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When It’s Already Broken . . .

by Avik Roy

Obamacare was doing badly before the shutdown

‘We’re going to do a challenge,” said Jon Stewart to Health and Human Services secretary Kathleen Sebelius on his Daily Show in early October. “I’m going to try and download every movie ever made, and you are going to try and sign up for Obamacare, and we’ll see which happens first.”

Imagine an alternative universe, one in which the Republicans had sought a delay of the law instead of insisting that it be defunded right this second. The glitchy rollout of Obamacare’s subsidized insurance exchanges would have been the lead story in every newspaper in America, a confirmation of Republican prescience about the law’s delays and mishaps. Unfortunately, we live in the real world, where Ted Cruz and Co. have snatched defeat from the jaws of victory.

Congressional Republicans — supported by anti-Obamacare activists on the right — had planned to use this fall’s fiscal fights to win a one-year postponement of the law. Instead, Cruz, Mike Lee, and a collection of outside groups pressured a group of 20 or 30 House Republicans not to pass a government-funding resolution unless it also defunded the health-care law. Faced with the possibility of losing a House majority on the budget, Speaker John Boehner acceded to the rump, and the shutdown was on.

There’s a reason conservative health-care activists picked the one-year-delay strategy, and it’s not that they are members of, in Ted Cruz’s words, a “surrender caucus.” It’s because there were strong indications that the Obamacare exchanges weren’t ready. Focusing on delay rather than total defunding would have put pressure on red-state Democrats to either endorse the measure or be held responsible for Obamacare’s first-year problems. That, in turn, would have helped put the Senate in play in 2014. Usually, you can’t pass bills repealing existing legislation without majorities in Congress and a supportive White House.

Even members of the Obama administration, and members of pro-Obamacare state governments, had expressed reservations about the implementation of the law. “I’m pretty nervous — I don’t know about you,” said Henry Chao, deputy chief information officer at the Centers for Medicare and Medicaid Services, in March. “Let’s just make sure it’s not a Third World experience.”

In February, Edifecs, a health-care consulting firm, surveyed a group of health-insurance executives on how the exchanges were going. “They are not optimistic that the government-run exchanges will be ready on time,” the firm concluded. “Almost all of those surveyed are concerned that the exchanges have not involved them as users in gaining input from the industry — traditionally a very bad sign in system development. . . . The executives are very concerned about being able to reconcile billing and eligibility information from the exchanges.”

One of the White House’s talking points was that implementation problems were the fault of recalcitrant Republicans, in Congress and state government, who weren’t helping to set up the law. But it was in the blue states, most of which elected to create their own insurance exchanges, that the problems were thorniest. “Sometimes it feels like we’re driving a car and then changing the tire at the same time,” Connecticut exchange CEO Kevin Counihan said in March. “We’re going to have a challenging enough time providing the quality of service that our residents deserve in Connecticut with the deadline that we have. If they keep adding new regulations, I’m sorry. . . . I wish we had one more year.”

An unpublished memorandum from the Congressional Research Service, written in June, calculated that the Obama administration had missed half of its statutorily required deadlines for implementing the health-care law. A former Obama-administration official described the exchanges as institutions that “will, unless delayed and fixed, inflict on the public the most widespread violation of the Privacy Act in our history.”

Meanwhile, it has become clear that the software architecture used to build Obamacare’s federal exchanges is badly flawed. “This is not normal maintenance, this is a huge fix,” Bill Curtis, chief scientist of the software-quality analysis firm CAST Software, told CNBC. “You just have a system that is in gross overload. . . . It has all the hallmarks of a project that was in a rush.”

It’s not just that people can’t get into the federal website, Healthcare.gov, that’s being used in 33 states. Among the lucky few who have managed to apply for health insurance on Obamacare’s federal exchange, after a week of enrollment, as few as one in a hundred is complete enough to allow someone to enroll in a plan. These problems are preventing people from buying a product, health insurance, that Obamacare forces them to buy, under penalty from the IRS.

Ted Cruz feared that if Obamacare were allowed to move forward, the law’s new entitlements would become too popular ever to repeal. Cruz’s inexperience with entitlement policy, however, prevented him from seeing what the conservative health-care activists are seeing. Obamacare isn’t like Medicare, or Social Security, or Medicaid, in which the costs and failures of the entitlement aren’t transparent to the average taxpayer.

Under Obamacare, average Americans are receiving notices of extreme premium hikes — in some cases as high as 300 percent — and they aren’t taking it lying down. “I don’t know whether to laugh or cry,” wrote one Forbes blogger. “My premiums are about to rise by 114.6%. My wife’s rates? Up 109%. Our kids? Don’t ask.” Kathy Kristof, a writer for CBS MoneyWatch, was sent a notice informing her that “at midnight on December 31, we will discontinue your current plan because it will not meet the requirements of the Affordable Care Act.” Her premiums have grown by $1,668 a year, an increase of 67 percent.

My colleagues at the Manhattan Institute and I crunched the numbers in a recent press release from the Department of Health and Human Services and found that, for the average person enrolling in Obamacare’s exchanges, the underlying cost of health insurance will go up by an average of 99 percent for men and 62 percent for women. Poorer people will be protected from these increases by subsidies, and very sick people will be protected by the law’s requirement that insurers charge people the same price regardless of health status. But everyone else will pay more, especially the younger people who have formed the core of the president’s political support.

Obamacare is a deeply flawed law. But while polls consistently show that majorities disapprove of it, a significant minority of Americans who dislike the law do so because it doesn’t go far enough. A survey of 1,976 registered voters conducted by the Morning Consult, a health-care/media firm, found that only 33 percent agreed that Obamacare should be repealed, delayed, or defunded. Twenty-nine percent believed that “Congress should make changes to improve the law”; 26 percent believed that “Congress should let the law take effect” and see what happens; and 12 percent believed the law should be expanded. In other words, for Republicans to have any chance at repealing Obamacare or rolling it back, they need to persuade moderates and apolitical voters to join them.

This, however, isn’t what the defunders are doing. “Look, we saw in Britain, Neville Chamberlain, who told the British people, ‘Accept the Nazis,’” said Ted Cruz of his strategy’s skeptics. “This law is going to destroy America and everything in America,” said Representative Paul Broun, who is running in a primary for Georgia’s open Senate seat next year. “Obamacare is the most dangerous piece of legislation ever passed in Congress,” warned Representative John Fleming of Louisiana.

Hyperbole has always been part of American politics. But defunders have spent far more time preaching to the converted — and attacking fellow Republicans — than they have persuading moderates and taking the fight to Democrats.

Moderates don’t have a doctrinal opposition to the expansion of government. And they don’t see Obamacare as “the most dangerous piece of legislation ever passed in Congress.” If they did, they wouldn’t have voted to reelect President Obama. These voters won’t be persuaded by appeals to the Founding Fathers. What they will be persuaded by is tangible evidence that Obamacare is going to make the cost of their health care higher and the quality of their health care lower.

You have the impression, listening to the defunders, that Obamacare will take America’s free-market health-care system and turn it into a socialist one. But that’s not true. The real government takeover took place in 1965, when LBJ signed the Great Society into law. Medicare and Medicaid are large single-payer programs, covering 86 million Americans, with a combined budget far larger than that of the Department of Defense.

In 2010, before Obamacare was enacted, U.S. government entities spent $3,967 per capita on health-care services. That’s the fourth-highest total in the world, far higher than Germany’s ($3,331), Canada’s ($3,158), France’s ($3,061), Sweden’s ($3,046), Belgium’s ($3,000), or Britain’s ($2,857). Obamacare makes this problem worse, but only incrementally. By 2022, according to the Congressional Budget Office, Obamacare will increase federal health-care spending from $1.6 trillion, under prior law, to $1.8 trillion.

America is already broke, and burdening the country with additional spending is a grave mistake. But the right message of conservative reform wouldn’t focus solely on Obamacare, but on the entire health-care-industrial complex.

That reform message would acknowledge that the system before Obamacare was also unaffordable, in family and federal budgets alike, thanks to decades of statist policies. It would make the case for policies that help people shop for inexpensive coverage on their own, instead of forcing them to be dependent on their employer or the government for insurance.

Reagan didn’t win the argument on tax cuts by speaking abstractly about the value of liberty. He won because he showed that tax cuts lead to prosperity. Similarly, conservatives need to show that their approach to health-care reform will make insurance better and more affordable. But first they’ll have to actually have an approach, instead of only shouting about what they’re against.

– Mr. Roy is a columnist for National Review Online and a senior fellow at the Manhattan Institute. You can follow him on Twitter at @avik.

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