Today at 7:38 AM
The Democratic Obamacare Freak-Out Begins
By Jonathan Chait
During the defunding fight, Republicans were stunned to see red state Democrats holding firm against not just their most grandiose demands but even their most targeted, made-for-30-second-ad gambits to split the caucus. Just a week later, panic over healthcare.gov is splitting the caucus wide open.
The most immediate manifestation of that panic is a bill being drawn up by Senator Joe Manchin, a conservative Democrat from West Virginia, to delay the individual mandate for a year. The concept of a delay is actually a good idea. (I made this case last week.) What Manchin’s proposing is a different, and terrible, idea.
Now, if you just hate Obamacare and want to do everything you can to cripple or kill the law, then delaying the individual mandate is good, repealing it is better, and repealing the rest of the law is better yet. Manchin doesn’t say that’s his goal, and I don’t believe it is.
The individual mandate exists in order to make health care affordable for sick people. A huge part of Obamacare is forcing insurers to sell affordable plans to people who are, or are at high risk of becoming, sick. But you can’t just let people sign up for insurance on their way to the hospital. That’s why we have a mandate. The mandate helps stabilize the insurance market by balancing out sick customers with healthy ones. If you delay it, you want to delay it in the most targeted way possible, giving relief to people who can’t enroll in the system while doing as little wider damage as possible.
The rationale for delaying the mandate is that you can’t fine people for failing to buy a product that’s extremely inconvenient to purchase. You could target a delay in the individual mandate to that goal, by delaying for those people who lack functional state exchanges. A year-long delay is the opposite of a targeted relief. It would apply to everybody, regardless of where the website is already working — screwing up the exchanges even in states that already have functioning websites.
And it would likewise apply regardless of when the website is working. Healthcare.gov could be functioning, for all we know, within a few weeks. Maybe it will take months. People can purchase insurance without facing a fine until March 31. If the websites still aren’t working by early March, extending the delay might make sense. (The history of Romneycare suggests that people will rush to apply at the last minute, before the deadline.) And if that turns out to be necessary, the administration has the legal authority to relax the individual mandate on its own, through the already-existing hardship waiver.
All this is to say that a legislative delay in the individual mandate can do plenty of harm and no potential good. It’s a pure political maneuver by vulnerable Democrats to insulate themselves from an unpopular national story. And as political theater, it’s a fairly clever maneuver. President Obama could simply veto a legislative delay if it passes. It would have been harder for him to veto a bill delaying the individual mandate if it were tied to reopening the federal government or lifting the debt ceiling. The individual mandate lets red state Democrats engage in some relatively harmless distancing rituals. Couldn't Manchin just print out the individual mandate and shoot it with a rifle or something?
And so while the prospects for direct harm are minor, the episode feeds into a broader dismay that is metastasizing into a full-scale freak-out. A dose of perspective is in order. The construction of the health-care websites was an outright debacle, one that deserves investigation by the media and Congress, and that also, as Norm Ornstein persuasively argues, highlights Obama’s frequent lack of attention to the crucial nuts-and-bolts details of governing. It's also a real source of hardship for millions of people who need insurance. It is not a non-event.
At the same time, it is also probably not the existential threat to Obamacare that the law’s enemies (and even many of its friends) portray it as. The administration has four and a half months to get the website running smoothly, and it has tools to push the deadline farther back if need be.
And even if the website failure persists longer, it would not spell doom. The worst-case scenario many people fear is that the lousy website drives away all but the most desperate customers, who will likely be the sickest, creating a pool of costly customers and triggering a “death spiral” of rising costs. Adrianna McIntyre argues, in an important, wonky post at the Incidental Economist, that the worst case scenario is unlikely to unfold. The law already has a three-year “risk corridor” buffer to recoup insurers who get stuck with a sicker pool of customers than they originally calculated.
The website debacle could turn out to be a months- or even years-long annoyance, gumming up the works of its signature initiative. Or it could be (as my colleague Justin Miller suggested) another BP oil spill — another in our endless string of Worst Crisis Ever, symbolizing the Obama administration's helplessness and demanding that everything be dropped until it is resolved immediately, only to disappear from public consciousness completely after a month or two. In the end, the law will almost certainly muddle through.