The strangest moment in yesterday's big presidential address on Obamacare came when President Obama implicitly compared the health care law to Samsung's Galaxy Note 7 smartphone, which was recently recalled worldwide for being a fire-safety hazard.
The speech was a defense of the signature law, and an argument against repeal, and while President Obama admitted that the law had flaws and requires fixes, he said that wholesale repeal was not the solution, citing the smartphone market as an example.
"When one of these companies comes out with a new smartphone," he said, "and it had a few bugs, what do they do? They fix it. They upgrade—unless it catches fire, and they just—[laughter]—then they pull it off the market. But you don't go back to using a rotary phone. [Laughter.] You don't say, well, we're repealing smartphones."
The comparison is apt, though not in the way the president seems to think.
The aside about a phone that catches fire was clearly a reference to the Galaxy Note 7, which Samsung released in August. Multiple reports of the phone catching fire quickly appeared. But in October, after attempting to fix the device's problems by issuing replacement phones that also caught on fire, Samsung announced a global recall—pulling it, as Obama noted, from the market entirely.
The Samsung Note 7 was the flagship product from one of the premier smartphone manufacturers in the world. Estimates suggest that pulling it from the market will cost the company somewhere in the neighborhood of $3 billion in lost profit. The announcement that the company was recalling the phone instantly reduced the company's market value by about $17 billion. In addition, many of Samsung's customers are further upset about the company's refusal to pay compensation.
The decision to pull the phone off the market, in other words, was a decision to admit failure, and take a massive loss in both value and reputation. But the company pulled the phone because it wasn't working. It's not the most of the phones the company sold during the short term. At the time of the recall, the company had received 92 reports of the battery overheating in the United States, including several from phones that were supposed to have been made with replacement parts. That was enough to spur the recall of roughly two and a half million phones.
No, the problems with the Galaxy Note 7 didn't cause us to "repeal smartphones" or go back to relying on rotary devices. But it did cause the company to completely discontinue the faulty product—meaning that consumers on the hunt for a new mobile device would have to choose a competitor, like, for example, Apple's new iPhone, which runs on a totally different operating system.
Obama's choice of metaphor, it turns out, tells us something not only about the health law, but about Obama's relationship to it. From the beginning, he has been unable to conceive of the possibility that there might be policy alternatives to his preferred design—especially those that rely on a totally different underlying system. He confuses a repeal of Obamacare with a repeal of all health policy reforms, rather than as a necessary but insufficient step in a different direction.
Republicans in office, of course, have aided him in this misperception, all but ignoring health policy for years, and then refusing to offer alternatives, or even the kind of party-wide public debate that is necessary to craft and build support for major policy decisions. But that does not mean those alternatives do not exist—merely that the competitors have done a poor job developing them.
Take a look at what's happening with Obamacare right now. Individual market premiums are set to rise by at least 30 percent in 8 states. Across the country, health insurers are pulling out of the law's exchanges, meaning that an estimated 1.4 million people (and possibly more) will lose their current plans and have to switch to new ones. Enrollment, already far lower than expected, is likely to stagnate this year, meaning that many of the law's problems are likely to persist.
Obamacare has more than a few bugs. Its architects have already taken extraordinary, in and several cases legally dubious, measures to fix it. Those fixes have not worked. A recall, it's true, would be costly, and damaging to the brands of both Obama and his party. The transition would probably not be smooth. It would no doubt leave many upset and frustrated. And yet, as with Samsung's failed phone, it would still be more than warranted.
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