Obamacare: All that was foretold is coming to pass

It is now universally recognized that Obamacare is failing and only massive intervention by government – on top of the massive intervention represented by Obamacare – can save the program and prevent huge dislocations in the health insurance industry.

But it didn't have to be this way.  During the debate over the passage of the Obamacare bill, critics turned out to be soothsayers, as their predictions have almost all come to pass.

IBD:

Who could have envisioned such problems? Not ObamaCare backers. They were endlessly promising that the law would create vibrant, highly competitive markets that would lower the cost of insurance.

Critics, however, were spot on. They said that, despite the individual mandate, ObamaCare wouldn't attract enough young and healthy people to keep premiums down.

The Heritage Foundation, for example, said that under ObamaCare, "many under age 35 will opt out of buying insurance altogether, choosing to pay the penalty instead." That's just what has happened.

Critics predicted sharp hikes in premiums and big increases in medical claims. That's what's happened.

Critics said people would game the system, waiting until they got sick to buy insurance, then canceling it once the bills were paid, because of the law's "guaranteed issue" mandate. That's happening, too. In fact, administration officials are trying to tighten the rules to mitigate this problem.

Critics said insurers would abandon ObamaCare amid substantial losses. Anyone want to dispute that this is happening?

These dire predictions weren't pulled out of thin air. Several states had already tried ObamaCare-style market reforms in the 1990s, only to see their individual insurance markets collapse. A 2007 report by Milliman Inc. looked at eight states that had adopted the "guaranteed issue" and "community rating" reforms at the heart of ObamaCare.

Like Obama, these states wanted to create insurance markets where no one could be denied coverage, or charged more, just because they were sick. But Milliman found that these regulations resulted in fast-rising premiums, a drop in enrollment in the individual market, and an exodus of health insurers.

Sound familiar?

By the time ObamaCare came around, most of those states either abandoned or overhauled this regulatory scheme, only to have it reimposed on them.

ObamaCare architects figured they could avoid the fate of those state experiments by including the individual mandate and subsidies for lower income families.

However, consulting firm Oliver Wyman correctly predicted in 2009 that these wouldn't work, either. "The subsidies and mandates," it concluded, "are not sufficient to drive high participation of younger, healthier members."

How much of what Obamacare backers were selling was a lie, and how much was the result of ignorance and stupidity?  Certainly a lot of both.  When you ask people to design a health insurance system who have no clue about free markets or business, you get Obamacare.  But, as Obamacare architect Jonathan Gruber said in that infamous video, Obamacare supporters trusted in "the stupidity of the American people."  They could be easily lied to and would swallow whole the false claims about how Obamacare would lower costs and lower premiums and how you could keep your policy if you wanted to.

Democrats and some Republicans will no doubt plan a rescue of Obamacare when the meltdown comes instead of repealing the entire program and initiating some modest reforms with some subsidies.

"I told ya so" may be satisfying politically, but in the real world, where people's insurance plans are at risk, a solution that doesn't throw good money after bad must be found to prevent the blow-up of the private health insurance industry.

It is now universally recognized that Obamacare is failing and only massive intervention by government – on top of the massive intervention represented by Obamacare – can save the program and prevent huge dislocations in the health insurance industry.

But it didn't have to be this way.  During the debate over the passage of the Obamacare bill, critics turned out to be soothsayers, as their predictions have almost all come to pass.

IBD:

Who could have envisioned such problems? Not ObamaCare backers. They were endlessly promising that the law would create vibrant, highly competitive markets that would lower the cost of insurance.

Critics, however, were spot on. They said that, despite the individual mandate, ObamaCare wouldn't attract enough young and healthy people to keep premiums down.

The Heritage Foundation, for example, said that under ObamaCare, "many under age 35 will opt out of buying insurance altogether, choosing to pay the penalty instead." That's just what has happened.

Critics predicted sharp hikes in premiums and big increases in medical claims. That's what's happened.

Critics said people would game the system, waiting until they got sick to buy insurance, then canceling it once the bills were paid, because of the law's "guaranteed issue" mandate. That's happening, too. In fact, administration officials are trying to tighten the rules to mitigate this problem.

Critics said insurers would abandon ObamaCare amid substantial losses. Anyone want to dispute that this is happening?

These dire predictions weren't pulled out of thin air. Several states had already tried ObamaCare-style market reforms in the 1990s, only to see their individual insurance markets collapse. A 2007 report by Milliman Inc. looked at eight states that had adopted the "guaranteed issue" and "community rating" reforms at the heart of ObamaCare.

Like Obama, these states wanted to create insurance markets where no one could be denied coverage, or charged more, just because they were sick. But Milliman found that these regulations resulted in fast-rising premiums, a drop in enrollment in the individual market, and an exodus of health insurers.

Sound familiar?

By the time ObamaCare came around, most of those states either abandoned or overhauled this regulatory scheme, only to have it reimposed on them.

ObamaCare architects figured they could avoid the fate of those state experiments by including the individual mandate and subsidies for lower income families.

However, consulting firm Oliver Wyman correctly predicted in 2009 that these wouldn't work, either. "The subsidies and mandates," it concluded, "are not sufficient to drive high participation of younger, healthier members."

How much of what Obamacare backers were selling was a lie, and how much was the result of ignorance and stupidity?  Certainly a lot of both.  When you ask people to design a health insurance system who have no clue about free markets or business, you get Obamacare.  But, as Obamacare architect Jonathan Gruber said in that infamous video, Obamacare supporters trusted in "the stupidity of the American people."  They could be easily lied to and would swallow whole the false claims about how Obamacare would lower costs and lower premiums and how you could keep your policy if you wanted to.

Democrats and some Republicans will no doubt plan a rescue of Obamacare when the meltdown comes instead of repealing the entire program and initiating some modest reforms with some subsidies.

"I told ya so" may be satisfying politically, but in the real world, where people's insurance plans are at risk, a solution that doesn't throw good money after bad must be found to prevent the blow-up of the private health insurance industry.