UNDER THE RADAR

The Stealth Issue That Could Win 2016

While everyone’s eyes are on ISIS and Putin, Obamacare is looking at a very rough 2016. Will trouble with the president’s signature law doom Dems next year?

12.02.15 6:00 AM ET

There is a stealth political issue in America today, one that could very well determine which party wins the presidency in 2016—and virtually no one in Washington is talking about it.

Issues of foreign policy, terrorism, and national security are understandably at the front of everyone’s minds. In the wake of the Paris attacks and the administration’s unpopular handling of ISIS, we’ve seen many commentators note the challenge Hillary Clinton faces as the likely candidate of the incumbent party regarding foreign policy and national security. President Obama and his administration seem to be the only ones who believe his approach to the Middle East is actually working, and voters are increasingly adopting a more hawkish position toward ISIS.

This is a real challenge for the Democrats. Just imagine traveling back in time to November 2008 and telling an Obama supporter that by November 2015, not even four years after delivering on his promise of withdrawal from the quagmire of Iraq, a plurality of Americans would want the president to send American ground forces back to Iraq. It would sound impossible—and yet that is the position voters hold today.

It may turn out that 2016 is indeed a foreign policy election—the third since 2001, with 2004 functioning as an endorsement of the George W. Bush approach and 2008 a rejection of it. But there’s also a possibility that Hillary Clinton will be undone by a more unexpected challenge: the political drag of Obamacare.

Don’t look now, but the president’s signature domestic policy, his namesake health care law, is doing very poorly. It just received its worst news yet, when the nation’s largest insurer, UnitedHealth, broached the possibility that it could exit the health insurance exchange due to its inability to find profits.

Its losses from participating in the exchange were simply impossible to maintain. If other insurers follow suit, those left behind will likely raise their rates even more.

To make matters worse, insurers are worried that they won’t get an expected taxpayer bailout for their massive losses thanks to a 2014 change to the existing law inserted by Sen. Marco Rubio into the so-called “Cromnibus” spending bill late last year.

The Obama administration is now scrambling to find another way to bail out the insurers, itself an admission that the exchange cannot function without massive amounts of corporate welfare.

At root, the problem stems from the fact that it has turned out to be far more difficult to get young, healthy people to sign up for plans in the exchanges, and the population is therefore older and sicker than insurers had expected and the Obama administration had predicted.

Because of that, exchange participants are using services at a much higher rate than anticipated. Check out this report from Wellmark of Iowa, the largest insurer in the state, which says that ACA enrollees “are using substantially more services and are receiving care for more chronic and critical diseases than anticipated.” They even note the kind of “use it and drop it” situations that many were worried about before the law’s passage:

There were 135 members who signed up for coverage, received several million dollars in health care services, and then terminated their coverage. Wellmark received only approximately 10 percent in premiums to cover those members’ health care claims.

This same circumstance is playing out across the country to varying degrees. And these younger, healthier people passing up Obamacare aren’t necessarily wrong to make that decision. Brian Blase from George Mason University’s Mercatus Center recently noted why:

A recent study by Mark Pauly, Adam Leive, and Scott Harrington—three economists at the University of Pennsylvania’s Wharton School—quantified how bad a deal ACA plans represent for most people without insurance. Their estimates show that ACA coverage becomes a significantly worse option as people earn higher income all else equal. Their paper shows that the ACA makes a typical person who is uninsured and earns about $40,000 worse off by about $2,000 to $3,000. The Wharton economists conclude that: “[t]he minority of high risks among the middle class uninsured may gain, but most uninsured will lose and, according to our estimates, will prefer to remain uninsured at the current penalty levels for violating the individual mandate.

For many of those who have signed up via the exchanges, President Obama’s health care law has unintentionally created the worst of both worlds: high-cost, high-deductible plans, which feel like a ripoff. Sure enough, in October, the administration was forced to cut its estimate of the number of Americans signed up for Obamacare’s exchange coverage roughly in half—10 million instead of 20 million.

And this is before you even get to the politics of the issue. Obamacare remains unpopular, and it is increasingly difficult to deny its defects.

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This is a frustrating fact for those who believed it would usher in a new era of voters with a stake in supporting the law’s survival. In Kentucky, the state that saw the largest decrease in uninsured people thanks to a working exchange and a Medicaid expansion, voters just elected a stridently anti-Obamacare governor in Matt Bevin.

This instability has led conservatives to feel emboldened about their prospects of dramatically altering the law after 2016—and it has pushed liberals to become more vocal in support of a single payer option alternative.

There’s a certain logic to this: The aspect of Obamacare that is most prominent in its defects are the exchanges and the subsidized insurance, while the most dramatic increase in coverage has been for the Medicaid-eligible population. But an argument that it’s time for Medicaid or Medicare for all depends on a government solution that the country may not be ready for politically.

Once Obamacare launched, it was supposed to be a political boon for Democrats. It was supposed to give them the ability to count on a newly engaged group of Americans who saw the government as providing them significant and helpful subsidies that prevented them from being concerned about their health coverage. Instead, its mismanagement and failure to live up to President Obama’s promises has given Republicans an opportunity they intend to exploit.

So does Hillary Clinton really have the wherewithal, in an era of such distrust for the government to manage anything right, to make the case for a government-run nationwide single-payer system for all? Does she have the boldness to argue that a government which has thoroughly mismanaged Veterans Affairs and struggled to launch a website will manage health care better for the entire population? That seems a heavy lift for an already challenging election year, especially for a candidate more comfortable playing small ball politically.

There’s one more fact that makes this the stealth issue for 2016: In 2012, the GOP nominated the one Republican in the country incapable of making a clear case against Obamacare. That won’t be making that mistake twice.