How ObamaCare Might Be Repealed

by Mario Rizzo  

As long as Obama is president, it is unlikely that the recently-passed healthcare law will be explicitly repealed. However, it is quite possible that if certain constituent parts of the law begin to fail a radical transformation could take place.  

The longer-term Achilles’ heel of the law is the health insurance mandate. Following closely in terms of vulnerability, but a more short-run concern,  is the projected Medicare savings.  

Each of these can and will likely be picked apart.  

First, without mandating the purchase of health insurance by every person in the US, the much-touted prohibition against excluding pre-existing conditions from insurance coverage will not work. Individuals would just wait until they get sick to buy insurance. The whole insurance system would collapse when the complete pre-existing conditions reform comes into being.  

It is possible, though not likely, that the courts will hold that Congress has no authority to mandate the purchase of officially-sanctioned health insurance. Let that pass for now.  

Will the fines already included in the law be adequate to induce purchase of insurance by young, healthy individuals? There is reasonable doubt that they are. If they are not, Obama will have to come to Congress to raise the fines. After November, he will not succeed. 

Who will enforce the fines? This is unclear in the law. (The police?!) Will the Internal Revenue Service have enough manpower? Some have argued that the IRS cannot, with current budgets and employees, enforce this. After November Obama will not likely get this expansion. (Furthermore, will these violators be able to pay the fines?)  

If the enforcement of the mandate fails, the system collapses. 

Second, the hundreds of millions of dollars of projected Medicare savings do not yet have the force of law. These will require substantial reductions in the goodies seniors get from their Medicare Advantage plans and well as other tightening in the Medicare program itself (e.g., doctors’ fees). The elderly will scream and the Congress will fall to its knees – especially as the “irresponsible” politicians play that card. The deficit will expand just as interest rates will be rising from the stimulus, thus retarding economic recovery and growth.  

In addition, Medicaid will be under increasing pressure both as coverage expands and state budgets become tighter. Other state expenditures (say, on education) will have to fall to pay for this. The various interests groups will protest.  

So in the final analysis the system can be picked apart. Obama will be asking the Congress to reform the reform. If the “reforms” he wants can be closed off then the death of a thousand cuts will begin.  

The story of ObamaCare is not over.

9 thoughts on “How ObamaCare Might Be Repealed

  1. The Tax Foundation has opined that the bill as enacted unambiguously states that the IRS is expressly denied the authority to enforce the no-coverage penalty.

    What would be nice in future years would be legislation from anti-HCR pols to expressly forbid any funding of IRS enforcement.

    Somewhere in the multiverse, maybe…

  2. I commend Mario for posing the question. Let me zero in on the fiscal problem.

    The debt crisis in Greece is the leading edge of global fiscal crisis in developed economies. In the EU no one really cares much about Greece (3% of EU GDP). They care about contagion spreading to the other members of the PIIGS: Portugal, Italy, Ireland, and Spain.

    Fiscally sound Germany could bailout Greece, but could not afford to bail out all the others. Desmond Lachmann of AEI and Wolfgang Munchau of the FT (April 5th, p. 9)both forecast a Greek default as all-but inevitable. With that, the EU fractures.

    Does anyone believe the contagion would not spread to the US. Where will the US cut? Surely in defense, but even eliminating all defense expenditures would not close the budget gap. Obamacare will be postponed indefinitely. Only the taxes will be implemented.

  3. While I cannot argue with your proposition that the mandate is the Achilles’ heel, you might be counting on it too much.

    I am curious to know what the enforcement provisions were this year for the $8000 fine for not buying a first house, and $1500 for not buying a new HVAC system. Did the IRS need lots of new staff and authorizations for these fines? How successful were the constitutional challenges against these mandates?

    How much is the average American willing to fight for the abstract right to NOT do something that they already do. For 85% of American’s who have health insurance, the mandate to have it isn’t much to fight against. Many of those that don’t have insurance, will get able to get it cheaply. Leaving only a few percent for whom the mandate has any actual effect.

    Do (say) 95% of the people (those who will have health insurance) value the “freedom not to have health insurance” sufficiently to be willing to pay 5% extra in premiums to support “freeloaders” – those that can get health care (inefficiently but free) at Emergency Rooms and who will purchase health insurance only when they get sick?

    Are Americans willing to defend the “Liberty of Freeloaders”?

    More importantly the mandate was a benefit bought by the health insurance industry, in return for concessions (and some of the “medicare savings”. Why should they give up that benefit, and why should the pols they bought allow it to go away?

  4. Premiums are already rising on existing plans, and companies are taking charges for future expected increase in costs. Some currently covered will cease to be. What will these people do?

  5. Given the dynamic you describe, isn’t it likely that the “radical transformation” would be toward the so-called single-payer system? Or is that what you mean by “repeal”?

  6. Obamacare will not unravel if the mandate to purchase coverage dies in the courts or is repealed by Congress. In fact, it probably will not be part of reforms implemented in 2014! In New York and New Jersey, guaranteed-issue coverage is law without any requirement for citizens of the states to purchase health care coverage. Granted, it has meant higher premiums for everyone in those states, but at the same time between 90% to 95% of New Yorkers and New Jersians enjoy health care coverage. In a national market in which some people will receive tax credits for buying health insurance they could not otherwise afford, the mandate with its weak enforcement mechanism is virtually meaningless and insurers will be able to craft guaranteed issue coverage that is profitable at reasonable premium rates. The necessity of the mandate in health care reform legislation that is now the law of the land is vastly over-rated!

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