October 1 2013
Advocates of ObamaCare will easily dismiss all the trouble people are having signing up for ObamaCare. They will predictably say, "The exchanges were so wildly popular, they attracted more web traffic than expected."
Perhaps it is so. Or perhaps the exchanges were so far behind schedule, they did not have time to do serious testing of their application Web sites.
Either way, Web sites are fixable. Barring any significant policy changes from Congress, soon all 50 states will have an exchange with a Web site, hotline, and information about health plans. They will be able to collect data from applicants who seek coverage in an exchange plan.
The technology they use to do this is not responsible for ObamaCare's success or failure. Ultimately, the law will fail to meet its main goals - affordability and expanded health care access - because the policy is fundamentally flawed.
In the exchanges, many people will find health insurance rates that appear to be more affordable, at least initally. This is because premiums in the exchanges, for people at or below 400 percent of the poverty level, are heavily subsidized. This will not bend the cost curve down. Instead, it means taxpayers are paying once for their own increasingly costly health insurance, and then again for subsidies in the exchanges.
I don't mean to demean people who receive subsidies. Anyone who qualifies for a subsidy should be expected to take advantage. This is simply rational self-interest at work. The problem with this approach - as we've seen with student loans - is that subsidization does not actually reduce costs. It simply moves money from bucket to bucket, spurring a less efficient use of resources.
Economists too often highlight this "less efficient use of resources" without explaining in human terms what this will mean. It will mean shortages (in health care), surpluses (in paperwork) and fewer lives saved. It will mean we reach important cures more slowly. It will mean life expectancy, infant mortality, and other health indicators will be affected.
Besides a wrong-headed approach to the cost curve, ObamaCare makes another serious mistake: confusing health coverage with health care. It's true that in the United States most people need health insurance to access the best health care. But the Affordable Care Act uses the Medicaid program to enroll about one third of the (projected) newly insured. Medicaid's health outcomes are abysmal when compared to private insurance. In other words, millions of people will be handed a card or piece of paper that says they are insured, but many physicians will not see them.
The same trend is at work in Medicare. What will happen if the exchange plans are one day regulated to a lower reimbursement rate (like Medicare and Medicaid)? Then today's applicants for exchange plans will see their care controlled by these government rates as well.
Some opponents of ObamaCare have encouraged people to "out opt" and avoid signing up for insurance. But this is not the truly free-market approach either. Individuals and families should opt out if doing so is in their best interest. But they should sign up for health coverage if they desire. We should want Americans and their families to be free to do what they believe is best, and we should fight for a policy that fosters the most innovation, highest quality, and lowest costs through choice and competition.
ObamaCare does not do this, and that is why it will fail. Don't blame the computer, the software, or the server. Blame the people who passed this horrendous law.