Assessing Failure: Obamacare

Because Megan McArdle is a noted and respected propagandist, not a noted and respected journalist and author, McArdle's opinion is even more valuable than her journalistic skills. When you add her keen and elegant prose, McArdle was obviously destined for far greater things than most reporters: media stardom, piles of books listed in the politics section on Amazon, lucrative speaking gigs,  the best table at the local gastropub. And a column in the Times, of course, to lead public opinion and tell everyone else the very best way to live their lives.

Which brings us back to failure, McArdle's self-professed specialty. Failure leads to success because failure never leads to consequences from which one never fully recovers, even though her own failure through success did just that. This, like all her advice, might seem contradictory but it worked for Megan McArdle and it'll work for you too.

It will not, however, work for Obamacare. Obamacare is an exception to McArdle's Path To Success. McArdle does not tell herself to wait until Obamacare fails so she can learn how to make Obamacare succeed. She doesn't want Obamacare to succeed. How do we know this? She tells us so.

Megan McArdle:  But I will say that Mr. Chait says that I’m against national health care and which is actually not true. I have long been proposing that the government should provide catastrophic reinsurance for people, basically picking up medical costs above fifteen percent of their income. It’s something that preserves the market mechanism. It’s progressive. Everyone is -- you know, you're taking care [unintelligible] poor, but otherwise it's progressive. It preserves the market mechanism, it makes sure people do not get bankrupted by their medical bills. I think that is actually the kind of system that you could grow out of Obamacare if it failed.  

John Donvan: Jonathan Chait.  

Jonathan Chait: The reason I wrote that you're against national health care is because in 2009 you wrote a column called "Why I Oppose National Health Care."  

[laughter]  

[applause]  

You've also predicted -- a few months ago you predicted the exchanges might not even open on January 1, that the administration would have to stop its whole law. So if you're talking about moving the goal post your definition of failure just keeps getting smaller and smaller.  

Megan McArdle: Well, I'm just saying that in 2010, 2011, and 2012, and 2013, I have written that I support the sort of catastrophic reinsurance program. I've been proposing it for a fairly long time.

Notice Mr. Chait calls McArdle on her well-worn deceptive techniques. First comes the lie necessary to win the argument, which depends on the ignorance and civility of her audience. When someone questions her conclusions, then comes the goalpost-moving to evade responsibility for her rhetoric. McArdle wants the taxpayer to pick up the big bills for the insurance companies and get no benefits in return.

McArdle pulled out another whopper later in the debate, along with a few right-wing rumors created to whip up paranoia.

Jonathan Chait: Then the study that Megan cited is still not a very good use of data. It's not a good use of data for two reasons -- if I may --  

John Donvan: Very --  

[laughter]  

Jonathan Chait: Number one --  

John Donvan: Very briefly, but you've got two people lined up to defend themselves.  

Male Speaker: That's right.  

Jonathan Chait: So, there are a series of studies on the effectiveness of Medicaid. Many of these studies -- most of them show what you would intuitively think. Going on Medicaid and being able to see doctors, even if you don't get a lot of choice, even if a lot of doctors don't want to take the low prices, is better than not having health insurance and going to good -- going to the doctor at all. Because as my partner explained in fairly strong detail, not having health insurance is dangerous. It's terrible. Nobody wants to have it. And people are right not to want it --  

John Donvan: Megan McArdle.  

Megan McArdle: Well, it shows actually --  

[applause]  

Here's something interesting -- is a lot of these studies have looked at Medicaid versus the uninsured. And the uninsured do better. Having no insurance is better in these studies than having Medicaid, even when you control for [unintelligible] --  

[laughter]  

Now, that said, do I think that having Medicaid is actually worse than being uninsured? No, I don't. It's very hard to actually measure lots of things. But the -- you would want to know about the impulse control, or social support and so forth. But I think that most people agree that Medicaid is bad coverage. It's not good coverage. You wouldn't want to go on it. And there are people who had cheap policies canceled -- got cancellation notices and found that when they went to the exchanges, they were were into Medicaid. That's [inaudible] --  

John Donvan: So, let -- I think -- 

Megan McArdle: So I'm not --

 

McArdle also told her readers that Obamacare would fail because the insurance companies hated it.

Megan McArdle: I think that Jonathan is way more optimistic than I, that a death spiral isn’t possible. For one thing, you know, a lot of the -- the thing that everyone has been leaning very hard on -- I haven't heard the insurers saying that they are real pleased with the mix. Humana and other people have said it's more adverse than they expected.

Jonathan Chait: No, at the JPMorgan Conference a series of insurers were interviewed, and they all said that they were generally expecting getting what they expected.  

Megan McArdle: But that -- neither -- leaving that point aside --  

[laughter]  

-- well, I mean, like he can say, "Yes, they have," and we can say, "No, they haven't," and you guys don't know either way, so I think this is not --  

John Donvan: Yeah, I'm actually with her on that.  

[laughter]  

Unless -- were any of you at that conference?  

Scott Gottlieb: I was [unintelligible]. 

Jonathan Chait: There were a series of insurers quoted at the JPMorgan Conference on January 15.  

Megan McArdle: There were also a series of insurers quoted, saying that they've had adverse --  

Scott Gottlieb: And they've announced --  

Megan McArdle: That they're announcing earnings adjustments because of their adverse selection. But that's not really even -- the issue is that, you know, a lot of the mechanisms they're depending on are these things called these risk corridors, which are temporary kind of reinsurance facilities to help insurers transition, and also the fact that these subsidies basically grow with the cost of the policy so that if we do start seeing adverse selection, if we do see young people not in the pools, healthy people not in the pools and so costs go up, well, then the subsidies will rise and these risk corridors will kick in. But those things end in 2018. Subsidy --  

John Donvan: All right, let's let  Jonathan Chait --

Jonathan Chait: Right, but what we're seeing right now is that they're not even going to need that kind of adjustment in the first place because they're saying the pool of people is young enough that it's meeting their expectations, that they don't need to raise premiums, whatsoever. And so if you want to -- if you have to ask, "What is the definition of success?" The definition of success is putting in place a law that will get at a certain point to having a dramatic expansion of coverage. So at one point you said, "Well, by January 1, there aren't as many people covered as there were before." 

Megan McArdle: I said we don't know.  

Jonathan Chait: Right, we don't know.  

Megan McArdle: The government will not --  

Jonathan Chait: You're right, you said -- that's correct.  

Megan McArdle: -- the administration will not say --  

Jonathan Chait: Right, we don't know exactly --  

Megan McArdle: -- that we have more people covered.  

Jonathan Chait: -- right -- we don't know the number of people who had their plans cancelled. It's way less than five million. We don't know, so we can't say exactly how many [inaudible]. But why is January 1, the first date the law started, the best mark? The law's supposed to --  

John Donvan: Stop right there because I want to hear the answer to that question.  

Megan McArdle: Well --  

Scott Gottlieb: We know this pool is exceedingly unhealthy by virtue of --  

John Donvan: No, no, no, that's -- his question is "Why set January 1 on the day that everything has to be successful?" It's a fair question. I just want to hear the answer to it. Megan, Megan.  

Megan McArdle: [inaudible] totally fair question, but, again, this is so much worse than I would've predicted. I was a critic of the law, but if you had asked me, "Is it likely that there could be fewer people insured, even that small number, on January 1?" I would've said, "No, that's insane." But that may actually be -- the administration won't -- it's not asking them how many people. When reporters on conference calls say, "Can you assure us that more people are insured through anything, through private insurance, through Medicaid?" they won't say, "Yes."

Here is a demonstration of another McArdle technique, pulling up a lone or disputed or arbitrary study that (she claims) supports her theory and destroys her opponent's theory. McArdle and Chait are debating whether or not Obamacare has failed. McArdle says it has.

Failure: Obamacare

Point of Failure: Goals Not Met By Opening of Exchange

Causes of failure:

1. Sebelius said seven million people would sign up by March 2114 and as February they had not all signed up.

2. "They" said 40% of the exchange needs to be young adults and only 20-25%  are as of now.

3. Slowing health care costs were caused by the recession, not Obamacare changes.

4. We don't have the numbers to determine if Obamacare is successful so far.

5. Some people will have to join Medicaid and Medicaid is so awful that nobody will want to be on it.

Of course it immediately becomes obvious that McArdle etc. are arguing that Obamacare has not met its goals, not that Obamacare has already failed. She attempts to disguise this elision by:

1. Claiming it is better to be uninsured than be on Medicaid while claiming she was not stating it was better to be uninsured than to be on Medicaid.

2. Claiming Obamacare would need more subsidies.

3. Claiming Obamacare would explode the budget.

4. Claiming Obamacare would "tamp down" medical innovation.

5. Claiming cost controls would not "hold."

6. Claiming Obamacare would destroy medical insurance.

7. Claiming the mandate would not be enforced and the law would be slowly dismantled.

8.  Claiming Obamacare will mainly benefit the old and the benefits will become increasingly unpopular.

9. Claiming the popular part of Obamacare have nothing to do with the popularity of Obamacare.

10. Claiming the US is uniquely unfitted to a national health plan because Americans love Freedom and would have different patients and staff than they do abroad.

Chait responded in part:

So you have to wonder, "Why are they simple moving from one disaster scenario to another disaster scenario?" Actually, I wanted to debunk a couple points they made, because a lot of this is just -- we've heard from the other side -- are not true. I can't give you links and charts to debunk them, but let me say that it's not the case that 5 million policies have been canceled. That's a number that was floating about that you can't verify. It's almost certainly not true. Many journalists have tried to figure out exactly how many policies have been canceled. And they don't have good enough records to know, but they know it's not 5 million. And they suspect -- the administration suspects it's closer to one-tenth of that figure. They can't actually prove that either, but for various reasons, you don't have a good enough count. This -- that's almost certainly nowhere close to 5 million. And that's a big number that's -- they're citing because they're saying, that -- those are the losers. But it's really nowhere close to that. Yet they say -- Megan said we can't -- we can't say for sure how many -- how -- that there are more insured now than there were before. We can't say for sure, because again, this number can't exactly be counted. We don't know that 400,000 -- it was 500,000. But we know it's not anywhere close to 5 million. And it's a mortal certainty that far more people have health insurance now than would have had in absence of the law.

So why are we having this kind of lurch, from one argument, abandoning these arguments when they disappear, and simply coming up with new ones? The truth is, they disagree with the goals of the law. And I think you could hear that in their remarks. They say, "There's less choice.” And it's true. The government says insurers have to provide certain benefits right. They have to provide pregnancy coverage. That's -- and maternity care. Those are the most controversial things that are mostly cited, because they want people who are male or old to not have to pay for those things. And they want people who are young and female and might have to bear children to pay those costs themselves, because that's an ideological difference between the two sides. And that's fine for them to have an ideological difference between the two sides. But we're not here to debate whether this law is a good idea. We're here to debate whether the law is actually working, and the truth is the only reason they're desperately trying to claim the law is not working is because they oppose national health insurance.

Megan McArdle was not hired to give the libertarian view, or woman's view, or even secret conservative view. She's hired to give the tea-bagger view. She quotes National Review writers and Fox News pundits and Koch-fed think tanks. She repeats hysterical right-wing screeds and attempts to gorilla-glue a thin veneer of science over the emptiness of her arguments. And she fails, since her arguments are based on gut feelings that she pretends are actually principled ideology.

But these are not ordinary failures. There is no need to claim responsibility, figure out the point of error, correct mistakes and grow wiser. These failures are ignored because anyone who is being paid six figures to give financial advice to the striving masses or given book contracts for advice that somehow always benefits the wealthy cannot possibly be a failure. Her success proves the superiority of her arguments. Her gut tells her so. And when her argument was battered and beaten, she was still the winner because she had another argument waiting in the wings: Obamacare is certain to fail some time in the future.

The question is whether the law is undermining its own goals. And to think about going forward, we, you know, Mr. Chait says it’s now here. In fact, we still have a long way to go with a bunch of unpopular stuff that is going to happen. Small businesses are starting to get a wave of cancellations that are going to come through the year, and they're being asked for a lot more money. A lot of that is due to Obamacare. The Cadillac tax, 40 percent surcharge on generous health insurance is especially hard on companies with old sick people, but a lot of benefits managers are saying basically everyone is going to have to go to light plans and scale down rather than get hit by that tax. We’ve got comparative effectiveness research which is going to start determining what sorts of things Medicare will reimburse at what rates.

In her book McArdle points out to her successful life as proof that she has recovered from failure. Her property proves her worth and her husband proves her merit. The failure of one relationship just lead to the success of her present marriage. And the failure of one argument just leads to the success of another. The audience laughed at McArdle at least three times. Her arguments were ridiculous and the audience didn't believe them but  failure at one job leads to success at another when there is always a billionaire around to pick up the bill.

Failing up is only for the rich.

(I will now go back to writing my book. I am 1/4 done with the first draft.)