Election May Not Save Obamacare

The left may be cheering Obama's reelection as protection for his signature achievement, but 6 major flaws may leave it so weak as to be unworkable in its present form, concludes NCPA's John Goodman:

[The flaws] are so serious that the Democrats are going to have to perform major surgery on the legislation in the next few years, even if all the Republicans do is stand by and twiddle their thumbs. Here is a brief overview.

1. ObamaCare is not paid for.

The law takes $716 billion from Medicare over the next 10 years in order to fund young people, causing reductions so severe that they will seriously impair access to care for senior citizens. The betting in Washington is that the cuts will be restored. That will mean that ObamaCare will hugely add to deficit spending, indefinitely into the future.

2. ObamaCare promises what it cannot deliver.

All those promised "free" check-ups require more doctors and nurses and hospital staff — something that ObamaCare does not create. Instead it creates a huge increase in demand with no change in supply, leaving those with government-subsidized plans even less access to health care.

3. ObamaCare mandates and subsidies will destabilize entire sectors of the economy.

The law will require employers of workers earning $15 an hour or less to provide very expensive health insurance ($15,000 for a family) or pay a $2,000 fine. For these employees, the cost of family coverage is equal to more than half their income and there are no new subsides to help the employer or the employee bear this cost. Yet, if these workers don’t get insurance from an employer, the government will pay almost all the cost of the insurance through Medicaid or in the new health insurance exchanges.

4. ObamaCare creates perverse incentives that threaten the quality of care. Since insurers must charge the same premium for healthy and unhealthy enrollees, all plans will have a perverse incentive to attract the healthy and avoid the sick.

5. A weakly enforced mandate will undermine the health insurance marketplace.

The fine for being uninsured will be small, relative to the cost of insurance. And there is not much IRS can do to people who ignore the mandate, other than withhold income tax refund checks. People will have incentives to buy insurance coverage only when sick, which, if everyone does this, will make premiums completely unaffordable.

6. A strongly enforced mandate will strain almost every family budget.

For the past 40 years, health care spending has been growing at twice the rate of growth of our incomes, on the average. Nothing in ObamaCare is likely to change that. Yet if we are required to buy coverage and denied the right to scale back benefits, choose higher deductibles, etc., health insurance premiums will crowd out more and more of the average family’s budget. Eventually, health insurance costs will threaten to crowd out every other form of consumption!