I believe 2014 will be make or break time for Obamacare. It is already abundantly clear that the rollout of The Affordable Care Act was a disaster, but the Obama Administration and its supporters are trying to do damage control by insisting the computer "glitches" are being repaired and the new system will eventually work as promised.
I actually think the computer glitches are distracting everyone from more serious problems with the plan that will not be so easily glossed over. For example, a critical element of Obamacare is the insurance purchase mandate that narrowly survived scrutiny by the U.S. Supreme Court. To make the economics of the new health system work, it is necessary that legions of young healthy citizens buy in. The mandate that they buy in or pay a penalty tax was deemed essential to make the plan strong enough to cover older people with serious health issues.
But young people are notoriously resistant to insurance schemes. Young people are generally healthy and seemingly immune to disease. The current crop of younger people is also afflicted with high levels of unemployment or marginal employment that makes it difficult for them to buy health insurance. They are not buying in - at least not with the numbers that would make this scheme viable.
Acknowledging this reality, the Obama Administration is already backing away from the mandate. It has ruled that millions of people whose allegedly insufficient health care plans were cancelled will now qualify for a "hardship exemptions" for which just about anyone can qualify. Now the Obama team is expanding access to "catastrophic" coverage insurance plans that are 20 percent cheaper than regular plans because they offer fewer benefits and are priced for younger people. So much for the massive buy-in that the plan depends upon.
It seems like hardly a day goes by that the Obama Administration doesn't announce yet another "tweak" to its revolutionary health care program to the point it now hardly resembles its former incarnation which in any case was incomprehensible. Add to that the wide open opportunities for hackers to pretend to be selling Obamacare policies just to obtain sensitive consumer data, and you have a great potential for anarchy.
All of their adjusting and tinkering, combined with increasing visits to hospital emergency rooms, will inevitably lead to even higher costs for health insurance. Obama had said his plan would save the average family $2500, but then he also said everyone could keep their plan if they wanted to. Insurance companies apparently see an opening and are raising premiums rapidly. The situation is deteriorating.
The big problem is that the administration tried to reorganize a major portion of our economy - health care is almost 20 percent of GDP -- in one fell swoop without bi-partisan support. Cleaning up this mess will require a bi-partisan effort.
Jerry Jasinowski, an economist and author, served as President of the National Association of Manufacturers for 14 years and later The Manufacturing Institute. Jerry is available for speaking engagements. January 2014