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It would be an understatement to say that this month’s rollout of the Affordable Care Act, U.S. President Barack Obama’s initiative to ensure that all Americans have access to health insurance, has not gone according to plan. On October 1, the online insurance marketplaces that are the lynchpin of Obamacare (as the law has colloquially become known) were opened for business -- but it quickly became clear that they are not functioning properly. Computer malfunctions have prevented enrollment, consumers are frustrated, and politicians and pundits are attacking Obama for the resultant “train wreck.” The problems are all the more embarrassing given that publicly funded health-insurance programs are commonplace in most other countries.
But the fact that the White House is having trouble implementing Obamacare also should not come as a particular surprise. It is not that the Obama administration is especially incompetent. Rather, the program it is charged with executing is a complex public-private hybrid that has no real precedent elsewhere in the world. The blend is purely American: Policymakers in the United States have a history of jerry-rigging complicated programs of this sort precisely because they have little faith in government. The result is a self-fulfilling prophecy that fuels only deeper public cynicism about the welfare state.
Among the advanced industrialized countries there is no real parallel to Obamacare. In part, that is because most countries established universal health insurance long ago, some fairly gradually. By contrast, the United States is abruptly expanding coverage to millions -- probably around seven million people will be purchasing insurance coverage through the new exchanges by 2014. Even the closest precedents fall far short of this. In the mid-1990s, Switzerland boosted health-insurance coverage to try to reach the four percent of the population that was not yet covered. But that was in a country whose entire population was seven million. In 2006, the Netherlands adopted a health-care system in which individuals could choose their coverage from competing health plans. Yet, unlike in the United States, virtually all individuals and their families were already covered, and the vast majority opted to keep the plan they had.
The real source of Obamacare’s current problems lies in the law’s complexity. A straightforward way to assure coverage would have been to extend an existing, well-worn program to more people. This is how most other countries guarantee health insurance. In the British National Health Service, there is little that beneficiaries need to do in order to receive health insurance, as all residents are automatically entitled. Other countries rely on private intermediaries that provide insurance -- nonprofit insurance funds in Germany or Switzerland, for example, or a mix of proprietary and nonprofit insurers in the Netherlands. Even in those instances, benefits packages and entitlements are highly standardized, making these health-care systems relatively uncomplicated from the standpoint of beneficiaries.
In the United States, political antipathy to government programs precludes this kind of straightforward administrative solution. Faced with such hostility, policymakers regularly rig up complex public-private, and often federal-state, arrangements that are opaque to the public, difficult to administer, and inefficient in their operation -- what Andrea Louise Campbell, a professor of political science at the Massachusetts Institute of Technology, and I describe as a Rube Goldberg welfare state -- because of the complicated way in which it achieves even basic tasks -- and what the political scientist Steven Teles aptly labels a “kludgeocracy.”
The Affordable Care Act’s health-insurance exchanges exemplify the labyrinthine quality of U.S. social policy. The first hurdle for consumers is figuring out if they are eligible for the new benefits: Although anyone lacking insurance can shop for it on the new health-insurance marketplaces, only those with incomes in a certain range are eligible for subsidies. The subsidies vary by income. Those already enrolled in a government health program such as Medicare do not need to buy coverage on the exchanges, a source of confusion for some seniors who assumed they needed to shop for a new plan, perhaps because they (understandably) mixed up the exchanges with the open enrollment period for the marketized versions of Medicare -- the Medicare Advantage and the Part D drug plan.
The new health-insurance exchanges are also meant to help people find out if their incomes are low enough to qualify for Medicaid, in which case they will get their insurance in a different fashion -- through the Medicaid program run by the state where they reside. Yet because the Supreme Court overturned the Affordable Care Act’s mandate that states expand Medicaid, about half of the state governments are refusing to do so. That means that eligibility standards vary widely across the country. Thus, two people with the same poverty-line income in Arkansas and neighboring Mississippi will not be eligible for the same health program: In Arkansas, the person will go on Medicaid, whereas in Mississippi the person may choose to buy a plan on the health-insurance exchange but would receive no subsidy for it.
The information systems underpinning the insurance marketplaces have to mesh multiple government and private databases in order to determine eligibility, entitlement to benefits, and available plans. It is not surprising, then, that the system has broken down in numerous instances. It also requires considerable coordination between the federal government and the 50 states, which are allowed to set up their own health-care exchanges. So far, only 17 states, including the District of Columbia, chose to manage their own exchanges, while seven others entered into varying forms of federal-state partnerships. Another 27 states left it up to the federal government to set up the exchange, and it is the federal marketplace, which has received a very high volume of visitors, that has had the most operational difficulties.
The burdens of implementing Obamacare were dumped on a federal agency -- the Centers for Medicare and Medicaid Services -- that already oversees enormous national programs on a limited budget. Although the agency received some funding increases, it operates with less than one-tenth the number of federal employees of the Social Security Administration. Those who are fearful that the agency would gain too much influence over U.S. health care systematically starved it of resources. Thus, much of its work is outsourced to private contractors, whose performance is highly variable, as the current problems in the health-insurance exchanges reveal.
The larger irony here is that administering a complex public-private health-care system often requires more government, not less. Yet the very same impulse that created this system also impairs the government agencies that could effectively oversee it. The programs, as a result, are messy and confusing. It should be no surprise that trust in government is so low. Obamacare’s early difficulties may provide an easy target for politicians, but those politicians have only to look into the mirror to see who bears responsibility.