The Corner

The President Is Losing His Plan

The most important thing about the policy move announced by President Obama on Thursday is not its practical significance—which is frankly very hard to predict—but rather what it tells us about the mindset of the president and his top lieutenants. In that respect, I think the past few days have marked a significant change, and signaled a new and unprecedented level of panic and chaos. 

The immediate purpose of the step the administration announced was, ironically, pretty much the same one that moved the president to falsely claim for three years that anyone who liked his insurance plan would be able to keep it: to calm down congressional Democrats and keep them unified. The president moved to permit insurers to renew plans that do not comply with Obamacare’s requirements because it looked like legislative proposals to do that were going to win the votes of large numbers of Democrats in both houses, and so effectively fracture the gritted-teeth Democratic unity that has been the only thing sustaining the cause of Obamacare in our politics since before the law was enacted. 

If many dozens of House Democrats broke with the leadership and the president to vote for the Upton bill (which would allow insurers to keep selling any 2013 plans they wanted to all comers next year), they might well never come back to the Obamacare fold, and the inevitable fights to come would be all the more painful for the president. If the Senate Democrats championing the Landrieu bill (which would impose a guaranteed-renewability requirement on all 2013 plans, overriding Obamacare’s qualified-coverage mandates) got their way, they would expose deep divisions in the Democratic caucus that Harry Reid has worked for years to hide (mostly by avoiding difficult votes) and put the president in the position of seeming to be reprimanded by his own party. If both bills passed, the result of a conference committee between them could well be unbearable for the president in both political and policy terms. Obama evidently decided he should do whatever it took to avoid those immediate undesirable consequences, regardless of the longer-term cost. This was the same sort of thinking that led him to repeatedly promise people they could keep any plan they liked in order to keep the extremely precarious Obamacare coalition of Democrats together in 2010 and after. The idea is to get past the immediate political problem and worry about the bigger problems you create later. 

The move also shared some means in common with previous instances of such expediency—like the delay of the employer mandate in July, for instance, which was a huge and early sign of implementation problems. The administration yesterday basically said that, although all the rules that have required the cancellations of millions of insurance policies technically remain in effect, the government will refrain from enforcing them against insurers who allow current customers to keep their existing plans for another year. Presumably (although I don’t think they have made this clear), they will also not enforce the individual-mandate penalty against people who stay in such plans. They aren’t working with Congress to change the law—in fact the whole point is to avoid that. And they aren’t changing the regulations they themselves have promulgated to enforce it. They’re just telling insurers and consumers that it’s ok to violate the law next year. And they’re asking state insurance commissioners to do the same. 

The callous disregard for the very idea of law inherent in this manner of governing is matched by the overt cynicism of the move itself: After having created the circumstances in which millions of people lose their health coverage, the administration imagines this latest move can allow Democrats to say that the president and his health reform are not at fault but insurers and state insurance commissioners are because, after all, although they have had to prepare to follow the law for three years they now have thirty days to prepare to ignore it. The president was incredibly explicit about this in his press conference on Thursday, saying “the key point is, is that it allows us to be able to say to the folks who’ve received these notices, look, you know, I, the president of the United States, and the insurance model of the Affordable Care Act is not going to be getting in the way of you shopping in the individual market that you used to have.” I guess they’ve got reason to think people will believe anything they say, but it’s still hard to imagine that argument working.

Even though the White House has done this sort of thing before, however, I think this particular exercise in imprudent expedience will carry particularly high costs, and those costs will not be all that far in the future. To address his very near-term political problem, the president has thrown the nation’s health insurers under the bus, even though he desperately needs their cooperation and support to mitigate the immense problems that the implementation of Obamacare now confronts. The response of the insurers, in the form of a statement put out by their industry group Thursday afternoon, was harsher than anything they have had to say about Obamacare since its inception, and it seems pretty clear that their basic disposition toward the administration and the law will now be changing for the worse. The insurers have no one to blame but themselves—they made a deal with Obamacare’s champions early on, knowing it was a gamble. But of course, they won’t be blaming themselves, and by turning them into scapegoats at this point the White House puts its effort to salvage something of Obamacare’s launch in even greater peril. 

Thursday’s move could put the exchange system itself in significantly greater peril too. It is very hard to know how many people will actually be keeping their 2013 plans as a result of this new policy, and of course it is also still possible that Congress will pass legislation. But by allowing insurers to keep current customers in pre-Obamacare plans outside the exchanges, and by letting the insurers choose which plans to keep, the administration makes it more likely that the exchanges will not be able to achieve the volume and the risk-balance necessary for them to function. The White House understands that, of course, and the decision to take this step suggests that they think the risk is worth it not just because the immediate political danger is so great but also because the chances of the exchanges actually functioning anyway seem lower and lower all the time. 

That, to my mind, is what Thursday’s announcement really signals, and why I think it’s so significant. Prior instances of reckless presidential expediency in the debate over Obamacare have involved efforts to get past some immediate obstacle and just get the system into place, in the hope that once it was working the criticisms would fade away. This latest instance, however, involves roughly the opposite impulse: to sacrifice the prospects of the new system itself in the service of avoiding immediate political pain and embarrassment and without some larger goal in view. 

It suggests that the administration is giving up on the long game of doing what it takes to get the system into place and then trusting that the public will come around and is adopting instead the mentality of a political war of attrition, fought news cycle by news cycle, in which the goal is to survive and gain some momentary advantage rather than to achieve a large and well-defined objective. It suggests, in other words, that the administration is coming to the view that Obamacare as they have envisioned it is not really going to happen, that they don’t know quite what is going to happen (and no one else does either), and that they need above all to keep their coalition together and keep the public from abandoning them so they can regroup when the dust clears. 

The president, in his Thursday press conference, did not treat November 30 as a key date. He did not suggest that there was just one large obstacle to overcome and then things would be fine. He did not say the product was good but the website is bad. He said things like this:

But even if we get the hardware and software working exactly the way it’s supposed to with relatively minor glitches, what we’re also discovering is that insurance is complicated to buy. And another mistake that we made, I think, was underestimating the difficulties of people purchasing insurance online and shopping for a lot of options with a lot of costs and lot of different benefits and plans and somehow expecting that that would be very smooth, and then they’ve also got to try to apply for tax credits on the website.

These are the words of a man who has had to internalize a lot of grim briefings lately, and to come to terms with some painful realities. And the decision the president announced is the decision of a man who has to just think about politics day by day now, rather than in terms of large goals and visions. 

It may turn out, of course, that the situation of Obamacare and its champions is not in fact this dire, that the exchange system will find some balance relatively soon and function in a way that bears some resemblance to how it was designed to work, and that the politics of health care in 2014 will be more mixed and complicated than the fiasco the Democrats now face. But the last few days have suggested that Democrats, including the president, are beginning to lose faith in that possibility. 

Yuval Levin — Yuval Levin is the editor of National Affairs and a fellow at the Ethics and Public Policy Center.

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