21.11.13

The Economic and Electoral Consequences of Obamacare

Obamacare--the signature achievement of the Obama presidency--never enjoyed popular support. In particular, certain pieces of the complex new policy--the individual mandate, the raiding of Medicare, the promise of rationing that always comes with expanded public healthcare (supply can never meet demand), etc.--kept the majority of the public against the bill. Many folks also didn't like how such a substantial piece of legislation, affecting one-sixth of the American economy, was passed on a strictly party line vote and against the apparent rebuke offered up with the election of Scott Brown in Massachusetts.

But the former objections pale with the present ones, now that Americans have to deal with the first round of economic consequences of the new policy (which are far less substantial than later rounds will be). In order for Obamacare to meet the promises made to reduce the burden on those with pre-existing conditions, there had to be a huge influx of healthy people joining the program, paying much higher premiums, in order to cover those who are less-advantaged. How could this vast number of healthy people be convinced to leave their old plans and pay higher premiums under Obamacare?

Apparently, they wouldn't need to be convinced. Obamacare's requirement that businesses provide Cadillac coverage to their employees was impossible for most businesses. In order to cover those news costs, thousands of businesses across the country cut the hours of their employees, thereby disqualifying them from the new requirements, and leaving many of them under-employed. In addition, health providers are also required to offer Cadillac coverage to many of those they cover, which forced them to start cutting people from the rolls due to the overwhelming expense of the new requirements. Subsequently, millions of people across the country have now lost their health care coverage, violating a fundamental pledge tied to Obamacare.

While the failure of the Obamacare website has become a symbol of incompetency to the American public, it is the larger issue of suspected deceit that has sent the poll numbers for both Obamacare and the Obama presidency plummeting further still. It is not just the violating of the pledge that people can keep their old health insurance. It is the suspicion that part of this was the plan all along--that the only way that healthy people would join Obamacare and cover the expenses of those with pre-existing conditions would be if they were kicked off their old plans and forced onto the Obamacare rolls. In which case, not only was the pledge violated, but it was disingenuous from the outset and the intent was always that people would be economically coerced into joining Obamacare (a less direct equivalent to the individual mandate).

It is this broader suspicion that now shows public disapproval of Obamacare at over 60% according to a recent CBS News poll, and President Obama's approval ratings now in the 30's, according to most major polls. But none of the poll numbers change the fact that we are now suffering from an unnecessary, self-inflicted economic blow that will reverberate amongst the American people until this new law is repealed.

In the meantime, an electorate that was looking unfavorably at the GOP after the government shutdown has shifted dramatically in their antipathy, directing their anger primarily at the Obama administration. They still dislike the GOP and that lack of an agenda by the GOP has helped their cause, but it looks like they are coming to dislike the Obama administration more.

As a result, the relatively static state of many of the Senate races are starting to shift. The GOP will need six seats in order to take the Senate. Three already seem to be probably pick-ups (WV, SD, and MT). The weight of Obamacare has now propelled a number of other seats into the pure toss-up category (AR, LA, AK, and NC) and a number of other safer Democratic seats into potential contention (IA, MI, and CO). IN the past, a GOP pick-up of 3-4 seats was probably the most likely scenario. If the Obamacare situation continues to deteriorate, the GOP is at least even money to take the Senate.

As a side note, neither the House majority of majority of governorships are at risk. In the House, there will likely be a net change in the single digits for the one of the parties. The GOP currently holds 29 governorships vs. 21 for the Dems. It looks like the GOP will pick up AR, but lose PA. Three other GOP seats (ME, FL, and MI) are at risk. At this point, I'd speculate that the GOP would lose ME, but hold the other two, losing one seat net.

And for 2016, the beginnings of the field are beginning to shape up. There is no question that Hillary is the front runner in the Democratic primary (by landslide proportions) and in the general election. The rest of the Dem pack will be vying for the VP slot (likely contenders include Sen. Elizabeth Warren of MA and governors Martin O' Malley of MD and Andrew Cuomo of NY). On the Republican side, Gov. Chris Christie of NJ is probably the front runner, though their is also strong support for Sen. Rand Paul of KY, Rep. Paul Ryan of WI, and Sen. Marco Rubio of FL. There is also smaller but significant support for former Gov. Jeb Bush of FL, Gov. Bobby Jindal of LA, and Gov. Scott Walker of WI.

Expect Obamacare to reverberate into 2016, especially if the GOP produces a clear, pragmatic, alternative agenda to governing (no sure thing, to say the least). In such a case, Hillary will lose her status as the front runner (especially due to Hillarycare, back in the '90s). And while she will have a much more substantial war chest than anything the GOP might be able to produce, there is also a good chance that the Dem ticket will be considerably older and whiter than the GOP ticket, which would likely favor the GOP.