The ObamaCare ‘Death Spiral’ Debate

Posted on | January 18, 2014 | 26 Comments

ObamaCare is exactly the kind of policy failure its opponents predicted, although it has also failed in a few unpredicted ways. The only way anyone can call ObamaCare a “success” is in a political sense, i.e., it helped re-elect Obama. We might also say ObamaCare is a “success” in the sense that its unmistakable failure will likely be leveraged as an argument for a single-pay government takeover of health care in some future Democrat administration, but we have not yet reached that point. Where we are now is Ezra Klein and other liberals trying to pretend that ObamaCare’s failure is not yet certain:

Ezra Klein is back in line. The Journolist founder, who now runs Wonkblog for the Washington Post, took some flak from other left-liberal journalists last year when he acknowledged that the ObamaCare exchanges had serious technical flaws. But now, as we move into Phase 3 of the ObamaCare failure — the unraveling of its economic assumptions — Klein and his wonkblogger staff are in full denial.

James Taranto’s recounting of the arguments is amusing, with Ezra Klein in the role of the Monty Python pet shop owner who insists that the Norwegian Blue is merely “pining for the fjords.”

Category: Barack Obama, Health Care

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26 Responses to “The ObamaCare ‘Death Spiral’ Debate”

Political Rift » The ObamaCare ‘Death Spiral’ Debate
January 18th, 2014 @ 3:21 pm

[…] Robert Stacy McCain ObamaCare is exactly the kind of policy failure its opponents predicted, although it has also […]
Anchovy
January 18th, 2014 @ 4:43 pm

I am absolutely certain that Ezra Klein has several pairs of flannel jammies. Maybe even some with a little alligator emblem sown directly over his bleeding little heart.
DaveO
January 18th, 2014 @ 4:45 pm

The only question is how much money will the Insurance and Healthcare industries receive to make up for their alleged losses. With the rates going up, but demand not increasing, and supply not having disappeared, and people required to sign up, I can’t mathematically ascertain where these ‘losses’ are coming from. There’s no one inside those industries pulling a snowden, and no one in the government enforcement organizations going chelseamanning, so the concern over a death spiral seems to be just another DNC/Tides opera to scare to masses.
Shorter: something has to live in order to die, and this Obamacare was never about having a living, viable healthcare system.
Evi L. Bloggerlady
January 18th, 2014 @ 5:12 pm

I am not sure ObamaCare was the primary reason Obama was re-elected. It may have contributed some + votes to him, but even that is not clear. Obama got reelected because the GOP did not have any viable candidates (not Romney, not Gingrich, not Santorum, go on down the line…) and we were not on a positive affirmative message.

What is clear is the Dem plan to create an environment for single payer worked too well (and can no longer be ignored by the lame stream media going into the 2014 mid terms. The dems did not anticipate ObamaCare imploding upon implementation. If Obamacare squaked by on the barest of margins, do you think a massive single payer change would pass?

Dems will pay the price in 2014 and 2016 and Republicans need to focus on winning (and not grabbing defeat from the jaws of victory). I will give you an example: Paul Ryan and the Establishment Republican caved to Patty Murphy and kicked the budget can down the road (get this) to October 2014. Are they fucking trying to lose? How retarded (yes I use the R word, although I am not being fair to the developmentally impaired) can they be?
Lightwave
January 18th, 2014 @ 5:38 pm

Here’s what we know:

1) Our side says Obameecare is a failure that will collapse under its own incompetent design. The other side says it will become another acceptable entitlement program for big government. Both sides can’t be right.

2) Since both sides can’t be right, one side has zero credibility and will continue to have zero credibility as everything predicted by the opposite side comes true.

3) Everything our side has predicted will happen has happened so far. The other side meanwhile redefines “success” downward, daily.

Given those three indisputable facts, how can anyone defending Obameecare at this point not be summarily fired?
Adjoran
January 18th, 2014 @ 5:59 pm

There is no guarantee that “everything” we’ve predicted will come to pass. It is not necessary that every potential problem actually arise in order to make ObamaCare a complete disaster.

But the “journalists” defending it aren’t fired because it is their job to defend it. All that crap you’ve heard about “objectivity” and “reporting facts” is just their cover story.
Evi L. Bloggerlady
January 18th, 2014 @ 6:02 pm

I agree with that, there is no guarantee of anything. But I think it is probable than ObamaCare will get far worse in the near future. And the attempt (at least so far) in trying to blame Republicans is not working. That is very disheartening for Democrats (and it makes me feel all “tingly”).
Adjoran
January 18th, 2014 @ 6:05 pm

Klein, founder and father of the secret propaganda cabal “Journ-o-list,” was never a “health care wonk” in the sense he was an expert on the issue. On the contrary, he learned enough to throw around industry terms and make the prospect of socialized medicine SEEM as if there was some rational basis or science behind it. There wasn’t, and isn’t.

Klein is and was nothing more than a leftist propagandist. That he formed the “Journ-o-list” to “manage” the news by ensuring all the reporters put the same spin on stories and carefully dole out “facts” in a way the public could not “misunderstand” proves that beyond any argument or doubt.

Klein began backtracking on ObamaCare for the same reason some leftists will hedge on Stalin: they wish to argue that communism was not the problem, but rather its poor execution, and “pure communism has never been tried.” That’s what Klein wanted to do, maintain that nationalized health care was still good even if Obama is an incompetent buffoon. But he was bludgeoned back into the fold as leftist apostates always are – IF they don’t wish to be exiled forever.
Evi L. Bloggerlady
January 18th, 2014 @ 6:07 pm

If we lose to this ad campaign, it is time to grab that canned food, ammo and trapping equipment and heard for the mountains…
Adjoran
January 18th, 2014 @ 6:15 pm

The losses come from benefits being paid in excess of premiums collected. This WILL happen because, unlike a free market with appropriate rating of risks for premiums, ObamaCare forces the insurers to cover everyone at the same price no matter how sick they are or what their treatment is likely to cost.

Adverse selection is almost guaranteed in such circumstances, which is why no insurer would have participated in the exchanges without some limit to their risks. The “risk corridors” do NOT cover all the losses, and do not kick in until losses exceed 3% of premium income (which is already an unsustainable outcome from the point of view of insurance actuaries).

Blaming insurance companies is 100% wrong. And if idiots like Rubio succeed, they will be driven from the individual business altogether. What is the plan THEN after ObamaCare finally falls apart and/or is repealed?
Adjoran
January 18th, 2014 @ 6:17 pm

ObamaCare had NOTHING to do with his reelection since even a plurality of those who voted FOR him opposed it.

He was reelected because his team turned out the blacks and young people in the same or greater numbers as 2008 while enough conservatives and evangelicals stayed home to let him win.
DaveO
January 18th, 2014 @ 6:30 pm

But no one is being covered. Folks are alleged to have signed up through the various exchanges, but those sign-ups are not being recognised as valid, and no additional money (outside of what is paid under legacy policies) is going to the doctors from the insurance companies. It is another accounting trick of what could happen. And frankly, yes, blaming the insurance companies is 110% correct and right – they made the deal with Obama and the DNC, and they should suffer, but they won’t so long as there are taxpayers.
PGlenn
January 18th, 2014 @ 6:53 pm

RSM, your points that ObamaCare can only be construed as a success in a political sense and/or that it will “successfully” contribute to more Big Government applies to “progressive” social policy in general.

“Progressives” claim to be pragmatic consequentialists, but conflate political success and their supposed good intentions with good policy outcomes. To them, the solutions to socioeconomic problems are obvious, it’s just that selfish interests, etc. stand in the way. If they’re able to “succeed” in getting policies enacted, the good consequences will follow. They never go back twenty years later to do a serious accounting of the impacts from their policies. They simply know that their policies worked and their delusions are aided by the hyper-complexity of the modern world and the labryrinthine nature of the massive “progressive” corporatist state.
PGlenn
January 18th, 2014 @ 7:11 pm

Adjoran: it’s not really about “blaming” insurance companies and/or their executives/lobbyists, who are trying to make their ways in the existing “progressive” corporatist system. However, two points:

1. The health care market has been very far removed from a “free market” for a long time now.

2. DaveO has a point – I don’t know if the “risk corridors” to which you are referring include what’s been reported recently, which is that the federal government will reimburse insurance companies a certain percentage of their losses on individual ObamaCare patients that ring up really high medical expenses. Perhaps the “risk corridors” might be adequate; perhaps the economic structure of the system is so flawed that insurance companies take losses above and beyond whatever “back stops” the feds set up for them. Either way, we got more corporatism in the bargain – that’s an observation on the nature of our political economy, not an indictment against “big business” or the millions of people who work for, or lead, big business corporations.

3 How we transition out of “progressive”corporatism to something more like a capitalist system, without causing massive disruption, etc. is a very difficult, weighty question. But that doesn’t mean it’s wrong for people like Rubio to criticize the system. We’re probably screwed either way, but we at least have a chance if we begin with greater clarity about the existing conditions.
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January 18th, 2014 @ 7:29 pm

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richard mcenroe
January 18th, 2014 @ 8:46 pm

There are still dams dotting the Russian landscape in places where there have never been any rivers. There are whole cities built in China where no has ever lived.
Yes, socialist follies collapse under their own weight, but the wreckage they leave can linger behind for decades.
Zohydro
January 18th, 2014 @ 9:04 pm

I’ve read some things about “bail-outs” in the pipeline for the health insurance
companies (to cover loses under Obamacare) and that the companies are all on board with
this…

Hmmmm…
Adjoran
January 19th, 2014 @ 2:40 am

So you believe the insurance companies should be in effect put out of business for trying not to be put out of business, then? ObamaCare was the law, their choice was to try to compete in the new marketplace or sacrifice their shareholders’ equity by refusing (which would be a violation of their legal fiduciary responsibility, btw). They were able to extract a minimal stop-loss provision: their losses over 3% of premiums are PARTLY covered. But any loss means they are in financial trouble.

So, what’s your plan for health insurance after you run them out of business and ObamaCare fails?
Adjoran
January 19th, 2014 @ 2:44 am

Live for one week using nothing produced, transported, or distributed by a corporation, and then come back with all your neo-marxist nonsense.

When you propose to run companies out of business, it matters little whether you “blame” them while doing it.

Rubio did NOT criticize “the system,” he proposes punishing private companies for participating when they had no practical choice but to participate.
Adjoran
January 19th, 2014 @ 2:46 am

A “bailout” is when a company screws up and the taxpayer pays. These companies aren’t screwing up, the screw-up is the federal law and regulations. The limits on risk were put in to attract companies to participate anyway.

But be very clear: the feds will only cover part of the losses for a limited time. And insurance companies that pay more in benefits than they take in in premiums don’t stay in business for long.
Adjoran
January 19th, 2014 @ 2:48 am

The difference is that building a phantom city only runs into trouble once the bonds come due later. ObamaCare involves people’s health coverage today and every day. It’s collapse will be much faster.
PGlenn
January 19th, 2014 @ 9:26 am

I’m a neo-Marxist? LMAO! Do you even know what corporatism means? Hint: it doesn’t mean what Hollywood thinks it means, but apparently you accept their definition.

I don’t propose to run companies out of business. It sounds to me, based on what you write above, that you believe ObamaCare will run many of the health insurance companies out of business as it is. So if we take your approach – “let’s not be overcritical about the system in such a way that it might disrupt United Health and Kaiser et al from being among only a few insurers in the ‘free market'” – many of those companies are doomed anyway, right?

That’s one of the problems with corporatism – it leads to socialism (sort of like your “neo-Marxism).

If Rubio proposes to punish “private” health companies, then I disagree with that. I agree with you that that’s the wrong approach (btw, on the public -> private spectrum, in which a company that operates almost entirely in the private market is, say, McDonalds restaurants, and a company that lives in/off the public sector is, say, a non-profit that does all its business on government contracts, where do the “private” health insurers fit on that spectrum?).
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January 19th, 2014 @ 1:09 pm

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Bob Belvedere
January 19th, 2014 @ 5:44 pm

Klein feared the metaphorical ice pick.
Bob Belvedere
January 19th, 2014 @ 5:46 pm

Which is what the Left is hoping for, so that it can offer the salve of single-payer.
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January 25th, 2014 @ 6:18 am

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