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Right Turn
Posted at 04:00 PM ET, 06/21/2011

How did Obamacare get so screwed up?

The Democrats’ “historic achievement,” shocking as it seems, turns out to be an expensive, jobs-crippling monstrosity that is filled with unintended consequences. Employers are likely to dump employees into highly subsidized exchanges. It’s not going to bend the cost curve. And today, the Associated Press reports:

President Barack Obama’s health care law would let several million middle-class people get nearly free insurance meant for the poor, a twist government number crunchers say they discovered only after the complex bill was signed.
The change would affect early retirees: A married couple could have an annual income of about $64,000 and still get Medicaid, said officials who make long-range cost estimates for the Health and Human Services department.
Up to 3 million people could qualify for Medicaid in 2014 as a result of the anomaly. That’s because, in a major change from today, most of their Social Security benefits would no longer be counted as income for determining eligibility.

Minority Leader Mitch McConnell’s communications director e-mailed me in response to this report, “Nearly every week we find a new reason to say ‘repeal and replace.’ ”

To understand how a major piece of legislation could be so badly crafted one only has to recall the mad dash to jam it through Congress. The point was to get something, anything in there to take root. Unfortunately, it is already rotting from within. As the AP observes, the administration isn’t even claiming this one is an error: “Indeed, administration officials and senior Democratic lawmakers say it’s not a loophole but the result of a well-meaning effort to simplify rules for deciding who will get help with insurance costs under the new health care law. Instead of a hodgepodge of rules, there will be one national policy.” Perhaps if lawmakers knew what they were voting for this would have been fixed.

Still, one can’t help but think that the administration and Democratic Congress didn’t have a firm grasp of some basics in our existing health-care system. James Capretta, for example, responds to The Post’s Ezra Klein, who repeats some standard liberal tropes. Capretta explains that in criticizing Rep. Paul Ryan (R-Wis.) Medicare reform plan, liberals seem to be confused about the highly successful Medicare Part D plan, which provided a model of a popular, market-oriented and subsidized health-care plan that came in under budget.

As to Klein’s claim that a downturn in drug expenditures was responsible for cost reductions, not Medicare Part D, Capretta replies, “Part D plans have aggressively pushed generic substitution as a way to lower premiums — and they have had considerable success. Isn’t it likely that this trend among the elderly has influenced how physicians and pharmacists behave with all their patients? In sum, the drop in drug spending systemwide is not evidence of Part D’s irrelevance. Indeed, it reinforces the point that Part D has been effective.” Put differently, it provides evidence for conservatives’ premise that shifting cost to the recipient reduces excess usage. This concept remains a foreign one to the left.

Likewise, Capretta responds to a second assertion: “Klein cites estimates from the CMS actuaries to argue that, even if Part D cost escalation has been moderate in the past, it is set to rise sharply in the future. But he fails to mention that a main reason for projected cost growth going forward is that Obamacare expanded the drug benefit by closing the so-called ‘doughnut hole.’ Moreover, the actuaries have noted that these projections come with great uncertainty. What we do know with certainty is that costs in the program’s first five years have come in remarkably low.”

And finally, Capretta confronts a misrepresentation head on: “Klein argues that Medicare beneficiaries are paying premiums in 2011 that are 57 percent higher than they were in 2006. This is demonstrably false. The data Klein cites are based on a subset of the program — the stand-alone drug plans — which means Medicare.”

If this issue is any indiction, we have a clue as to how Obamacare got so screwed up. Those who drafted and now tout it have a shaky understanding of how markets operate and a built-in preference for top-down management. But it turns out that millions of people making individual health-care decisions are a lot smarter than the bureaucrats who constructed such a massive structure that no one can be expected to understand it and its consequences. Who knew?

By  |  04:00 PM ET, 06/21/2011

Categories:  Obamacare

 
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