Too Late, Guys


Since the passage of the Affordable Care Act almost four years ago, there’ve been two continuing battles over the law. One was narrowly political: win the 2010 and 2012 elections and repeal the law. The other was less visible but no less important: sabotage the law at the state level to engineer failure and force repeal or a combo of policy and political catastrophe for the Democrats. The first failed in November 2012. Now we know they whiffed on the second one too.

It’s simply too late to undo what happened in March 2010.

To be clear, the program is still trying to make up ground lost in the first blundering two months of the roll out. And the near-term politics for Democrats may still be bad. But all the efforts at sabotage – trying to convince young people not to sign up, trying to scare people that they’d have their identities stolen, trying to prevent so-called ‘navigators’ from helping people enroll, refusing to set up state-based exchanges, opting out of Medicaid expansion and generally trying to scare the crap out of people with death panels and everything else so they wouldn’t sign up. All had one aim: undermine enrollment to force what health care economists call a risk pool death spiral.

That’s when you’ve got too high a percentage of the old and sick to spread the cost of payouts. Without more young and healthy people, there’s no way to effectively spread the risk. Then you have to raise premiums. So the logic of holding coverage is undermined for all but the really, really sick. And pretty soon the whole thing just blows up.

That was the aim. But it didn’t work. Relatively little noticed this week, we got the first look at the demographic breakdown of the first round of sign ups (those through Dec. 28th, 2013). They weren’t great. 24% of enrollees were 18 to 34. The administration was and is aiming to have 40% of enrollees in that category.

But that’s not the end of the story. A key Kaiser Foundation study recently found that the key threshold for Obamacare success was 25% of enrollees in that age group. At that number you could have 1% to 2% premium rises. Not great, but not enough to fundamentally break the program and not enough to cause the dreaded ‘death spiral.’

Still this is 24%. Not quite at the 25% threshold. So how is this good?

That’s where history and health care economics comes in.

The people who sign up first tend overwhelmingly to be the people who need care most – i.e., the sick and the old. So the demographic distribution almost always gets better over time. It already appears to be happening in the Obamacare pool. That’s what happened during initial implementation in Massachusetts. Every indication is that this is the floor for the percentage of youth enrollment. It will almost certainly go up. How much is unclear. 40% seems like a pretty tall order. But this was as good as it’s gonna get – if you design ‘good’ as the failure of the program and preventing millions of people from getting secure, quality health care. And it’s not enough. Even if the enrollment ratios in January, February and March were identical – something that is extremely unlikely – it would still be good enough to avoid a death spiral and program collapse.

And then there’s this. The indispensable Sarah Kliff just went to a meeting of health care insurance executives and investors in San Francisco. And their verdict is they think it’s going reasonably well.

To quote Sarah …

Obamacare’s troubled rollout hasn’t scared insurers out of the marketplace. Instead, speaking to thousands of health-care investors gathered in San Francisco, plan executives describe the Affordable Care Act as, at worst, a fixable mess and, at best, a major growth opportunity.

The executives’ commentary was a reminder that the health-care industry doesn’t set its watch by the election cycles which dominate Washington. They expected Obamacare to be a bit of a mess in 2014 — but they’re in it for the long haul.

I don’t want to be pollyannaish on this. I think supporters and opponents should be realistic. It’s not a slam dunk; it’s not “Mission Accomplished.” But the effort to use guerrilla policy warfare to collapse Obamacare with a ‘death spiral’ has failed.

The numbers show it. The stakeholders know it. The Obamacare dead-enders gave it their best shot, pushed the limits, spent lots of money. They even got a massive assist from the administration in the website debacle of October and November. But they failed. And now it’s too late.