Asymmetrical Information - Megan McArdle

04.03.13

Obamacare Won't Be Doing Much for Small Business Next Year

It's easier to describe a system than to implement it.

Where was the contingency plan?

That's what Joe Klein asks upon learning that Obamacare's health care exchanges, a sort of government-run insurance supermarket, are going to delay implementation of most of functionality that was supposed to be available for small businesses.  Instead of a choice of offerings, in many areas, they'll basically have one.  This is worse, not better, than the current markets.

Sure, the administration was surprised when so many states declined to operate their own exchanges, forcing the federal government to step in.  But the administration doesn't seem to have prepared for that possibility, even though it was an obvious threat by last year.  Instead, they held open the deadline for states to declare, making themselves even later.  

This is the danger of a Rube Goldberg Policy Machine: a very large, complex piece of legislation with lots of parts that all have to work together perfectly in order to make the whole thing run.  If you've misunderstood the mechanics--if, for example, you thought that premiums were going to decrease, rather than increase, under the new law--then there's a huge danger that this massive apparatus will suffer an irreparable breakdown.  The risk increases if you passed the law over the vociferous objections of a minority party whose cooperation you now need to fix it, especially if you said things like "elections have consequences".

I don't get the sense that at the time of passage, people had spent a lot of time thinking about the sheer mechanics of how this would all work: how the IT would be built, the rules written, the necessary information assembled.  They spent a lot of time staring at the blueprints, not so much thinking about the building materials and the labor.  

The result is delays like this.  Presumably the small business policies are a bit of triage--cut so that they could focus on the part of the exchanges that serves individual consumers.  But the fact that they're having to cut this out, and at this late date, raises concerns about what the individual exchanges are going to look like.  Does the administration have a contingency plan if those aren't ready, either?