The recent news of Aetna’s withdrawal from participation in the Affordable Care Act’s insurance-purchasing exchanges has renewed all sort of liberal fears and gleeful conservative hopes about Obamacare’s viability. As the dust settles, it’s becoming apparent that Aetna’s action, in conjunction with the earlier withdrawal of UnitedHealth, mainly threatens to be a problem for rural areas where there was little or no competition in the pre-ACA individual insurance marketplace.
And as Sarah Kliff explains in an especially thorough analysis of the situation at Vox, even under a worst-case scenario Obamacare isn’t going to “die” by any stretch of the imagination. It will provide insurance coverage for many millions of people with relatively low incomes who were not eligible for Medicaid before the ACA was enacted, which is a pretty big deal. It just may not significantly displace employer-sponsored health insurance to the anticipated extent, nor offer (in some places, at least) the kind of consumer choice many Americans value.
But Kliff also points out a large irony about the central problem Obamacare and private insurers are facing: The pool of individuals seeking insurance in the exchanges is smaller and less healthy (and thus more expensive to cover) than planned because the individual mandate has turned out to be too weak to encourage younger and healthier Americans to obey the law and buy insurance.
You remember the individual mandate, right? It was the feature of ACA that spurred vast tea-party protests against the “tyranny” of Obamacare. And it was the central bone of contention in the first and most dangerous legal challenge to the law: the claim litigated in NFIB v. Sibelius that the federal government did not have the power to compel citizens to buy insurance.
As Kliff explains, the paltry and poorly enforced tax penalty that the individual mandate actually involves is not moving a lot of people to comply. European countries that have similarly pursued universal coverage through mandated purchase of private health plans have been a lot tougher:
[T]hose countries did something quite different from the United States. When they set out to create universal coverage systems, they regulated their health care system much more tightly. They mandated the benefits each insurer covers and how much each medical service costs. They also set up much stronger laws to force consumers to buy coverage.
Take Switzerland, for example. Anyone who moves there must purchase coverage within three months of arrival. Few people try to evade coverage, but those who do can end up facing steep fines or even jail time.
Can you imagine the hysteria that would have broken out among U.S. conservatives if Obamacare had been similarly structured? The same dynamics would probably prevent the Obama (or a successor Clinton) Administration from taking one of the few actions it could pursue to strengthen the mandate without explicit congressional approval: ordering the IRS to get serious about enforcing the penalties as they exist. You think today’s protests about the IRS persecuting conservative nonprofit political groups by slow-walking applications for tax exemptions and the privilege of hiding their donors’ identity are shrill? An IRS trying to herd millions of people into “socialist” insurance exchanges would probably spur lots of talk about “Second Amendment solutions.”
And thus it transpires that the tyranny of the Obama administration is far too tolerant and lax to make any sort of tyrannical demand for something approaching the universal health coverage similar countries (and conservative parties within them) take for granted. In a world of perfect bipartisan comity conservatives might pocket this symbolic victory and cooperate with progressives in rebuilding the Obamacare exchanges via the carrot of more generous subsidies as opposed to the stick of purchasing mandates. We are a million miles away from that world, so we are likely doomed to a health-reform initiative that is far short of its potential, or a return to the status quo ante, or worse.