Death spirals and ineptitude

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The Tea Party’s recent attempts to defund or delay Obama’s Affordable Care Act (nicknamed Obamacare by the Republican Party) reminds me of a Hollywood remake of H.G. Wells’ War of the Worlds. President Obama and the Senate Democrats play the role of the Martian invaders while the members of the Tea Party perform the part of the hapless soldiers who lose every battle. However, in the movies, as in politics, there can be surprise endings. In the movie, the Martians undermine themselves because – as I see it – they lacked adequate government health care to protect against germs. Now, some worry whether internal flaws in Obamacare will cause it to self-implode as well.

The problem is that Obamacare predicates itself upon generational larceny that makes bank robbery seem like petty theft. In order to offer less expensive insurance premiums to older and sicker people, Obamacare requires younger and healthier people to pay more for health insurance.  Young, healthy people may opt out of Obamacare’s individual mandate by choosing to pay a small fine instead of a large premium.  They can do so without taking an unreasonable risk, since Obamacare makes it possible for them to buy insurance should the medical need arise.

If sufficient numbers of young, healthy people opt out of the Obamacare program, the insurance pool will become disproportionately older, sicker, and riskier. With fewer young and healthy people subsidizing the older and sicker people in this pool, premiums will rise, and more young people will exit the system as they rationally evaluate the opportunity costs. Many fear this will result in what insurance experts call a death spiral – a continuing cycle of increased pool risk and higher premiums that may cause Obamacare to self-destruct.

The Obama administration reportedly won’t achieve the proper risk pool balance in its exchanges unless 2.7 million, or about 40 percent of the 7 million people it expects will enroll, fall within the cohort of young people in good health. Because young and healthy people lack a strong incentive to enroll for health insurance they don’t need or can’t afford, the Obama administration hoped to roll out what Will Smith might call the “new hotness” of a website that would induce participation by making the online shopping experience of buying health insurance as easy as purchasing a book on Amazon.com.

Unfortunately, the Obama administration produced an “old and busted” website, even after a three year lead time and cost overruns that would make a Pentagon planner blush. Those attempting to navigate the website have reported a maddening array of login malfunctions, frozen screens, error messages, unintelligible instructions, lost passwords, and interminable delays. One New York Times researcher couldn’t log into the website after trying over 40 times during an 11 day period. Like Dante’s lost souls who abandon all hope in hell, this researcher apparently gave up when he received a blank screen on his final try.

The Obama administration tried to attribute these problems to “glitches” caused by greater-than-anticipated server demand – conversely, computer experts ascribe them to structural errors.  These portal issues are just part of the problem – those who finally get access to the site often report huge premium increases and sky high deductibles. Obamacare is thus failing to generate usable insurance enrollment forms for the relatively few people enrolled to date. One might compare the Obamacare roll out to a dog with fleas – but that would insult dogs with fleas.

As my mom used to remind me, things are only funny until something gets broken.  I’m afraid that principle applies to the multiple and sundry ways the Obama administration has screwed the pooch with its roll out of Obamacare. Although the Obama administration assured everyone that Obamacare would be ready for primetime on its roll out date of October 1, experts now say it will take “two weeks to months” to fix the system, which, according to Bloomberg’s Megan McCardle, “is the programming equivalent of saying, ‘A long time, but I have no way of knowing how long.’”

Although the Obama administration has reportedly delayed the deadline to buy insurance until March 31, 2014, the clock is still ticking for Obamacare. If this postponement does not buy Obamacare enough time to enroll enough young and healthy people, Obama may still face the unenviable choice of further postponing Obamacare or risking a death spiral that might kill the program. As Obama is to politicians what Houdini was to magicians, he may yet extricate himself from this dilemma. But the embarrassing implementation of Obamacare will remain a lasting stain on his presidency. If Obamacare self-implodes, Obama will have no one to blame but himself.

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