rates for insurance to subsidize the lower-than-market rates paid by older, sicker enrollees.
Another key figure the administration disclosed is that 82 percent of enrollees qualify for taxpayer-subsidized rates. That number should be no great surprise; it's an iron rule of economics that people act in their own best financial interests. Those who receive discounted insurance because of a taxpayer subsidy have an obvious incentive to enroll. The subsidies are generous; a family of four earning up to $92,000 a year qualifies for this welfare assistance.
In that respect, Obamacare is working as intended, and the administration is pleased.
But in another key respect, the administration is displeased because Obamacare is working as intended.
Fearful of the political fallout from continuing implementation, President Obama announced this week that he's once again unilaterally delaying a key provision in his signature legislation. Obama is delaying until after the fall election the requirement that employers with 50 to 100 employees either provide employer coverage or pay fines.
Here's the rub. The health insurance is expensive while the government-imposed fines are comparatively inexpensive.
The Obama administration fears that small employers would dump insurance for their employees shortly before the scheduled fall deadline — right before Election Day — and create a political furor among those forced to shop for more expensive, less complete coverage on the Obamacare exchanges.
The same thing happened last year with millions of insureds who found their individual policies summarily canceled because those policies did not meet Obamacare mandates. The administration fears that small-group employees who lose their employer coverage will rush to the polls in November in search of vengeance against congressional Democrats who enthusiastically passed this legislation.
President Obama masterfully minimized the consequences of his delay, telling reporters that the change is "smoothing out the transition" for medium-sized employers.
But it's not the transition that is the problem. It's a relatively easy decision for private employers — continue to insure their employers or tell them to purchase health coverage from the Obamacare marketplace.
The problem is the consequences of that transition — personal for employees, political for Obama. From his perspective, it's better to have people angry after the election rather than before.
One way or the other, however, the transition is coming. Obamacare is working as intended, and the president is determined to see it through to its ultimate conclusion.
The president hinted at his end game this week when he told reporters that "I don't think that an employer-based system is going to be or should be replaced any time soon" by a government-run system.
But he appears determined to end it, if not on his watch then certainly on the watch of his successor. If so, Obamacare will be a smashing success.