Unintended, But Not Unforeseen

National Review Online
Friday, September 24, 2010

The Patient Protection and Affordable Care Act, a.k.a. Obamacare, is to the law of unintended consequences what Newton’s apple was to the law of gravity: the illustration that bonks us on the head with its obviousness. Practically every week since its passage has added a new dimension of mirth to Nancy Pelosi’s punchline for the ages, that we had to pass the bill to find out what is in it. Out of the mouths of babes and clueless politicians.

And on the subject of babes, they are the latest victims of Obamacare: Health-insurance giants Anthem Blue Cross and Blue Shield, Aetna, Cigna, CoventryOne, Humana, and UnitedHealthCare have stopped writing child-only policies in those jurisdictions where they are able to do so. The reason for this is obvious: Because Obamacare forces insurance companies to accept children who are already sick with pre-existing conditions on the same terms as healthy children, parents now have a strong incentive to wait until their children are sick to buy child-only policies, making the products a guaranteed money-loser for insurers, which are not in the business of guaranteeing losses to their investors and employees. It is no accident that they stopped offering child-only policies on the very day the rule came into effect. Want to buy a child-only policy in Colorado, California, Ohio, or Missouri? Good luck with that.

The Democrats will rail in reliably demagogic fashion about the evil insurance fat cats boosting their profits, but consider this: Those losses would be passed on to health-care consumers in the form of higher premiums and reduced benefits, meaning that the mandate to cover those with pre-existing conditions will function as a tax on other insurance consumers, and those who were responsible enough to buy insurance before they got sick will be punished to bail out those who were not similarly responsible.

The Obama administration, which already has done almost everything in its power to buy off the insurance industry, announced that it would try to accommodate insurers’ concerns by allowing the use of “structured open-enrollment windows” to continue conducting business on more or less the same terms as they had been. These came in the form of what the administration calls, with exquisite bureaucratic hedging, “interim final regulations.” Interim or final? Your guess is as good as anybody’s.

Democrats of late have spent a lot of time engaged in televised scoffing at the idea that regulatory uncertainty is a major cause of our current economic malaise. They would do well to consult the insurers whose businesses they are attempting to micromanage. WellPoint had this to say about its decision to discontinue child-only policies: “Unfortunately, there remains a great deal of uncertainty as to how the rules will be implemented and what the impacts might be on participating insurers.”

Health-insurance rates already are rising even more quickly than they had been in the past because of concern about the costs that will be imposed by Obamacare. Various kinds of insurance products and services are being discontinued. Colleges have had to go begging to Washington to be allowed to continue offering the inexpensive, bare-bones coverage they make available to 18–22-year-old students who do not much need annual prostate exams or coverage for hip-replacement surgery. These consequences were unintended, but they were not unpredictable: They were, in fact, predicted by a very large number of critics, not least those writing for National Review.

Dozens of new taxes, regulatory beasties, and unlovely business outcomes have cropped up since the bill was passed. Meanwhile, the Democrats have declared war on financial reality, blasting insurance actuaries for the crime of consulting the actuarial tables when it comes to pre-existing conditions. And who can forget Rep. Henry Waxman’s fit of rage inspired by the fact that corporate accountants were following the rules of corporate accounting, inflicting massive writedowns on scores of struggling American companies forced to adjust their balance sheets to reflect the new costs and liabilities Obamacare inflicted on them?

And if you’re going to ignore a century’s worth of actuarial practice and accounting rules, why not just throw out all of economics and feign surprise at rising insurance premiums, the cancellation of services, and the discontinuation of products? Obamacare levies a 3.8 percent tax on profits from home sales — meaning they have reduced the real sales value of American homes by 3.8 percent — and Democrats act as though this will have no effect on the tanking housing market. They issue “interim final” rules that change at the whim of the administration and then deny that uncertainty is hobbling the economy. They require that every business file a 1099 for the IRS for every vendor transaction exceeding $600 — a requirement that the IRS itself confesses it lacks sufficient manpower to handle — and then promise that their program will save the country money through reduced paperwork. They add an extra layer of taxation onto investments to offset the costs of their health-care mess and then wonder that investors aren’t pouring money into new job-creating enterprises. No, neither Obamacare nor regulatory uncertainty is exclusively responsible for the poor state of the economy, the unsteady markets, or weak housing prices, but they are contributors, and their contribution is not negligible.

Meanwhile, Obamacare innovations such as the Community Living Assistance Program already are poised to far exceed the budgets established for them in the bill, and the turbocharged Medicaid provisions are threatening to bankrupt states across the country. Thanks to Obamacare, you will pay more for heart stents and other life-saving medical devices, and you’ll have less money to do so once all the additional taxes and fees with which the bill is larded up kick in.

On their own signature domestic issue, Democrats are as lost as last year’s Easter eggs. In the wake of the bill’s passage, the conventional wisdom held that Republican promises to repeal the bill in its entirety and start from scratch were wishful thinking that savored slightly of sour political grapes. But the continuing stream of noxious consequences percolating up from the murk of Obamacare make it clear that repeal is the only sensible option. The wise choice is, at the moment, also the popular choice, a rare enough concurrence, with half of the population strongly in favor of repealing Obamacare and more than half sympathetic to the idea. We propose that the next Congress adopt as House Bill 1 a single sentence: “The Patient Protection and Affordable Care Act is hereby repealed.”