ObamaCare’s capricious lack of fairness is, I think, a subject readers are now familiar with. Clearly, a program as big as ObamaCare will help some people; my beef is that ObamaCare, by virtue of its system architecture, will not and cannot treat all people equally, as single payer Medicare for All would do. People will be sent to Happyville or to Pain City randomly, and not when buying flat-screen TVs, but when buying a complex product costing many thousands of dollars that may (or may not) prevent bankruptcy or save a life. Moreover, ObamaCare’s system architecture, in consequence of Obama’s decision to preserve and protect the rental streams extracted from the body politic by the private health insurance industry, is needlessly complex, resulting in requirements abandoned and deadlines slipped, as is normal when a bloatware software project goes out of control. It may be that Obama’s public relations machine and career “progressive” enablers will be able to paper over these issues during ObamaCare’s launch phase, but they will become increasingly evident to the general public forced to enter, mandated to enter, the ObamaCare “marketplace” (the Exchanges). Whether what the general public experiences matters to policy makers is another question, of course.
So this week I’d like to take a quick survey of major ObamaCare implementation issues: The state of the California exchanges, the Pruitt v. Sebelius case, and whether ObamaCare will “make projection” and sign up 7 million people.
First, California. As is, again, typical with out-of-control bloatware projects, Covered California (the ObamaCare Exchange, or “marketplace”) is considering slipping its launch date; the euphemism is “soft launch.” LA Times:
Thursday, the state’s new health insurance marketplace said its website may not be fully operational Oct. 1 when consumer enrollment begins under the Affordable Care Act. But officials said they would know more after the results of key computer tests early next month.
This is, let us remember, 37 days from launch. For a complex system with potentially 7 million users (albeit with the more modest goal of signing up 1.4 million). This is insane.
We have not made that call yet,” said Peter Lee, executive director of Covered California, which is implementing the federal health law in the state. If online enrollment isn’t immediately available, Lee said, there would be other ways to sign up through call centers, enrollment counselors and agents before coverage kicks in Jan. 1.
I don’t care about the deadlines I can’t meet either.
Keith Ketcher, an outside project manager working on the state computer system, told the Covered California board Thursday that “there is work that remains to validate that the enrollment process is ready to go in October.… We will know in the coming weeks what our progress is.”
Well, 37 days is 5.28 weeks so yes, I guess you will. And of course people will be able to sign up on paper (Lee can’t seriously believe people are going to sign up over the phone), but how that will play with the youth Obama’s data geeks hope to attract is unknown,* and I’d bet they won’t do anything if they can’t use their cellphones or, heaven forfend, Mom’s laptop.
Meanwhile, Covered California is also shedding functionality, again typical of out-of-control bloatware projects. Sacramento Business Journal:
Covered California has decided not to include a quality rating system for health plans when the new insurance marketplace kicks off enrollment in October [and to delay this system until 2015]. …
But efforts will be made to post a couple of measures that health plans already report as soon as possible in cases where the provider networks for Covered California have at least an 80 percent overlap to current ones on the market.
So much for the idea that
The Exchanged citizens consumers will be able to compare plans easily, like buying a flat-screen TV!
If ObamaCare is a political campaign — and by “if,” I mean “since” — then Covered California is Super Tuesday. Here’s a big state, committed to the program, where the Democrats are dominant, where the Democratic apparatus has a ton of walking around money to promote the program, and where the coveted Hispanic vote is huge. So Obama has to win California or, more precisely, be seen to.
Next, the Pruitt v. Sebelius, where the state of Oklahoma has unexpectedly been given standing to go for ObamaCare’s jugular. Here’s the theory of the case, developed in part (you will note) by the Cato Institute. (What’s the matter, ObamaCare is Heritage’s plan, so that’s why Cato has a problem with it?) From a Social Science Research Institute article by Jonathan H. Adler and Michael F. Cannon:
The Patient Protection and Affordable Care Act (PPACA) provides tax credits and subsidies for the purchase of qualifying health insurance plans on state-run insurance exchanges. Contrary to expectations, many states are refusing or otherwise failing to create such exchanges. An Internal Revenue Service (IRS) rule purports to extend these tax credits and subsidies to the purchase of health insurance in federal exchanges created in states without exchanges of their own. This rule lacks statutory authority. The text, structure, and history of the Act show that tax credits and subsidies are not available in federally run exchanges. The IRS rule is contrary to congressional intent and cannot be justified on other legal grounds. Because the granting of tax credits can trigger the imposition of fines on millions of individuals and employers, the IRS rule is likely to be challenged in court.
The 31 states that have not built Exchanges default to the Federal Exchange. That’s the back-up plan. So if the Federal Exchange can’t give citizens in those states their subsidies, ObamaCare’s back-up plan collapses in half the country. Oopsie.** Timothy Yost, an ObamaCare supporter, explains the mechanics of the PPACA bill, and the implications. Oklahoma’s Attorney General Scott Pruitt*** brought suit using Adler and Cannon’s theory:
[The Pruitt] plaintiffs challenge the Internal Revenue Service’s interpretation of the language of the ACA. Section 1311 of the ACA creates and defines the responsibilities and powers of the ACA’s exchanges. … Section 1311, and Congress in drafting section 1311, assumed that the exchanges would be established and run by the states in most instances. …
In fact, however, under our Constitution, Congress cannot require a state to establish a regulatory program. Recognizing this, Congress adopted section 1321 of the ACA, which provides that if a state fails to create the exchange “required” by section 1311, HHS shall create “such exchange” in its place. The term “exchange” is defined in the ACA as a “1311” exchange, and it is clear that Congress intended the federal fallback exchange to take the place of and fulfill all of the functions of the state exchange.
One of these functions is to determine eligibility for premium tax credits. Section 1411 of the ACA requires HHS to determine eligibility for premium tax credits based on information provided by applicants through the exchanges. Section 1401 creates a new Section 36B of the Internal Revenue Code, requiring the IRS to provide premium tax credits to individuals determined eligible. In promulgating rules under its statutory authority to implement section 36B, the Internal Revenue Service has determined that premium tax credits are available through both the state and federal exchanges.
Section 36B(b), however, provides a formula for determining the amount of the premium tax credits. Opponents of the ACA have seized on to this phrase to claim that premium tax credits are only available through the state exchanges and that the IRS rule is contrary to the statute and invalid.
Well, I’m no strict constructionist, but these guys “seized on to [sic] the phrase” because — follow me closely, here — they actually read the text of the statute carefully. And the idea of the Courts, in essence, redrafting legislation because “everybody knows” what the legislators “really meant” strikes me as more than a little iffy. Does the Executive branch get to do that too? And in secret? Yost goes on to point out what are from his perspective bad policy outcomes, but those are not, or should not be, relevant to the Court’s decision. Picking up the thread:
Clearly [these bad outcomes are] not what Congress intended. … In the voluminous records of ACA debates, there is not the least suggestion that Congress did not intend federal exchanges to issue premium tax credits, while there are many references to the fact that premium tax credits would be available in all states. Indeed, it was not until late in 2010, months after the ACA was adopted, that the possibility that only state exchanges could issue premium tax credits was first noticed.
Yost goes on to describe how Judge White gave the state of Oklahoma standing, since they’re employers who would be “concretely injured” by the IRS”s decision, in that they’d come under the employer mandate (which is pretty hilarious argument). Then:
In sum, the Oklahoma case is likely to reach the merits of the challenge to the IRS rule. It will do so, however, before a judge that seems skeptical of the claim that the state of Oklahoma has been injured in some way by the IRS’s decision to ensure that its residents receive premium tax credits. In his opinion, Judge White also described the article by Michael Cannon and Jonathan Adler setting out the theory on which the state bases its case as “polemical law review article.”
Not that there’s anything wrong with that! Bottom line is there’s a big monkey wrench flying through the air aimed directly at some even more rickety than usual bits of ObamaCare’s Rube Goldberg-esque machinery, but nobody knows whether it will hit or miss. Pass the popcorn.
Finally, will ObamaCare make projection? From a USA Today survey of state projections:
Estimates from 19 states operating health insurance exchanges to help the uninsured find coverage show that at least 8.5 million will use the exchanges to buy insurance, a USA TODAY survey shows. That would far outstrip the federal government’s estimate of 7 million new customers for all 50 states under the 2010 health care law.
USA TODAY contacted the 50 states, and 19 had estimates for how many of their uninsured residents they expect will buy through the exchanges. About 48 million Americans were uninsured in 2011, according to the Kaiser Family Foundation.
Well, this is interesting; the states running their own exchanges (not the ones who opted out) could put ObamaCare over the top. Of course, since the ObamaCare rollout is a political campaign, and the biggest states (California, New York) are Democratic, that is exactly what we would expect them to say. (You don’t hear “My guy’s gonna lose” a whole lot from party apparatchiks before election day, do you?) So it would be nice to have actual polling data on this point. However, the tactic of managing expectations by lowballing is an ancient one, and again, the ObamaCare rollout being a political campaign, we would expect the administration to have used it. FWIW, my take is that the administration will pass the 7 million bar, and lost in the Hossanahs and confetti and pom pom-waving will be the pathetic fact that 41 million Americans will be uninsured, and roughly half of those will still be uninsured when ObamaCare is fully implemented. After LBJ rolled out Medicare for all over-65s in just one (1) year. So, modified rapture.
NOTE * It’s important to attract youth to ObamaCare for actuarial purposes, so that the healthy not-yet-old subsidize the sicker no-longer-young. Why the Department of Health and Human Services has decided to adopt a business model from private health insurance baffles me; this is cognitive regulatory capture of a very high order. Why not focus on those who need care, instead of those who don’t?
NOTE ** Of course, if the Democrats had abolished the filibuster in 2009 and passed single payer Medicare for All (HR 676, SB 703), establishing a uniform system across the entire country, none of this would have happened. Unfortunately, the administration was more concerned to preserve the insurance industry, its rents, and its campaign contributions (and its career opportunities). So much for that.
NOTE *** There is a Halbig case as well, but apparently it’s unlikely to get standing, unlike Pruitt.