Occam's Razor

One of the ironies of the Affordable Care Act is that Republicans were the ones to derisively name it “Obamacare”. So when it works, as it is going to, President Obama is going to get all the credit. This will make the Republicans look particularly stupid, not that they need a whole lot of help looking stupid lately. It might kill them as a party.

Perhaps it is the fear that it actually will work which is having them go into overdrive with desperate, last minute attempts to make it fail by convincing people not to enroll. They are doing so by refusing to set up state health exchanges but more recently by placing burdensome state regulations on Obamacare “navigators” (people paid to promote the insurance with uninsured communities) that effectively keep them from “navigating”. These tactics likely won’t work and worse are unconstitutional because of the supremacy clause to the U.S. constitution, not to mention the right of free association. Their hope is that by throwing sand into its engines before the courts tell the states their laws are invalid that it will cause the program overall to fail.

Good luck with that Republicans, because it won’t work. Granted, there may be some fits and starts to get the Affordable Care Act fully in gear. Whether or not navigators promote the law or not, it’s a straightforward matter for anyone who wants to get health insurance to acquire it: just get on line and sign up! On the national or state health exchange they can sign up for health insurance regardless of preconditions. If they don’t make a lot of money the government will subsidize some portion of their premiums.

The only ones to truly get screwed by Obamacare will be the working poor in red states, at least those red states like Texas which won’t accept Medicaid subsidies to expand the insurance pool. This is only possible, of course, due to the Supreme Court’s decision earlier this year that gave states the right to opt out of this part of the law. Now that decision definitely threw some sand into the Obamacare engine, but it was not fatal. It just meant that the poor, as usual, would continue to get screwed over in many red states. That will change with time.

So many ironies! It turns out that red states are essentially screwing themselves. By turning away free money to pay the medical expenses of their poorest citizens, these people will simply clog emergency rooms for costly “free” health care. This unofficial tax will be added to the price of health care services for the insured of these states, making their premiums proportionately higher than in states where Obamacare goes into full effect. This, in effect, makes blue states more desirable places to live because there is less health care cost shifting going on: health care expenses become more predictable. “Live free or die,” is the state motto of New Hampshire and by inference much of red America. But of course “freedom is not free”, as states like Texas will discover to their sorrow. The only interesting part of this exercise is how long they will hold out before they realize the futility of their own pigheaded stubbornness. There will be a whole lot of money that could have been used to build bridges and fund schools that will be needlessly squirreled away into higher health care costs instead.

This is because the whole point of insurance is to spread the risks, and thus the costs, lowering costs for everyone and thereby providing services that would otherwise be unaffordable. I don’t expect my house to burn down this year, so in the eyes of red America I am probably wasting money sending $600 a year or so to USAA. Essentially I am giving my money to someone else who will use it to rebuild their house when they have a fire. Of course should I have a fire, I’m out $600 in premiums and likely some costly but not catastrophic deductibles. But I am not left to rebuild my house with money from my savings account or using some loan that is based on my creditworthiness. $600 seems amazingly cheap for this investment of $500,000 or so. Essentially I pay .12 cents per dollar of the house’s value so I don’t have to pay to rebuild it in the event of catastrophe.

The same idea works with health care costs, of course. Only a very stupid wage earner when they measure their potential financial shock without health insurance will pass it up if they can possibly afford it. And with subsidies, they will be able to afford it, well, unless they make so little they count as working poor. If the states won’t take the federal money to insure these people then these low-wage workers will get screwed if they develop a costly condition. Many of them will die prematurely, but most will linger in pain and in poverty while racking up huge hospital bills that they cannot pay, but whose costs will simply be passed on to those who can: the insured.

Anyone who can possibly afford insurance is going to want to get it, and if they think they cannot they will find the cost of dodging it will increase every year with fines collected on their federal income taxes. At some point they will say, “If I am going to spend this much money not to be insured, maybe I should just be insured.” For now, these red states are hoping that ignorance will kill Obamacare. Keep the cheap to insure out of the market and it raises premium costs for the rest. In short they are betting on ignorance, hence their obsession with keeping “navigators” from navigating. It may work for a short while, but not forever, and if it works it will be locally, not nationally. Eventually some peer is going to tell them that they are insured now and it only costs X dollars and they are being subsidized with Y dollars of free money. It’s like a 401K employer match. Free money will get their attention, so let’s hope those navigating the navigators tell them to pitch it like this.

Despite attempts by some states to “overturn” Obamacare, it cannot be overturned by a state’s fiat. It is a done deal, a law largely upheld by the Supreme Court. It can only be repealed through an act of Congress signed into law by the president, or by a Congress that overrides the president’s veto.

It’s just like that scene from the movie Lincoln when, after the passage of the 13^th amendment Lincoln meets with the vice president of the Confederacy who is making peace overtures. “Slavery,” President Lincoln informs him, “is done. Finished.” Check and mate! The Affordable Care Act is finished too. It can’t be overturned because it wasn’t overturned. Certain red states will screw themselves for a while as they try to make it not work in their states, but it won’t work nationally. Obamacare is done. It is potentially possible to repeal it, but it won’t happen without a Republican House, Senate and White House, and only if there are sixty or more Republican senators. In reality, at this point it can only be amended, and by amending it, it will only be strengthened, not weakened.

Obama may screw up his legacy by sending missiles into Syria to avenge the use of chemical weapons by its government. But he won’t screw it up through Obamacare. Ten years from now most people even in red states will be scratching their heads wondering why they opposed it in the first place. They probably won’t like paying their health insurance premiums and copays too much. I don’t like paying mine either. But I do like knowing one costly illness won’t wipe me out financially. So will millions of Americans simply trying to reach old age in a state resembling solvency.

Perhaps the most ironic part of Obamacare is that Obama will get credit for something he largely did not contribute to. He basically said he was for the idea of national health insurance but left the details to Congress. The Affordable Care Act was what emerged. Republicans named it “Obamacare” to tar it to President Obama, who they obviously loathe, and the frame stuck. Even the president now calls it Obamacare. It will be seen as the major accomplishment of his term of office. At least President Franklin D. Roosevelt truly instigated the New Deal. Obama, the man Republicans love to hate, will be gratefully remembered for Obamacare in the generations to come. He will wear laurels placed on his head by Republicans, who thought they were putting on a crown of thorns.

The real credit for the legislation though should go to the Democrats who controlled Congress at the time. Senator Harry Reid and Speaker Nancy Pelosi should be wearing those laurels, but also the sixty Democratic senators who, as a block, held themselves accountable when push came to shove and overcame cloture in the Senate. It was an improbable act of great bravery. Sadly, their contributions and these moments will be largely footnotes.