Thursday, March 27, 2014

The  ObamaCare – The Great Social and Economic Experiment

A great social and economic experiment, noble in  motive and far-reaching in purpose.

President Herbert Hoover(1874-1964), referring to Prohibition, 1931
The preservation of the sacred fire of liberty, and the destiny of the republican model of government, are justly considered as deeply, perhaps as finally staked, on the experiment entrusted to the hands of the American people.

President George Washington (1732-1799),  First Inaugural Address, 1789

When I think of ObamaCare, I think of Prohibition. Both were and are vast social and economic experiments. Both were and are  noble in purpose and far-reaching in purpose.  Both, as with most experiments, are destined to  either succeed or fail.  And both, after a long run of experimentation,  will either endure or fall by the wayside.  Prohibition lasted 14 years.  How long ObamaCare will last is indeterminate.

ObamaCare is a national experiment, testing whether this nation’s government can expand coverage and control costs.    Whether the experiment succeeds or fails rests in the hands of the American people,   who will vote in November 2014 to retain or turn out the  political leadership of Congress. 

According to a 39 page report “The Patient Protection and Affordability Act: From Theory to Boots on the Ground – Part I,” which you may access at,   the critical issues facing the electorate are:

One, Rate Shock, whether the premium offerings offered under the various ObamaCare plans  are too high or are affordable.    These offerings are closely tied to how insurers respond, how many plans they offer, and their rates for different groups.  How insurers respond, in turn, will be affected by how enrollees of different ages, incomes, and subsidy levels  respond.    The response so far has been tenuous and mixed.   The young and uninsured appear to have a jaundiced view of the new plans and have been reluctant to enroll and pay their first premium.  On the other hand,  older citizens, 35 to 64,  are signing on in significant numbers.

Two, Adverse Selection, whether the initial open enrollment period,  supposedly ending on March 31, 2014, attracts enough of the young and healthy to offset the costs of older and less healthy enrollees.  The mix will profoundly affect average plan costs, plan margins, and future premiums.  According to the authors of the Physician Foundation Report,  Kathy Means,  a national expert on Medicare, Medicaid, and health care reform, and Ken Monroe, CEO of Bostrom,  a nonprofit professional and management firm,  “This first year is in many ways a truly experimental year.  A more crucial test could be what happens to insurer participation, plan offerings and relative premium levels in Year 2 based on Year 1 results.”

Year 1 will end in January 2015, and Year 2 will commence on that date.   In my opinion, the outcome of the November 2014 elections will determine whether ObamaCare carries on or whether it collapses or is eventually changed beyond recognition or repealed.  These events will be shaped by how ObamaCare’s “social engineering” affects the Medicare program and how senior voters respond to ObamaCare changes.

Tweet:  ObamaCare is a vast social and economic experiment, and its future will be determined by the 2014 midterm elections and by rate shock in 2014 and adverse selection in 2014 and 2015.

Source:   Kathy Means and Ken Monroe,  “The Patient Protection and Affordability Act: From Theory to Boots on the Ground – Part I,” commissioned by the Physicians Foundation.   To access and read, go to

No comments: