THE BLOG

Obamacare Obstructionism 2.0: Rooting for Implementation Failure

02/22/2013 02:49 pm ET | Updated Apr 24, 2013

"Make it work."

This advice on health reform to Democrats earlier this month illustrates that President Clinton knows what the opponents of Obamacare also know: success is the best political revenge.

As the health reform law moves off the drawing board into the real world, its opponents are doing their best to make it not work -- by shifting their energies from fulminations about the boogeymen they imagine in the law to hampering, complicating or outright obstructing its implementation.

For openers, half the states have announced they will probably not expand their Medicaid programs under the law -- though there have been defectors, most notably Florida. This will leave a large segment of the uninsured priced out of even the subsidized insurance markets created under Obamacare, while adding enormous complexity and uncertainty for small businesses and multi-state employers who want to comply with the law and cover their lower-income workers.

The same states, more or less, are also refusing to establish health insurance exchanges -- online marketplaces where small businesses and individuals can purchase private health insurance -- the fulcrum of the law's provision for those not covered by Medicaid. As of last Friday's deadline, 24 states and the District of Columbia were going ahead with exchanges and 26 were not.

While the refusenik states generally cleave to the red state/blue state divide, two Democratic governors went the other way, while three Republican governors have chosen to implement the law and build exchanges -- each for interestingly divergent political reasons. Things were messiest in Kansas and Mississippi, where Republican governors went to war with their own insurance commissioners over the matter and ultimately prevailed. In New Jersey, Governor Chris Christie simply vetoed the exchange bill passed by his own legislature.

Stand-offs between a state's insurance commissioner and governor are especially illustrative of how critical exchanges are to the implementation of Obamacare. The job of an IC is to regulate a chronically dysfunctional insurance marketplace, impose transparency on an industry that thrives on obfuscation, and deal with the everyday disasters of people who cannot access insurance or were shafted on insurance they thought they had. The job of a governor is to direct the political compulsions of a state, ideally through vision and leadership, but too often through grandstanding, in its ugliest form in defiance to the federal government.

While governors just saying no fans the flames of partisanship and makes it more difficult for health reform to succeed on the ground, the substance of the objections about the exchanges -- by Republican pols, Wall Street Journal editorial writers, and conservative bloggers alike -- have nothing to do with reality. Exchanges are bureaucratic contraptions of immeasurable complexity and cost, they argue, and will not work. But if the exchanges were bridges too far, the vetoed insurance commissioners would not put their own political capital at risk to build them.

As with other ideological about-faces among the president's critics since market principles emerged along the foundations of his health reform plan, the reality of the exchanges is exactly the opposite of what their critics would have us believe. The health insurance exchanges in Obamacare utilize marketplace ideas and processes to emulate the emerging best practices of today's employer-based, private health insurance marketplace, expanding and making them available to all.

The exchanges will combine the establishment of a health benefits package, a process for certifying local and national insurers to sell that package, and an online marketplace for small businesses and individuals to pick and choose the best insurer to buy it. For the working poor, they will also credit a sliding scale subsidy toward their purchase. The exchanges represent the Expedia, Hotels.com and Cars.com for health insurance -- designed to shed the opacity of three other traditionally inefficiently priced industries -- and increase choice, transparency, mobility and competition among insurers for consumers' dollars.

Those who, like insurance commissioners, actually know what they are talking about when they talk about insurance exchanges, do so for good reason. There are three already operating today, by payroll processing giant ADP and employee benefits management companies AON and Towers Watson. But as with most things in health insurance, the private exchanges are limited to people with health benefits from their employers. Most small businesses, the self-employed, and those who buy their own coverage -- the bulk of those of who will benefit most from health reform -- are left out, the same way the tax code has always discriminated against their health insurance purchasing and the market has tried to priced them out as expensive nuisances.

The private exchanges represent an incremental but important evolution from what large employers have been doing for decades: allowing employees to pick and choose from a variety of health plans through what many call "benefits portals." Such portals are complicated, with far more moving parts -- dental, vision, child care, extra vacation time -- than anything available as part of Obamacare. And yet they work, are updated every fall for "open enrollment," and provide a good working model for what is possible for the rest of us with the implementation of health reform.

There is much to pick on in the details of the president's reform plan, and many of its elements will execute less than perfectly in the first few years of its implementation. (Unlike today's health insurance system, which we all know executes flawlessly.) But governors who, on misinformed ideological principle, are deliberately complicating this implementation -- implicitly rooting for and attempting to enable its failure in their own states -- are falling into an odd political trap. They may be perfectly willing to abandon their uninsured, underinsured, and working poor as "takers" whose votes do not matter.

But because Obamacare is a federal law, they are merely delegating their undesirables back to the federal government, which is building its own fail-safe exchange. Under the law, when a state cedes their people to the Federal exchange it also cedes away any right to decide which health plans are allowed onto that exchange -- effectively giving up any say-so over which insurers will be serving their own citizens. This would be sufficient explanation for why an insurance commissioner would want one enough to defy his or her own governor.

Giving up all that control to the Fed, because your ideology vilifies the Fed as an overreaching control freak, may seem like a Pyrrhic way to make your point. But not to anyone trying to sort anti-Obamacare rhetoric from legislated reality. Nowhere more than here is it obvious that the ideological war over the president's plan has little to do with health policy and everything to do with politics. The single biggest problem with "Obamacare" is that it now goes by the name its critics foisted on it in derision. It was inevitable that the partisanship inspired by the law's passage would only intensify with its implementation.

Demagoguery over the exchanges may be particularly loud because, as mentioned earlier, it represents another ideological about-face, an example of the recurring paradox about the main ideas behind Obamacare. Conservatives have been in a frenzy of denial that the central mechanism of the law -- the individual insurance mandate -- was their idea all along, a fact well documented in public policy literature before I summarized it in a New York Times essay in September. The depth of the fury I inspired across the conservative blogosphere showed the rawness of nerves on this point -- especially given my pro-market, pro-business credentials. (It gets lonely in Washington when you believe in capitalism and competition, but have zero interest in the Obama-hating, social conservative goat rodeo currently dismantling the Republican Party.)

The same political paradox applies to the exchanges. As a market-enabling mechanism for ending the dysfunctionality of local health insurance purchasing, the idea emerged not under President Obama, but under President George W. Bush. Exchanges were first championed by his Secretary of Health and Human Services, Michael Leavitt, the former governor of Utah. Not coincidentally, Utah is one of three states with a Republican governor that is building its own exchange or, more precisely and tellingly, adapting the one it built years ago.

Politicians ignore such paradoxes at their own peril. As Mitt Romney learned while attempting to distance himself from his signature accomplishment as governor of Massachusetts, Obamacare's naysayers are playing a dangerous political game. The Supreme Court has upheld almost the entire law, some of which has already been implemented with narry a whirr from the black helicopters. Nearly three years after its passage, there have been no actual reported health coverage or job losses of any significance -- only a steady stream of media reports saying that business lobbies and benefits consultants are all saying that their members and clients are all saying they are thinking about cutting coverage and jobs.

All that remains for those rooting for the failure of Obamacare, now that the Supreme Court has ruled against them, are a handful of nuisance lawsuits, more obstructionism, and the inevitable conflation about every element of implementation that did not work to perfection into an indictment of the entire plan.

Socialized medicine! Government bureaucrats dictating what your doctor can do! No more freedom to choose your own doctor!

Yes, that is what they all said -- about Medicare, when it was enacted in 1965. Back then, there was a Greek chorus lamenting how Medicare would drive all physicians from practice and spell the end of medical innovation. I would cite specific members of that chorus -- a few of whom were ideological state-level politicians who went on to support Medicare when they rose to national prominence -- but the vast majority were policy experts and writers, and almost no readers of this newspaper will recognize their names.

Like those today working to obstruct or complicate the implementation of Obamacare - along with those simply rooting from the sidelines for its failure -- they were simply wrong.

Success is the best political revenge.