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Obamacare Supporter Worries Failure May Stick in People's Minds

Six weeks into the roll out of Obamacare some true believers are starting to worry. The law may be in trouble and not just superficial, technical trouble soon forgotten once the website is fixed. There are a host of other problems.

Alan Blinder is a professor of economics at Princeton and a supporter of the law. Monday he wrote a column in the Wall Street Journal arguing that "the health care law is worth it" despite a roll out which he concedes has been "horrible, embarrassing, inexcusable."

While Blinder says from the outset the law is worth it, upon reading the majority of his piece it becomes clear he is worried America may not share his confidence, especially not if the problems persist much longer. And even worse, Blinder is worried that the failure of the website might convince people that government isn't an effective problems solver:

I fear that what is being sloughed off by some ACA supporters as merely bad PR might wind up being a great deal more damaging. Remember, in politics, spin is often more important than reality.

[...]

You only get one chance to make a first impression, and many Americans' first impression of health-care reform comes from the website—or from jokes about it by Leno, Letterman and Stewart. Becoming a national laughingstock is worse than getting off to a bad start. It undermines trust in health-care reform and, more generally, in the government's ability to solve problems.

In addition to the website failure, Blinder adds that the President's misstatements (lies really) about people keeping their plans if they wish was not helpful to forming a good impression of the law.

Finally, about halfway through his piece he gets to the stuff that makes it all worthwhile "The three central elements of ObamaCare are insurance reform, getting (most of) the uninsured covered, and containing the upward spiral in medical-care costs." He addresses each of the three items in turn.

First he claims the law will cover "most of" the uninsured. He allows that the success on that front is pretty limited thus far when he writes the "initial enrollment period might have to be extended a bit."

As for insurance reform that's a clear win because pre-existing conditions are no longer an issue and "Annual and lifetime limits will go the way of the dodo." Of course someone has to pay for all these new goodies. So how is cost containment going? On this issue Blinder writes "there is at least some reason to think that the 'affordable care' part of the act may be working already."

Actually, that's debatable. The rise in health care costs has slowed substantially, especially this year, but some experts believe the drop is a lagging result of the economic downturn in 2008. The Kaiser Family Foundation estimated that 78 percent of the decline was the result of the broader economic picture. That leaves 22 percent, some portion of which may be the result of Obamacare. It's not clear how that would work given that major features of the law intended to cut costs have only been in effect for six weeks. In any case, most analysts predict health care costs will rise substantially again next year.

Blinder isn't done worrying. He has two more concerns about how this could all go wrong:

the "individual mandate" is not really a mandate. The law allows people to opt out by paying a modest fee: just 1% of income in the first year, which is a mere $500 for someone with a $50,000 income. That is a pittance compared with the cost of most health-insurance policies. If many low-risk people stay out of the pool, we have a problem: The insured pool will be less healthy than the total population.

Second, there's the behavior of businesses with more than 50 employees. Some companies that now cover their workers with costly health-care plans might decide to drop that coverage once the exchanges are up and running. The penalty for leaving workers uncovered is just $2,000 per person per year, and the exchanges will make insurance available to all. So pure self-interest will push firms to drop coverage.

The first problem is actually a feature not a bug. The penalty for not buying insurance was designed to phase in over three years so that people would not be hit with a huge tax if they missed the deadline in year one. As the NY Times reported this week, the Obamacare PR team is all about offering carrots rather than threatening people with sticks. Increasing the penalty might make the law work better but only at the cost of aggravating even more people.

As for businesses dropping people onto the exchanges, this is a problem which conservatives have been warning about for several years. CBO has already estimated that 7 million people would experience this. Add those people to the 5 million who are already seeing their private insurance cancelled and you have a lot of irritated voters.

What all of this adds up to is a political problem that is growing, not shrinking. Fixing the website now will help some of these problems, but the stain of a President who lied to Americans is probably going to last well beyond November 30th (or whenever they get it fixed).

Plus, as Blinder points out, there are more unpleasant revelations to come if, say, not enough young people sign up or millions are dropped from their corporate plans. It's about time supporters of the law worried about the near future rather than promising a glorious outcome 3-5 years from now. They may get there but every indication is that it is going to be a rocky road for a lot of Americans who were promised smooth sailing.


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