Articles

Behind The White House's Health-Law Dodges

February 12, 2014

When President Obama told Russian President Dmitry Medvedev in March 2012 that "after my election I have more flexibility," most assumed he was referring to foreign policy. It turns out Mr. Obama's ambitions weren't so limited.

Earlier this week, Mr. Obama demonstrated his imperial flexibility again, delaying another important provision of the Affordable Care Act. For firms with 50-99 employees, the president waived until 2016 the requirement they provide health insurance or pay a fine. Also, companies with 100 or more workers can avoid most of the law's penalties if they provide coverage to at least 75% of their workforce. The House Energy and Commerce Committee says this is Mr. Obama's 22nd delay or modification of his signature law.

Why did the president do this? Politics. Mr. Obama saw the firestorm that erupted last fall when Americans lost their health policies because their policies didn't conform to ObamaCare's requirement for "essential benefits" and other mandates. Based on a flurry of reports and estimates that have come out since October, Jim Angle of Fox News says that 6.2 million have lost their health coverage so far. (There is no hard number from the Department of Health and Human Services.)

The president didn't want another avalanche of cancellations before this fall's midterm election. Yet one was coming because the law discourages small businesses from providing health-care coverage. Here's how it works: Businesses can continue to pay a hefty share of their workers' premiums (AON Hewitt estimates they now run roughly $11,000 a year per employee) or dump coverage and pay a $2,000 fine per employee. Companies would have to decide this summer or fall whether to continue providing coverage for 2015.

Roughly 42.1 million Americans worked in firms with 100 employees or fewer in 2008, the last year for which Census Bureau numbers are available. And if millions of them lose their insurance plans shortly before the election? The consequences would be disastrous for the president's popularity, and that of the congressional Democrats who loyally voted for the Affordable Care Act, sight unseen and text unread.

Yet the dirty little secret is that this loss of coverage is by design. ObamaCare was intended to move America toward a single-payer system as more small businesses dropped coverage, dumped workers into the exchanges, and substituted a $2,000 fine for the ever-increasing premiums.

Mr. Obama is constantly amending his own law not because it doesn't do what it was intended to do, but because it's accomplishing precisely what it was meant to. His challenge is to transform the system without blowing up his party in the meantime.

And after he's gone? ObamaCare won't be fully operational until at least 2016, just in time for the next president to deal with its exploding costs and imploding private insurance system.

Mr. Obama's pattern is to act, or fail to act, in a way that will leave his successor with a boatload of troubles. The nation's public debt was equal to roughly 40% of GDP when Mr. Obama took office. At last year's end it was 72% of GDP. The Congressional Budget Office said this month that the government's "deficits are projected to decline through 2015 but rise thereafter, further boosting federal debt." Yet Mr. Obama ignored his own Bowles-Simpson deficit commission and has made no effort to reduce the long-term debt burden.

Then there's Medicare, whose Hospital Insurance Trust Fund will go bankrupt in 2026. For five years, Mr. Obama has failed to offer a plan to restore Medicare's fiscal health as he is required by the law establishing Medicare Part D. When Medicare goes belly-up, he will be out of office.

From the record number of Americans on food stamps to the worst labor-force participation rate since the 1970s to rising political polarization to retreating U.S. power overseas and increasing Middle East chaos and violence, Mr. Obama's successor—Republican or Democratic—will inherit a mess.

At Monticello earlier this week with French President François Hollande, Mr. Obama was overheard joking, "That's the good thing about being president, I can do whatever I want." His words call to mind the famous words attributed to one of Mr. Hollande's predecessors, Louis XV: "Après moi le déluge."

A version of this article appeared February 13, 2014, in the U.S. edition of The Wall Street Journal, with the headline Behind The White House's Health-Law Dodges and online at WSJ.com.

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