Obamacare is in much more trouble than it was one week ago

November 13, 2013

1. The Affordable Care Act's political position has deteriorated dramatically over the last week. President Bill Clinton's statement that the law should be reopened to ensure everyone who likes their health plans can keep them was a signal event. It gives congressional Democrats cover to begin breaking with the Obama administration.


When you've lost Clinton... (Carolyn Kaster/AP)

2. The most serious manifestation of that break is Sen. Mary Landrieu's "Keeping the Affordable Care Act Promise Act." It's co-sponsored not just by the usual moderate Democrats -- Landrieu and Dianne Feinstein and Mark Pryor and Kay Hagan -- but also by Oregon liberal Jeff Merkley. It's worth noting that Merkley is up for reelection in 2014.

3. The argument Landrieu is making on behalf of the bill will appeal to many Senate Democrats. "When we passed the Affordable Care Act, we did so with the intention that if you liked your health plan, you could keep it," she said on the Senate floor. "A promise was made and this legislation will ensure that this promise is kept." It's an underplayed dynamic of the current political storm that many congressional Democrats feel Obama broke a promise he made to them, as well.

4. The bill Landrieu is offering could really harm the law. It would mean millions of people who would've left the individual insurance market and gone to the exchanges will stay right where they are. Assuming those people skew younger, healthier, and richer -- and they do -- Obamacare's premiums will rise. Meanwhile, many people who could've gotten better insurance on the exchanges will stay in bad plans that will leave them bankrupt when they get sick.

"I think it would be a real substantive mistake to do the Landrieu bill," says MIT health economist Jon Gruber, a supporter of the Affordable Care Act.

5. Put simply, the Landrieu bill solves one of Obamacare's political problems at the cost of worsening its most serious policy problem: Adverse selection. Right now, the difficulty of signing up is deterring all but the most grimly determined enrollees. The most determined enrollees are, by and large, sicker and older. So the Web site's problems are leading to a sicker, older risk pool. Landrieu's bill will lead to a sicker, older risk pool. Obamacare has provisions meant to stop an out-of-control death spiral, but higher premiums are a real danger. (For more on that, see "Seven reasons Obamacare isn't facing a death spiral.")

6. How much will premiums rise if Landrieu's bill passes? No one knows. "It sure would be good to know how bad that problem is," says Drew Altman, president of the nonpartisan Kaiser Family Foundation. "I don’t feel I know." Jon Gruber agrees. "I don’t know how much higher premiums go," he sighs. "I really don’t." I asked Landrieu's office whether they had any estimates. "We expect the impact to be very minimal as this bill is designed as a transitional fix," says a staffer.

7. It's useful to think of this in terms of who, on the margin, should be paying higher premiums: The people who've benefited from the various kinds of discrimination that undergird the current system, or the people who've been victimized by that discrimination? Bills like Landrieu's lower premiums for people who have benefited from the system at the cost of raising them for the people who've been locked out of the current system.

8. Insurers would also freak out. "Some insurers would end up pulling out [of the exchanges] for 2014 because they would say their premiums are now inadequate, and the rules have changed," said Larry Levitt, vice president at the Kaiser Family Foundation. They'd be right, of course.

9. Nor is it clear, if the Landrieu bill passes, that that's the end of it. "You’re opening Pandora’s box both with Congress and insurers," warns Altman. Once Congress reopens Obamacare, no one knows where they stop. Landrieu's bill, for instance, will also have to pass the House -- and they're going to want to attach provisions to it that Democrats won't much like.

10. The biggest problem for Obamacare is that HealthCare.gov remains a mess. If HealthCare.gov was working smoothly, a lot of the people getting insurance cancellations would be learning that they'll have better, cheaper insurance under the law. And at the same time, a lot of people who couldn't get insurance at all would be learning that they were going to get affordable coverage. "The number of winners will vastly outweigh the number of losers but no one knows that yet because of this Web site," says Gruber.

11. The biggest problem for the Obama administration in protecting the law is that they're losing credibility with congressional Democrats -- and, frankly, everyone else. They passed the law based in part on promises they couldn't keep. They botched the implementation terribly. And now it looks like they may not have HealthCare.gov fixed by the deadline they set for themselves. Congressional Democrats feel burned by them -- but even worse than that, they don't feel able to trust them. And Democrats looking toward 2014 are going to be made very nervous by this chart, first posted by our friends at The Fix:

Screen-Shot-2013-11-13-at-10.45.00-AM2

12. Ultimately, the White House needs to be able to convince congressional Democrats that their best chance in 2014 is a working law. Solving a political problem now at the case of worsening a policy problem 10 months from now isn't a good trade. But they can't do that unless congressional Democrats are confident that the White House can make the law work.

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Lydia DePillis · November 13, 2013