Obamacare: Republican Tragedy, Democrat Farce

By now everyone knows that federal roll out of the Affordable Care Act (Obamacare) health care exchanges has been a disaster. But Obamacare is also a tragedy and a farce.  A tragedy because it is a horrible policy, a farce because it is now forcing Democrats to defend what was essentially a Republican idea.
    The Affordable Care Act is a Republican idea.  Obama himself acknowledged that during his 2012 presidential campaign, repeatedly reminding Mitt Romney that the Affordable Care Act was based significantly upon the policy he signed into law as Massachusetts governor.  But Romneycare’s origins goes back to the 1990s–a policy alternative to the Clinton’s failed healthcare proposals.
    The problems with the Affordable Care Act rests with two original design flaws in the law.  First, the legislation was meant to appease business groups and build on an existing system of health care insurance.  There were too many moving parts, too much capitulation to the industry for the law to work. It was essentially a free-market approach to delivering insurance, giving big insurance companies the opportunity to make more money by selling insurance to the uninsured.  The profit motive of private interests and the free market would solve our health care crisis.  This belief lead to a second and more fundamental problem residing in the assumption that economic markets and competition can deliver health care in an efficient, equitable, and affordable fashion.  The fact that the current health care delivery and insurance system is the most expense in the world with 48 million uninsured and mediocre outcomes attest to that.  The Affordable Care Act is a testament to a foolish belief that market mechanisms will solve health care problems. 
    The Affordable Care Act assumes that consumers can make choices about health care and will buy insurance if affordable.  It assumes that insurance companies will offer policies if markets exist.  The law assume that consumer choice and vendor competition will produce savings.  None of this was true before and there was no reason to think that it should have worked under this act.  If anything, the Affordable Care Act speaks to the limits of free market approaches to delivering vital government services such as health care.  No one in their right mind thinks the US military should fights wars and make a profit doing it, or that police and fire departments should let market mechanisms determine how the bad guys are caught and fire put out.   But Obamacare is a quintessential business pro-business free market idea.  Even the subsidies for the poor are pro-business–if individuals cannot afford health care the government will subsidize it–with the money going to private business.  What a windfall for the private insurance profit margin!
     If these design flaws were not bad enough, the Act has three other problems in terms of cost, coverage, and outcome.  First, the Act does little to address costs.  Currently the US spends 19% of the GDP on health care–we have by far the most expensive health care delivery system in the world.  The next closest are countries such as Canada and France at around 12% GDP, but with universal coverage.  Obamacare is supposed to reduce costs by insuring everyone, thereby reducing emergency room visits and encouraging people to visit doctors before a problem gets too serious.  There are also some provisions in the Act that are supposed to cut costs and in general the entire concept of the health care exchanges is that competition will pressure down costs.  All great theory, but as pointed out in a terrific recent article in special issue of Public Administration Review devoted to Obamacare, these ideas have little empirical foundation and actually most of them were already shown to be ineffective in reducing costs when the Act was being debated.
    Maybe short-term health care costs will go down but there is no evidence that longer term Obamacare will “bend the cost curve.”  On top of that  throwing millions of new consumers into a market with no plans to increase the supply of primary care doctors and nurses means there will be pressure to serve more people with existing resources.  The Act also does nothing to address the going health care needs of aging Baby Boomers who will pressure the health care delivery system.  In effect, the law fails to account for the demographic forces significantly driving up health care costs in the system.
    Additionally, Obamacare is far from universal coverage.  Remember initially that out of fear that universal coverage would lead to illegal aliens jumping the fence along the Mexican border to get free medical care in America ,the 12 million or so undocumented individuals living in America are not eligible for coverage, leaving them with the choice to self-deport themselves back to Mexico.  Many Republican states are also choosing not to extend Medicaid coverage.  The result?  While currently about 83% of individuals in America have health care insurance from their employer, through government, or purchased privately, at best Obamacare will push coverage up to about 90%.  At best, the Affordable Care Act does not even cut in half the number of uninsured in America.  It makes a good dent, but passage of the Act expended so much political capital to achieve so little.
    Finally, the Act does little to address the root cause of so many health care problems–poverty and poor life style choices.  Poverty leads to a host of problems that increase health risks, including malnutrition and homelessness.  But Americans are fact and lazy–we eat, drink, and smoke too much.  Obamacare does nothing to address these issues, problems that health care officials say we need to if we are to really reduce costs and improve outcomes to make America more healthy.  In effect, the act does almost nothing to address preventive or public health issues, again adopting a free market approach that individuals should be free to make their own health care choices.
    Despite all these problems, Democrats and their media apologists defend the law.  They say the law can be fixed or improved over time.  That the law was the camel nose under the tent to further reforms or that–to use the great line that often justifies bad laws–“The good should not be victim to the perfect.”  The reality is that Obamacare was a bad law or idea from the start–it was a bad Republican proposal that the Democrats have now embraced.  Couple the original design flaws along with so many self-inflicted wounds in implementation and so many problems forced upon Obama (a massive Republican effort to destroy a law they originally embraced) and one has a recipe for Democrats going down in 2014 or 2016 because of Obamacare.
    Thus the tragedy and the farce of Obamacare might also have an irony too it–Democrats are embracing a Republican idea and may lose politically because of it and Republicans who originally designed the ideas for Obamacare are now opposing it and may win politically.

Obama Won by Losing: Thoughts on the Health Care Decision

President Obama won by losing on Thursday.  Yes his health care legislation was upheld but it came at the expense of federal power and perhaps further losses down the line in terms of civil rights and other forms of federal power. The media will report that by a 5-4 decision the Supreme Court affirmed the individual mandate and upheld the Obama Health Care Act.  But a tighter and more thorough reading demonstrates this to be a very conservative decision and Obama lost big legally.

Congress passed and the Obama administration defended the Patient Protection and Affordability Care Act primarily on Commerce Clause grounds.  Their argument was that Congress under the Commerce clause (giving them the power to regulate interstate commerce) justified the imposition of the individual mandate.  They cited an important 1938 New Deal case Wickard v. Filburn as precedent.  Five justices rejected this argument.  Chief Justice Roberts along with the four dissenters contended that Congress may not compel an individual to buy health insurance because individuals who do not have insurance where not engaged in the activity of interstate commerce.  Instead, the individual mandate compelled them to enter commerce.  They used this argument to distinguish this health care regulation from the regulation in Wickard where in that case a farmer was growing wheat for personal consumption and not sale and the Court said that this still constituted commerce.  In that case the farmer was doing something, here people who do not buy insurance were not engaged in commerce.

The broccoli argument here was persuasive.  Roberts alluded to broccoli once and the dissenters specifically mentioned it 12 times in their opinion.  They agreed that by the logic of the Obama administration the federal government could force us to buy broccoli because it is good for us.  Thus, the individual mandate to buy health insurance is not something that the federal government can do.

Yet the backup argument by the Obama administration was that Congress’s power to tax saved the mandate.  Yes, sort of.  Roberts again drew on another landmark New Deal case United States v. Darby.  Here a New Deal Court affirmed a law under Congress’s taxing power to regulate and eliminate child labor.  In the health care case on Thursday Justice Roberts and the four liberals affirmed the individual mandate as a tax.  They contended that no one is required to buy insurance  but if they do not then they have to pay a tax.  Thus, contrary to media reports, Congress cannot compel us to buy health insurance, but they can tax us if we do not.

Some may state this is a difference that does not make a difference.  This is not true.  The four liberals on the Court would have affirmed the individual mandate on Commerce clause grounds in addition to the tax claim but Roberts only supported it on taxing power.  What are the implications?  In the last 50 or so years major legislation on civil rights and many other regulatory issues have been affirmed in part on Commerce Clause grounds.  This decision today actually trims back the Commerce Clause power of the federal government, raising questions about the Voting Rights Act and other civil rights legislation in the future.  This is the case both because of a weakened Commerce Clause and also because it suggests a Court perhaps less sympathetic of federal power than thought.  All this is significant especially in light of state challenges to legislation in these areas.

Yes, Obama got a win on Thursday.  He had a good week.  Housing prices are going up, gas prices going down, and he has clear leads in Ohio, Florida, and Pennsylvania.  He won the Arizona case too. But the health care victory is a pyrrhic one at best.  It is not a major expansion of federal power but a contraction.  Justice Roberts gave the president very little and he actually was a genius.  He agreed with most of the conservative dissenters while making it look like the Court is above politics and in the process preserved its institutional image.  Obama won by losing today.

America Beyond the 2012 Elections: What the candidates should be discussing

Groucho Marx declared that any club that would have him as a member he would not want to join. His sentiment perhaps captures my attitude toward presidential candidates–anyone who wants to be president I would not want to support! The reason is that with America’s problems so pressing, anyone who wants the job or thinks they have easy solutions to the difficult problems is probably a fool and should not be president.

The same is true this year. While the presidential primary and now general election seem again mired in social issues, the tough issues facing America are left untouched or inadequately discussed.  Yes, there are concerns about the solvency of Social Security and other entitlement programs, and the economy and gas prices loom large, yet there is little serious debate about how to solve these issues, whether the president even has the power to do anything, and also little discussion about a range of other pressing concerns that need to be addressed. Regardless of who wins in November, consider some of the pressing issues that need to be confronted but which are being ignored.

Obama faces an economy where the best projection is of high unemployment and low economic growth. But there is more. Home values remain about 25% or more below what they were in 2008, consumer and now student debt is high, and many people have already blown through their unemployment benefits and face an uncertain future. Consumer confidence remains near historic lows, suggesting little chance that retail sales and spending for the coming holidays and into next year will revive the economy. The public just does not believe the country is headed in the right direction (61% say in the wrong direction) and few think we are better off now than four years ago.

However, in recent months the American economy appears to be recovering. The unemployment rate is steadily decreasing, the stock market is at pre-2008 levels, and the housing market appears to be stabilizing This has brought a shift to three other domestic issues—gas prices, debt, and social issues. In 1980 rising energy prices due to two embargoes by oil producing countries had an impact on President Jimmy Carter’s election loss to Ronald Reagan. In 2012 projections are that gas prices may increase from approximately $3.00 per gallon to perhaps $5 by July. These rising prices are already causing a potential worry in terms of their impact on the US economy, and they are the subject of political criticism by Republican presidential candidates who are blaming Barack Obama for the increases.

American Decline?
A second domestic issue is the American budget deficit. The current budget deficit for fiscal year 2013 is projected to be nearly $980 billion with overall nation debt estimated at $15.6 trillion. This debt is a concern for many reasons, some of which is over worry that the United States cannot continue to finance it budget deficits by borrowing. Continued long term US debt affects its credit rating and ability to borrow money from sources, some of which are international. Efforts to reduce the debt and budget deficit potentially have an impact on defense spending and there are some discussions regarding how this might affect US military might. Paul Kennedy describes how one threat to the United States may be that its declining economic strength may compromise its ability to maintain its international military supremacy or standing in the world as it loses it capacity to maintain both hard (military) and soft (economic) hegemony.

Former national security advisor Zbigniew Brzezinski writes in his new book America and the Crisis of Global Power that the budget deficit, an unstable financial system, decaying infrastructure, growing economic equalities, and partisan politics threaten America’s national security and international standing. In many ways his arguments echo what Paul Kennedy had asserted 25 years ago in his influential 1987 "The Rise and Fall of the Great Powers" that the declining economic stature of the United States could have a significant impact upon its geo-global standing. Both books powerfully connect domestic politics to national security and assert that the country must confront certain realities. Yet unlike when Kennedy wrote it appeared America had bipartisan capacity to act, Brzezinski sees the very polarization of our political system as a strategic liability, standing as impediment to solving the other problems that exist.

This polarization affects the capacity to govern. Samuel Huntington and others were roundly criticized over a generation ago for asserting that America faced a governability crisis. Yet now he seems prescient. The list of problems confronting the American political system is endless. There is the growing polarization of the political parties that makes compromise near impossible. Add to that the personalization of political attacks that render compromise after election difficult. But there is also the growing disaffection of the public from the two major parties, the inability of the Democrats and Republicans to escape capture by special interests, the impossibility of the an opportunity for minor parties to emerge. Polls increasingly point to large majorities of the American public expressing dissatisfaction or distrust with Congress and the government overall, and while money in politics has always been a problem, the Supreme Court’s decision in Citizens’ United v Federal Election Commission has exacerbated the impact that wealthy donors and corporations have on the political process. Political scientist E.E. Schattschneider wrote more than 50 years ago that America was in danger of becoming the largest aristocracy in world where political power was stratified by wealth, race, and gender, and that has largely come to be.

But the political divisions are a consequence of another real problem America must confront—the growing gap between the have and have-nots. Mounting evidence demonstrates that the United States has the largest gap between the rich and poor this country has experienced since the 1920s. Since the 1970s repeated studies document declining social mobility for the poor and middle class and a nation where the rich have done will and the rest have not. The United States fares poorly in comparative statistics on equality and mobility compared to other developed countries. The reality is that there is a significant class divide in this country, affecting political engagement, life prospects, health, and a host of other issues.

Domestic Policy: Infrastructure, Health Care, and Gas Prices
Another issue is America’s crumbling infrastructure. It now seems a distant memory that in 2007 a bridge collapsed in Minneapolis. For a few days infrastructure was the word of the day. “Infrastructure” is not a sexy word. Nor is it the type of word that most of us use in everyday conversation, until the Minnesota bridge collapsed. Yet infrastructure—a short hand way of referring to America’s bridges, roads, highways and sewer and water pipes—is important to our everyday lives. Without the basic infrastructure of roads we would never get to work, to school, or go shopping. Without it we could not cross rivers, drink water, or flush our toilets. In 2007 the American Civil Engineering Society estimated a need of at least $2.2 trillion to revitalize America’s aging infrastructure. While no additional bridges have fallen, the aging American infrastructure costs the economy billions in lost competitiveness.

The American health care system is a mess. The United States currently spends nearly 18% of its GDP on health care, far greater than the 10-12% spent by other developed countries. Spending will only grow as the Baby Boomers age. The United States does not have universal coverage and 44 million plus lack basic coverage. Health indices such as infant mortality, life expectancy, and obesity rates compare unfavorably to other nations. Obama’s health care act may not have been an ideal solution, but it tried to do something.  Republican Party repeal or Supreme Court invalidation of the health care act and return to a free market solution will fail to address the problem.

Short term rising gas prices are a problem but the longer term issue is that this country remains wedded to a low cost hydrocarbon economy that is not sustainable. Demands to frack or drill more will do little to depress long term energy prices as worldwide demand increases. In fact, statistical evidence demonstrates that America’s increased production over the years has had little impact on decreasing energy prices. Unlike Germany which is moving rapidly into alternative energy sources, or Europe in general which has adjusted to higher prices, the American economy is not prepared for a new energy future.

Finally, there are significant educational and demographic changes that America needs to face. Educationally, America’s students underperform compared to those in most other developed countries. It is not that teachers are not teaching but that our school system represents a horse and buggy era far too slack on math, science, and other standards. Americans still think that second languages are unnecessary, and ignore the ways that poverty and racism affect learning and outcomes. Demographically, we face a more diverse yet aging society. Future workers will have to support an aging population and these new employees confront a high-tech world where they may not have the skills to compete on a global scale.

All of the above described problems are dire and require money to fix them. This list does not even include the environment and global warming, but the last problem America faces—its budget deficit, as noted—may make that impossible. Continued long term US debt affects its credit rating and ability to borrow money from sources, some of which are international. Efforts to reduce the debt and budget deficit potentially have an impact on defense spending and there are some discussions regarding how this might affect US military might. Both Paul Kennedy and Brzezinski, as noted, describe how one threat to the United States may be that its declining economic strength may compromise its ability to maintain its international military supremacy or standing in the world as it loses it capacity to maintain both hard (military) and soft (economic) hegemony. Together they and others see a need to address the long term fiscal health of the country but alas, the growing political polarization of the United States places a solution beyond immediate grasp.

Foreign Policy
So far in 2012 foreign policy issues have been secondary concerns this year. The United States formally withdrew from Iraq in 2011, leaving this issue as a minor concern for most. However, the United States still has troops in Afghanistan and there are some who criticize President Obama’s intention to phase out the military commitment there.

The Middle East in general is perhaps the primary foreign policy concern for the United States. There is concern over Iran’s nuclear ambitions, defense of Israel, and the latter’s potential bombing of Iran to prevent its access to nuclear weapons. The Obama administration does not presently support military action against Iran but some of the Republican presidential candidates do. The notable exception is Ron Paul who does not see Iran as a security threat to the United States. The United States supports the opposition in Syria but so far official US policy has not endorsement arming them or taking more aggressive military action. Again, some of the Republicans endorse this action.

In addition to the Middle East, North Korea’s stability and nuclear ambitions are of concern. Recently the United States secured some agreements regarding the North Korean nuclear program. Regardless of who is elected president, steps will continue to be taken to address this issue. It is unlikely that the US will return to the rhetoric of George Bush who labeled North Korea one of the “axes of evil.”

Finally, Europe does not seem to factor large in terms of issues dominating the 2012 American elections. This is perplexing given the historical close alliances with Europe and how financial instability across the continent could impact the American economy. Furthermore, Russia does not factor very high in the 2012 presidential debates, although Mitt Romney, the likely Republican Party presidential nominee, has described that country as one of the main competitors and security threats to the United States. China is perceived as more of a rival or threat to US interests than is Russia. Barack Obama shortly after assuming the presidency canceled the missile shield proposal in Europe that his predecessor George Bush was advocating. Were a Republican elected as president it is possible that the missile defense shield proposal might again be resurrected.

Overall, these are the difficult issues confronting America’s future and it does not look like either any of the candidates or political parties are confronting them in a realistic fashion. Nor does it appear that either the media or the public is either.

The Last Word
There is an interesting article in the New York Times discussing how Obama is having a difficulty attracting big donors this election. It notes how over 58% are small donors this time. Big money is going to the GOP.  It seems that after wealthy America threw a party and had to pay the bill, they turned in 2008 to Obama to bail them out. Now that they are bailed out and partying again they have turned their bake on him. There is a message here for Obama and corporate Democrats. The silver lining here is that if Obama gets reelected it will be with small donors and perhaps they will mean a change in politics. But the worry for Obama and the Democrats is that big money is again voting ideological and that is usually a good sign for Republicans.