ObamaCare Assumptions Are Inherent Fatal Flaws

The cost of implementing ObamaCare, estimated by Pres. Obama at less than $1 trillion for the first decade, will actually be $2.6 trillion for the first decade of real implementation. Cost is a major reason why the Affordable Care Act is actually not affordable. And what can’t happen won’t happen.

But, as Jay Cost of The Weekly Standard points out (http://www.weeklystandard.com/blogs/morning-jay-dont-bet-obamacare_64816…), one does not need to count dollars to realize that ObamaCare will not last. One merely needs to understand the assumptions behind the law and then recognize that these assumptions are not likely to be true. Excerpts:

I believe that Obamacare in its current form is doomed, regardless of who emerges victorious on November 6.

I have two reasons for this conclusion.

First, the bill is built on far too many questionable assumptions. If any one of them fails to hold, the entire thing could fall apart.

For instance, the Congressional Budget Office gave the authors of the bill a pretty good score on the efficacy of the individual mandate, declaring that only a small portion of the public would choose to go without health insurance. This is very important: If the mandate is too weak, too many people will forgo coverage until they get sick, insurance premiums will rise, more people will forgo coverage, and so on. It’s known as a “death spiral.”

CBO says it will not happen. But that is an assumption – one that not everybody agrees with. The insurance industry, for one. Though Democrats brutally demagogued insurers during the 2009-2010 drama to pass the bill, behind the scenes they worked assiduously to win their endorsement. They failed, but only because the mandate the Senate endorsed was so weak the insurers feared a death spiral. (There is also a chance that the mandate will lose some of its psychological teeth if people come to view it as a mere tax, which could increase the likelihood of a death spiral. Economics mingled with the realities of social psychology can produce some strange effects.)

There are plenty of other questionable assumptions like this scattered all throughout the bill. Consider:

-Will employers drop their insurance coverage en masse, knowing that their employees can get insurance on the exchanges? Democrats assume not, but there are signs that may not be the case.

-Can Medicare be cut by $500 billion without undermining quality of care? Democrats assume so, but the Centers for Medicare and Medicaid Services is doubtful.

-Can Medicaid handle about 15 million new recipients? Democrats assume so, but doctors are already loath to accept Medicaid because it pays so poorly.

-Can you increase the number of people demanding medical services, without a corresponding increase in the supply of services, without a huge spike in prices? Democrats assume so, but common sense casts doubt on this proposition.

With every contestable assumption built into the bill, the odds that the whole package will fail in some way increase substantially. Suppose an 80 percent chance of success on each of these five guesses; in that case, the likelihood that all of them will be correct is only 33 percent.

Second, the bill is nothing like Social Security and Medicare, which seem to be the political template the Democrats believed they followed. The political genius of these programs was that they were designed to benefit everybody. Indeed, this is why FDR stuck with a social insurance model for Social Security, despite the fact that its design was clunky. He understood, correctly, that it would inoculate the program from future political blowback.

This is a big reason why these programs have withstood the test of time, even as other social programs like welfare have been substantially reformed. Because Social Security and Medicare do not discriminate between citizens, there has yet been no political coalition powerful enough to alter them. Everybody expects to benefit from them, so it has been impossible to implement even common-sense reforms.

Obamacare has no such insulation from reformers because it discriminates between classes of citizens. Indeed, Democrats played all kinds of favorites:

-People who make less money get a better deal on insurance than people who make more.

-People who acquire insurance from the exchanges get a better deal than people who get it through their employer

-Medicare recipients in Florida get a better deal than Medicare recipients elsewhere.

-People who receive an insurance subsidy get a better deal than people junked into the broken Medicaid program.

-People without insurance get a better deal than people who have it but are paying more than they can afford.

And on and on it goes. Worse, many of the winners in the Obamacare system are actually well heeled interest groups like the drug manufacturers. They spent hundreds of millions of dollars on lobbying, and they scored a substantial return on their investment.

My comment:

The Affordable Care Act is unaffordable, based upon false assumptions, and plays favorites. It can not survive economically, ideologically, or politically.

Dr. Joe Jarvis