The Patient Protection and Affordable Care Act (ACA) is a bad piece of legislation, creating defective bureaucratic structures to implement policies based on dysfunctional theories. Whether the question is defunding, delay, or outright repeal, ACA deserves to go — not because it is Barack Obama’s legislative centerpiece, not because Ted Cruz has promised to undo it, but because it is bad law that will make life unnecessarily worse for many Americans, including many least able to bear its burdens.
And those burdens are growing. Under ACA, health-care spending is expected to rise significantly, even beyond the usual inflation in medical prices. President Obama’s economic advisers originally had calculated that the bill would reduce health-care spending by $200 billion a year, from whence the president derived his intellectually indefensible conclusion that the bill would save the average family of four some $2,500 a year. Recently, the Centers for Medicare and Medicaid Services calculated that ACA will not reduce health-care spending at all and will instead add about $70 billion per year in the immediate future. Estimates of the program’s expense keep growing. It will spend more than originally estimated, it will tax more than originally estimated, and its vaunted deficit-reduction benefits have been evaporating at a pace suggesting that, as many predicted, they will never come to pass. In 2010, CBO projected that ACA would reduce the deficit by $140 billion through 2019; today that projection is a mere $4 billion. The estimated tax increases in the bill have doubled. That rising price tag means higher costs for consumers as well as taxpayers: The average 27-year-old man buying health insurance on the ACA exchanges can expect to pay almost double what he had been paying before; the average woman of the same age, 62 percent more.
The difference between the increase in men’s rates and those in women’s rates is one of the more naked bits of ideology apparent in the bill. Women spend considerably more on health care than men do, and hence have paid higher health-insurance premiums. The architects of the ACA decided that this was not permissible, and so by fiat eliminated the difference, meaning a disproportionate increase in men’s rates. Likewise, because there can be only so much difference permitted in prices paid by the young and the old, the young will pay much higher rates. That the administration did this in the teeth of all actuarial data is another indication that it is willing to set aside the evidence when it is inconvenient. What are the facts when you have Sandra Fluke playing Veruca Salt at the national convention?
The problem is that the entire structure of the ACA is dependent on such elevation of political considerations over reality. That begins with the mandate that insurance cover preexisting conditions, which puts them in the paradoxical position of taking future-directed actions — insurance — in response to events in the past. From this mandate is born the individual mandate, since mandatory coverage of preexisting conditions create a very strong incentive for people to forgo insurance until they get sick, upending the operating model of insurance. From the individual mandate comes the employer mandate. Each has its own set of perverse incentives, the worst of which may be the employer mandate’s creation of powerful economic preferences for part-time workers. By mandating coverage for those working 30 hours or more, the employer mandate makes part-time workers that much more attractive to businesses, a fact not lost on President Obama’s erstwhile supporters in organized labor. “The ACA will shatter not only our hard-earned health benefits, but destroy the foundation of the 40-hour work week that is the backbone of the American middle class,” reads a joint letter from the major labor unions.
A mandate here, a subsidy there, a tax and a surtax — ACA is the perfect expression of the old progressive dream of government by expert administration. But its administration is looking decidedly non-expert, something the president himself has been forced to acknowledge in public. The exchanges, set to open today, already are showing signs of being disastrously mismanaged. The exchange in Washington, D.C., will be entirely useless when it opens — it won’t even have prices for policies, leaving consumers flying blind. Washington State hopes to be operational in a few months, after it has addressed its “high error rate” in calculating credits. Colorado is in similar shape. Many states have no way of verifying that consumers are eligible for the subsidies they claim, and they have settled for now on the strategy of just taking everybody’s word for it. The exchanges will almost certainly fail to meet their enrollment goals, which presents a serious problem: Without all those healthy young people paying overinflated premiums, the finances of the underlying system will fall apart.