June is Bustin’ Out All Over – for the President — 25 June 2012

June has been terrible for President Obama.  And it’s about to get worse.

Start with the awful employment numbers for May; as I wrote a few weeks ago, jobs are growing at about half the pace we need them to just to keep up with population growth.  Then Mr. Obama compounded the embarrassment with his completely clueless comment that “the private sector is doing fine” but what we need to do is throw a lot more taxpayer money at public employees (and their unions) to keep them employed.  The month’s GDP report showed the economy once again slowing into the summer after a promising spring.  Finally, Obama sought to restate the case for his economic mission with a 54-minute speech in Cleveland, which was panned by critics on both left and right as being long on wind and short on substance.  Matters economic have not been good for the President this month.

Add to that the big recall election victory of Scott Walker in Wisconsin; the scandal about serial leaks of national security details to the press – by supporters of the President; the failure of the Baghdad talks on Iran’s nuclear program; the lack of any meaningful plan to address Europe’s slow-motion financial train wreck at the G-20 meeting; reports that Mitt Romney’s fund-raising has eclipsed that of Team Obama; the Supreme Court affirming its Citizens United decision on campaign finance, rejecting a Montana law that limited corporate contributions; and last but certainly not least, the impending finding of contempt of Congress for Attorney General Eric Holder, and Obama’s last-minute declaration of executive privilege.  It’s been hard for the White House to find cheerful news lately.

But the big shoe is about to drop on Thursday: the Supreme Court’s ruling on the Affordable Care Act, aka Obamacare.  The most commonly expected scenario is for the Court to reject at least one portion of the law – the individual mandate – and quite possibly other provisions, or indeed the whole law.

There doesn’t seem to be any way this will break well for the President.  Even if the High Court affirms the law in its entirety, the political impact is unlikely to help him.  The law is still unpopular with about 60% of the electorate, which means that even if the Court upholds it the President is not likely to make it a centerpiece of his campaign.  On the other hand, it would redouble the motivation of Republicans who would realize that the only way to rid the country of what they view as terrible legislation is to sweep the Democrats from power.

If any part of the law is overturned, the negatives for the President are manifold.  It might be most disruptive if just the individual mandate were rejected.  This would undermine the grand bargain struck by the insurance companies, who agreed to uneconomic conditions such as insuring anybody who asks for it at any time, without regard to the state of their health.  The only way this works is to force young, healthy people to buy insurance way in excess of what they need, so their premiums can subsidize what would otherwise be huge underwriting losses for the insurers.

Without the individual mandate, those costs remain but without the offsetting revenue.  There is one and only one response: insurance premiums will skyrocket.

If the Court decides to annul the related provisions of no rejection for previous condition, “community rating” of individual risks, and the like, the impact will still be great.  The health care industry has spent millions over the last two years making ready for the regulations and behavior changes mandated by Obamacare.  In the wake of the ruling, some of those efforts will have to be reversed.

Moreover, certain parts of the law may still stand, such as the expansion of Medicaid to tens of millions of new patients, and the gutting of Medicare by half a trillion dollars that is meant to pay for it.  The insurance exchanges at the state level, which are supposed to be market places where people can buy subsidized insurance, may still proceed.  And the Independent Payment Advisory Board, whose power to cut spending on Medicare has led it to be called a “death panel,” will likely survive.

The result is likely to be a hodgepodge of intersecting but incomplete measures that will further fracture our ailing health care system, raise costs for all, and result in lower quality care.   Just figuring out what will remain of the law and what its implications will be will likely extend the uncertainty that is suppressing our economy and further deter businesses from taking risks and adding to growth.

Finally, if the entire law is scrapped, the country will be set adrift, halfway between preparing for an environment that will not occur, and the traditional arrangements that have been altered, sometimes irrevocably.  And the outlines of the health care crisis will remain.

Here is where the Republicans can make a devastating case against the President.  He had unassailable majorities in both the House and the Senate in the first two years of his term, and the economy was in dire straits.  But instead of focusing “like a laser beam” on making sure we rebounded from the Great Recession, President Obama chose to devote his political capital to reforming health care.

Three and a half years later, the economy is still struggling, and what do we have to show for it?  At best, a radical change to the health care system in this country that adds to regulation and cost, that limits innovation, and will result in lower quality care for millions.  At worst, a mishmash of incomplete measures, an interlocking puzzle with several pieces missing, leading to confusion, uncertainty, high cost, and slow growth.  This is what Obama has achieved when he should have been trying to fix the economy.

And the supposedly brilliant professor of constitutional law could not even ensure the constitutionality of his signature legislation.

Republicans have a terrific opportunity here, but they cannot simply surf the wave of Obamacare’s destruction.  They need to persuade voters that there are two equal parts to “repeal and replace.”  They must have a plan to replace it.

Many of the elements have been aired already: eliminate the tax provision that benefits corporate health care plans but not individual plans; incorporate free-market reforms to allow competition and innovation to help limit costs and find value for patients; enact tort reform to limit the money wasted on defensive medicine; allow patients to shop across state lines for insurance.

Governor Romney needs to pull these strands together into a comprehensive plan that he intends to put in place of Obamacare.  Amid the likely wreckage of this week’s ruling, the public will be looking for it.

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