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Obamacare flimflam exploited gullible voters

By Peter Morici
web posted November 4, 2013

Outrage about HealthCare.gov and millions losing health plans should scare the wits out of liberals. With enough money, the morass can be fixed, but it lay bare the limits of tax and spend to buy voter allegiance.

The liberal formula is quite simple.

Target a few Americans to soak and pander to the base instincts of the masses. President Obama's favorite mark is wealthy Americans who benefited most from recent economic growth. Characterize them as undeserving and exploitive—disdainfully he expounds those folks claim they did it with hard work, leaving his followers to conclude their affluence was built on the back of the common man. Then it becomes reasonable that the well-off pay higher taxes to continue public benefits.

The caution to Democrats is not to promise too much, lest the rich flee the country or stop working altogether.

In 2008, candidate Obama bit off more than he could chew. He promised everyone access to cheaper and better health insurance, and to let those satisfied keep their existing plans. If paid directly from the U.S. Treasury, new benefits would have cost at least $1 trillion.

New taxes alone couldn't carry that load. Many businesses, already burdened by the highest corporate tax rates in the world, are moving assets and jobs offshore. Higher taxes and new entitlements have already given the country more adults on means-tested government benefits—a.k.a welfare—than working.

Predictably, economic growth, which provides the tax base, is evaporating.

The solution left to the president and his pals in Congress was to deceive the folks he promised to help. Make them pay more, a lot more but do it through the marketplace.

The only way to offer everyone health insurance was to compel everyone to buy health insurance with minimal levels of coverage and implicitly tax those already with insurance to subsidize new policyholders. The government would have to run marketplaces in every county to facilitate the purchase of mandatory insurance.

Insurance companies jubilant with prospects for so many new policyholders were willing to accept limits on administrative expenses. Smarter than the Ivy League social engineers that advise Democrats and the bureaucrats at Health and Human Services, they helped shape regulations that ultimately manipulated markets.

Now cartels have emerged in many rural areas with only two insurance companies in cahoots with local hospitals and providers. That's why folks in rural Colorado are paying twice and three times more for basic coverage than in Denver.

In the big cities, lots of Americans are getting cancellation notices for their health plans, because those don't meet foolish ACA mandates, such as requiring 50 year old women to purchase maternity coverage, or those policies were written after March 2010. Few existing policies could not be cancelled by creative health insurance executives.

Obama promised the ACA would save families $2500 a year. That was flimflam bait.

Conservative pundits warned throughout the ACA debate many Americans would lose their health plans, adding 50 million to rolls would push up prices, and this journey into socialism would be much more expensive than advertised.

Some things never change. There is no such thing as a free lunch, but voters wanted to believe differently. And the president exploited that.

His only refuge—or that of the Democratic candidate for president in 2016—will be to top his whopper promises on health care.

Perhaps Hilary Clinton can offer Americans immortality. But in this progressive paradise that would be too much like purgatory. ESR

Peter Morici, an economist and professor at the University of Maryland Robert H. Smith School of Business, is a widely published columnist. He tweets @pmorici1





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