How Obamacare Is Like the Iraq War

America needs an exit strategy from Obama's health care law.

Not even the most ardent defenders of Obamacare—aka the Patient Protection and Affordable Care Act—claim anymore that the law will lower health coverage costs for Americans. How, then, will it achieve universal coverage, its central goal?

The short answer is, it won't.

Last week, major insurers warned of double-digit premium hikes for small businesses and individuals when Obamacare goes into effect next year. Likewise, the nonpartisan Society of Actuaries this week estimated that costs to insurers that provide coverage to individuals will rise 32 percent on average within the first three years of the law, with premium increases sure to follow.

Similar analyses last year had already forced MIT's Jonathan Gruber to admit that his projections that the law would lower premiums for young and old alike were wrong — even though his projections were instrumental in securing Obamacare's passage. Gruber's revised estimates now show that even the least affected states, such as Colorado, will experience premium hikes of nearly 20 percent by 2016.

Clearly, the word "affordable" should be scratched from the law for the sake of truth in advertising. But what about the "protection" part—namely, universal coverage?

That too is a lie.

Before Obamacare, every percentage-point increase in premiums would price a few hundred thousand people out of the market. Obamacare's supporters, however, claim that the law's complicated scheme of mandates and subsidies will prevent this from happening. But that's unlikely, notes Greg Scandlen, founder of Consumers for Health Care Choices. For starters, the Supreme Court dealt a big blow to Obamacare's key mechanism for covering the uninsured by making its Medicaid expansion optional for states—and many states are opting out. An even bigger problem, Scandlen notes, is that Obamacare has created perverse incentives that will encourage employers to drop coverage in droves—and employees to forgo it in droves.

The law's play-or-pay mandate requires employers with more than 50 full-time employees to offer a lavish panoply of benefits or else pay a penalty. Many small businesses will simply choose to stay small to avoid the mandate, which means less hiring and more uninsured.

As for large companies, McKinsey & Company, a private consulting group, estimated that nearly 30 percent will pay rather than play—that is, pay modest fines instead of paying several times as much to give robust coverage to employees. The Congressional Budget Office estimates this might cause between 5 million and 20 million Americans to lose their employer-provided coverage. Former CBO Director Douglas Holtz-Eakin puts this figure at a whopping 35 million.

It doesn't take a rocket scientist to understand their calculation here: The penalty will cost a company $2,000 per employee, while a family insurance plan costs $12,000 to $16,000. This means that the company can pay the penalty, give employees generous raises to buy their own coverage, and still come out ahead.

But will employees buy coverage or just pocket the extra wages?

Obamacare's supporters bet they will buy insurance because Obamacare will subsidize the purchase and because they will otherwise have to pay penalties under the law's individual mandate.

But Scandlen notes that the penalties are meaningless. Not only are they small, they are easily avoided. The only way Uncle Sam can extract them is by subtracting them from taxpayers' income tax refunds. Simply avoid excessive tax withholding and the feds have no way of collecting.

As for the subsidies, Scandlen maintains that their allure, too, is overrated. They will be relatively modest for middle-income families, and to qualify, purchasers will be required to obtain very expensive "Cadillac" coverage.

People will also have the option of waiting to buy insurance until they get sick. Thanks to Obamacare's "guaranteed issue" provision, insurance companies can't turn anyone away, even those calling from the intensive care unit. This will only deepen the problem of the "adverse selection death spiral" as healthy people stay out of the insurance market while sick people jump in. This, in turn, will trigger even more premium hikes.

The Iraq War cost $1 trillion and produced a quagmire abroad. Obamacare will cost $1 trillion and will create a quagmire at home. Americans need an exit strategy.

This column originally appeared in the Washington Examiner.

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  • John||

    Except that the Iraq war was supported by large numbers of the opposing party and authorized by legitimate vote. If the Iraq war had been authorized without a single Dem vote and done so by reconciliation, it would be like Obamacare.

  • some guy||

    Because it's okay to make a bad decision as long as it has bipartisan support?

  • DarrenM||

    Because it's okay to make a bad decision as long as it has bipartisan support?

    No, it's not okay. However, it's less likely to be a bad decision (or at least not as bad of a decision) if it has bipartisan support. The inadequacies are also more likely to be addressed if both sides share some of the blame.

  • Auric Demonocles||

    I think the biggest difference is really that the Iraq War fucked mostly other people and for about a decade, while Obamacare is going to fuck us, and indefinitely.

  • some guy||

    Only until they sign off on single payer. Then single payer will be fucking us indefinitely.

  • Auric Demonocles||

    Then single payer will be fucking us indefinitely.

    Which I'm going to count as part of Obamacare's orgy.

  • CatoTheElder||

    Only until US single payer collapses into NHS-style socialized medicine.

    US has no more chance of success with single payer than it does with ObamaCare. The US is not a small homogeneous country.

  • DarrenM||

    Only until US single payer collapses into NHS-style socialized medicine.

    We are going to need a contest for what to call the American version of the NHS. I vote "The Thing".

  • newshutz||

    I can't think of anything worse to call it than Belgian.

  • John||

    The fact is that most of the people who claim to be against the Iraq war were not really against it at all. They voted for it and continued it once they got in power.

  • Tony||

    Anyone who didn't march along with Bush's scared shitless flag-waving jingoistic war drums was called a traitor, John. Just because you supported it doesn't mean it wasn't one of the biggest all-around fuckups perpetuated by the US in decades. And just because some Dems supported it doesn't absolve you of your poor judgment.

  • John||

    The Iraq war is the most Wilsonian war the US has ever waged. It was all about the credibility of the UN and the world order. That is why liberals for the most part voted for it and to a man continued it after they took the Congress and the White House.

  • ThatSkepticGuy||

    "And just because some MOST Dems supported it doesn't absolve you of your poor judgment."

    And the fact that it started under a Republican president doesn't pardon your side from flip-flopping from supporting it fully, to opposing it during election seasons, to once again being in favor of the War to the point of trying to extend it, Blueshirt.

  • DarrenM||

    traitor

    An we know politicians can't stand to be called names.

  • some guy||

    At least Obamacare won't result in tens of thousands of premature deaths... or will it?

  • Auric Demonocles||

    They're just trying to bridge the life expectancy inequality gap.

  • Bardas Phocas||

    Both in war and government healthcare policy - that's a feature, not a bug.

  • ||

    But Scandlen notes that the penalties are meaningless... Simply avoid excessive tax withholding and the feds have no way of collecting.

    Bullshit. SCOTUS ruled the "penalties" are taxes. Regardless of how the ACA is written, a court could easily uphold active collection.

  • Gray Ghost||

    This.

    The 'no way to collect' will last as long as the idea that seat belt offenses weren't enough by themselves to get you pulled over, or that "we'll stop collecting the tolls when the road's paid off."

    They have a means to assess a penalty, and a Supreme Court that's willing to blue-line Congressional legislation. I don't see an obstacle for them.

  • grey||

    Do we know the libtards pitch to blame Obamacare failures on red team or on the minuscule remaining 'free' healthcare market?

    The Iraq vs Obamacare lead is cumbersome at best, but the article is a nice Obamacare update.

  • JWatts||

    The 'Iraq vs Obamacare lead' is trollish. I agree it's a nice article, but it's a bad headline.

  • kinnath||

    Salon had an unrelated article over the weekend explaining that Justice Ginsberg had to go right now dammit, cause the Repulicans could take the senate in 2014. And my first thought after reading the headline was "why are libs worried about losing the senate next year?". Then I remember that Obamacare starts to kick in next January, so the general public will have 10 months or so to stew in whatever anger this causes.

    With any luck, Barack will be the lamest of lame ducks to hold the white house during my lifetime.

  • John||

    It is going to be ugly in 2014. They own everything that happens.

  • kinnath||

    It's the only hope I have left at this point.

  • John||

    I am not even that hopeful. I have no idea what exactly is going to happen. But whatever it is, it is going to be big and ugly once people get the bill for this.

  • JWatts||

    Yeah well I hate to break it to you but:

    a) low information voters
    b) an adoring press
    c) the Obama election machinery kept running after the election

    Team Blue wants to own the future. My guess is any problems with Obamacare will be blamed on any convenient scapegoat. Seriously they are still blaming the economy on Bush, 5 years after the recession.

  • AD-RtR/OS!||

    The Dems blamed Hoover for everything deep into the Fifties.

  • Raven Nation||

    They SHOULD own everything, but they won't.

  • thom||

    Don't worry, they'll just blame Republican obstructionism.

  • kinnath||

    Salon (off all possible lefty websites) has already run an article explaining that Obama abandoned the working class and that Obamacare is going to fuck over the people at the bottom of the totem pole.

  • Johnimo||

    "Fuck(ing) over the people at the bottom of the totem pole" is what socialism is really, really good at. In the name of dismantling the advantage of the wealthy it is made certain that nobody will have a future other than being a state beholden serf.

  • ||

    Yeah, and everyone was saying the Republicans were going to take back the Senate in 2010 ... and in 2012.

    Don't get your hopes up.

  • fried wylie||

    Americans need an exit strategy

    If you don't like it you can just *hitches thumb* geeeet out.

  • Tony||

    I suppose more dead Americans than 9/11 could manage and countless dead Iraqis all the result of a big fat lie are sort of... not factors in this comparison?

  • John||

    You mean lies like "if you like your coverage you can keep it?" or "we are going to bend the cost curve"? Lies like that Tony?

    And you mean that war dozens of Democrats voted to launch and continued to fund and fight throughout its entire course? That war? You know the war Bill Clinton wanted to fight in 1998?

    Face it Tony, the Iraq war was a Wilsonian liberal endevour. Liberals own it as much as Bush, really more so since it was fought to uphold liberal ideals about the world order.

  • Snertly||

    Let's see.... Who was it that made the lies that sold the plan for invading Iran? Cheney and Bush, those war mongering liberals!

  • ||

    I think it's highly unlikely that it will be repealed any time soon.

    However, a preferred option could be to add a fourth-tier high-deductible/catestrophic plan option, and allow that to qualify to avoid the "tax penalty". The "free preventive care" provisions really don't cover very much, just an annual visit and a few screening procedures like mammograms. And birth control. So that shouldn't increase the cost much. Congress could also allow the minimal fourth-tier plans to opt out of the free preventive coverage aspect.

    The benefit of this would be that it would provide an option for healthier young people to purchase relatively inexpensive coverage and avoid paying high premium increases. And from a libertarian standpoint, you get the economic benefits of high-deductible plans where people shop around for routine care. Plus, by having four tiers instead of three you allow a wider price differential between the healthiest people (who will opt for higher deductibles), and the sicker people (who will opt for lower deductibles). So the younger people on the high-deductible plans will be able to avoid subsidizing older/sicker people as much.

  • JWatts||

    Having healthy young people pay high rates is considered a feature of Obamacare not a bug. So that's not going to go away without a major restructure or just repealing the whole thing.

  • Dave Boz||

    Yup. Screwing young people is pretty much the point of Obamacare. Maybe youngsters will figure this out, but in the meantime, thanks for the subsidy! And enjoy your free birth control.

  • Alton543||

    as Ralph answered I am stunned that any body able to earn $4231 in one month on the internet. have you read this web site http://www.wow92.com

  • izzyabby||

    Who thought calling from the intensive care unit and buying Obamacare was a good idea?

    Why would compulsory government insurance have a "Cadillac plan"?

    What the hell's going on out there??

  • Eric Bana||

    At least Obamacare is going to be deficit neutral. Right? Right?!

  • AD-RtR/OS!||

    Obama presides of the "Lillian Hellman Presidency":
    Everything about it is a lie, including "and" and "the"!

  • AD-RtR/OS!||

    ...correction...

    Obama presides over the "Lillian Hellman Presidency":
    Everything about it is a lie, including "and" and "the"!

  • Snertly||

    What else do the Iraq War and Obamacare have in common?

    Republicans screwed up the implementation of both, making both far more costly and painful than necessary.

  • chenzhong||

    Because it's okay to make a bad decision as long as it has bipartisan support? http://www.celinebagsaleuk.com/

  • mayajan67||

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    HTTP://BIG76.COM

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