President Obama is still trying to downplay the launch failure of ObamaCare as if it were just a few glitches on a website.
No, it’s much more than that. It is a timeless demonstration of the failure of central planning, government regulations, and the entitlement state. It is a failure so total, so comprehensive, and so multifaceted that it will be studied by schoolchildren 50 years from now when their teachers explain to them why the giant welfare and regulatory state built up in the second half of the 20th century collapsed in the first half of the 21st.
The lessons of that failure will not be new lessons. They’re the ones we should have learned in the 20th century, when we had plenty of examples to draw from. But a generation has grown up that doesn’t remember the 1970s, the failures of socialism, or the depredations of Communism. And because those topics are not yet part of a standard school curriculum, we’ve had to relearn them in the School of Hard Knocks, with Professor Obama giving us a refresher course.
In the hope that we won’t have to learn this all over again another thirty years from now, here are ten big lessons from the launch of ObamaCare about why big government fails.
1. There’s no such thing as a free lunch.
We’ve already seen about a half-dozen stories like this one, in which an Obama voters declares, “I was all for ObamaCare until I found out I was paying for it.” Or as another one puts it: “Of course, I want people to have health care. I just didn’t realize I would be the one who was going to pay for it personally.” Well, who did he think was going to pay for it?
The entire middle-class welfare state, to which ObamaCare is the latest addition, is an attempt to make the middle class into a constituency for big government by promising them endless benefits, from free health care to a guaranteed income, with no costs, consequences, or trade-offs, and no strings attached. Everything is supposed to be paid for by “the rich,” which means anyone who makes a dollar more than you. But when the law is passed, a whole chunk of the middle class finds out that they are the ones getting fleeced for the benefit of anyone who makes a dollar less than them.
If you want to figure out the winners and losers of ObamaCare, it’s not so much about the rich versus the poor. It’s this: the more you are productive and self-supporting, the more likely you are to end up paying the freight for everyone else. That’s what promises of a free lunch always amount to: punishing the productive and rewarding the unproductive.
What do you suppose are the long-term consequences of that kind of system? Well, let’s start by looking at what the regulatory state does to productive people, which is our second lesson.
2. Regulation stifles production.
How did the president who deployed state of the art information technology for his re-election campaign manage to botch the website for his signature piece of legislation? Listen to this explanation from some of the Obama campaign’s own Web guys: “The government has to follow a code called the Federal Acquisition Regulation, which is more than 1,800 pages of legalese that all but ensure that the companies that win government contracts, like the ones put out to build HealthCare.gov, are those that can navigate the regulations best, but not necessarily do the best job.”
In other words, when you pass a lot of regulations, it only makes people good at following regulations. As I replied: “But what do they imagine ObamaCare is, if not a massive set of new regulations? If a mere 1,800 pages of federal procurement regulations cause 94% of federal IT projects to fail—how about the 2,000-plus pages of the Affordable Care Act?”
A truly creative, productive mind answers to only one “regulator”: reality. It looks at facts and results and figures out what is actually required to get things done, rather than following some arbitrary set of rules. But government regulations put precisely such rules between a worker’s mind and reality. That’s how the federal government ended up launching a system that had been tested against every clause and subsection of the Federal Acquisition Regulation—but hadn’t been tested to see if it would work in the real world.
This leads us to a wider observation about the inherent limits of the power of government.
3. The power to tax is the power to destroy.
The government’s only real power, the base for everything it does, is the power to take things away and to prevent people from acting. It is the power to tax, to confiscate, to ban, to jail, to kill—and not the power to build. Remember that all those pages of procurement regulations, meant to prevent any possible shade of wrongdoing by federal contractors, did nothing to help anyone actually build the ObamaCare website. Expand that to apply to the entire health care industry. Thousands of pages of regulations will prevent people from doing a lot of things, but it won’t help them to provide more and better care.
In fact, it will get in the way. There are already indications that ObamaCare will lead to a shortage of doctors because it’s paying them less to do more work: “Doctors must now see many more patients each day to meet expenses, all while dealing with the mountains of paperwork mandated by the health-care law.”
The essence of ObamaCare is summed up in the fact that millions of people are now being booted off of their existing health insurance plans—but the state and federal exchanges that are supposed to offer them new insurance aren’t even functioning. The Department of Health and Human Services has done an efficient job of destroying old insurance policies, but it has failed to provide new ones. That is the power of government summed up for you.
There’s an even more horrifying implication that follows from this: once the system is broken, it’s going to take a long time to rebuild it. This is another lesson of the 20th century. An Eastern European economist once explained the big challenge faced by his countrymen after the collapse of the Soviet Union. The old Communists justified their policies by declaring, “you can’t make an omelet without breaking a few eggs.” (By “eggs,” of course, they meant “skulls.”) This economist retorted: “If you have eggs and you want an omelet, it’s very easy. If you have an omelet and you want the eggs back, it’s very difficult.” This is a good analogy for what’s happening to the market for health insurance, and we’re going to spend years trying to unscramble this omelet.
Meanwhile, what about the people who scrambled it all up? That’s our next lesson.
4. No one is accountable.
Secretary of Health and Human Services Kathleen Sebelius, who was in charge of the ObamaCare launch, has told Congress that “I’m responsible” for its results—so long as she doesn’t have to resign or suffer any actual personal consequences. This is a bureaucrat’s conception of “accountability.”
If a private company had so completely bungled the launch of its biggest, most important product, with no prospect of recovery for months, the accountability would be rough and immediate: the company would go out of business. There would be no need to fire anyone. Everyone from the CEO to the mail boy would be out of a job, and more competent competitors would swoop in to grab their former customers. But the federal government faces no such market pressure. It has an endless amount of taxpayer money to draw from and a phalanx of civil service regulations to protect bureaucrats from the consequences of their incompetence. As for Sebelius, it is precisely the scale of her failure that protects her job: President Obama can’t fire her without admitting how big the problem is and facing an embarrassing Senate confirmation hearing for her successor. So it’s bad management practice to keep her on—but good management is overruled by politics.
The gap between Obama’s campaign technology and the implementation of ObamaCare is explained entirely by this difference between campaigning and governing. For politicians, manipulating you into voting for them is always going to be more important than actually delivering on the promises they made when they were campaigning.
That leads us to the next big lesson of this debacle. Brace yourselves, because this one is going to be a shocker.
5. Politicians lie.
Did I mention that none of these lessons are really new? The fact that politicians lie is a cliché, yet few people really take it seriously. If they did, they would realize one of its implications: when a politician promises you a cornucopia of benefits from some new government program, don’t believe him. He is simply telling you what you want to hear in order to get your vote, or get a bill passed, or get himself out of a jam.
But there’s more to it than that. An in-depth report in the Washington Post about the chaotic planning for the launch of ObamaCare indicates that the project was repeatedly undermined by attempts to hide the truth for political reasons.
A larger number of states than expected were signaling that, under Republican pressure, they would refuse to build their own online insurance marketplaces and would rely on the federal one. The more states in the federal exchange, the more complex the task of building it. Yet, according to several former officials, White House staff would not let this fact be included in the specifications. Their concern, one former official said, was that Republicans would seize on it as evidence of a feared federal takeover of the health-care system….
After the contract was awarded to CGI Federal, the administration kept giving states more and more time to decide whether to build their own exchanges; White House officials hoped that more would become willing after the 2012 election. So the technical work was held up. “The dynamic was you’d have [CMS’s leaders] going to the White House saying, ‘We’ve got to get this process going,'” one former official recalled. “There would be pushback from the White House.”
You can use this story to blame the Republicans for “sabotaging” ObamaCare, if you like, but that misses the point. If the government cannot successfully build something when there is political opposition, then the government of a free society cannot build anything ever, because there is always political opposition.
And it’s not just politicians who lie to the public. Politicians and bureaucrats also lie to each other as a part of their own internal political games. Thus:
[O]n Sept. 5, White House officials visited CMS for a final demonstration of HealthCare.gov. Some staff members worried that it would fail right in front of the president’s aides. A few secretly rooted for it to fail so that perhaps the White House would wait to open the exchange until it was ready.
Yet on that day, using a simplified demonstration application, the Web site appeared to work just fine.
No wonder President Obama was blindsided by the website’s failure: nobody in the entire chain of command had the courage to tell him that it wouldn’t be ready. This is another big lesson from the 20th century. One of the reasons Mikhail Gorbachev pushed for his reforms of the Soviet system, in a last-ditch effort to save Communism, was because he discovered that the Politburo had no idea what was really going on in the Soviet economy. Lower officials all the way down would cover up problems and report inflated production numbers in order to burnish their reputations or avoid being thrown in the gulag. The result was that the central planners couldn’t plan, because they had no idea what was the truth and what was a lie.
President Obama faced the same problem with the ObamaCare website, being treated to a Potemkin demonstration of a “simplified” version of the site because officials lower down didn’t want to confess that the real website wouldn’t be ready in time.
But that’s not the kind of political lying everyone is talking about right now. The lie they’re talking about is bigger and more flagrant.
When President Obama promised over and over and over again that “if you like your plan, you can keep it,” it wasn’t an ordinary politician’s lie. It was a Big Lie, the kind where a politician looks you sternly in the face and wags his finger and declares that he will absolutely, positively do one thing—while behind the scenes he is already planning to do the exact opposite. We now know that the clauses in the law that were meant to grandfather existing insurance plans were interpreted so narrowly as to ensure that most of those plans would have to be dropped in favor of new, more expensive plans.
Since March 2007 United Healthcare has paid $1.2 million to help keep me alive, and it has never once questioned any treatment or procedure recommended by my medical team. The company pays a fair price to the doctors and hospitals, on time, and is responsive to the emergency treatment requirements of late-stage cancer. Its caring people in the claims office have been readily available to talk to me and my providers.
But in January, United Healthcare sent me a letter announcing that they were pulling out of the individual California market. The company suggested I look to Covered California starting in October.
Who could have predicted this? Well, a lot of us did, only to have those warnings ignored and dismissed—and not just by Democratic politicians. That brings us to our next lesson.
6. The press lies, too.
As Megan McArdle points out, the new line of defense on the cancellation of existing health insurance policies is that “everyone knew” this was going to happen. It’s just that nobody bothered to tell the public. It’s an example of the old Clinton Rules for how to dispose of a scandal: “it’s not true, it’s not true, it’s not true, it’s old news.”
This illuminates the extent to which the mainstream media, rather than being a check on the political system, is a part of it. When reporters come from the same cultural and ideological perspective as the politicians—and the Obama White House has been notorious for its revolving door between the administration and the press—then the watchdogs become lapdogs. That’s why the fact-checkers couldn’t be bothered to fact-check such an important and obviously false claim back when it would have mattered. They couldn’t fact-check it precisely because it would have mattered, because no one wanted to be responsible for undermining a piece of legislation all of their colleagues regarded as enlightened and “progressive.”
Of course, there are other reasons why the press wasn’t able to warn us about the consequences of ObamaCare, which leads us to our next lesson.
7. The Law of Unintended Consequences.
Thanks to Nancy Pelosi, ObamaCare will go down in history as the law we had to pass so we could find out what’s in it. It’s a law so big, so complex, and so vague—requiring thousands of pages of regulatory rulings to flesh it out—that no one knew or could have known exactly what it was going to do. Some of it we could guess at, like the fact that ObamaCare would wipe out a lot of existing insurance policies. Some of it comes as a surprise, like the fact that the whole law is totally dependent on building a complex, high-volume website. Then there are dozens of other things that we’re going to discover about the law in a constant drip-drip of news stories, week after week. The latest: ObamaCare subsidies create a huge marriage penalty.
Free-marketers recognize this as the Law of Unintended Consequences. Along with all of the things the law’s drafters and supporters thought they were going to do, there are many more things they didn’t know they were doing, which they failed to anticipate or couldn’t anticipate. With a law that runs to 2,000 pages and regulations running to thousands of additional pages, and all of that interacting with the implementation efforts of hundreds of bureaucrats and computer programmers, the business decisions of dozens of insurance companies, and the personal financial decisions of some two hundred million adults, it is simply impossible to project all of the consequences. Yet the hubris of central planners and regulators is to assume that they can anticipate and control these results.
In practice, this means that they end up passing the law so we can find out what’s in it, then tinkering with it endlessly afterward, with each ad hoc fix creating unintended consequences of its own. That’s how we end up “reforming” health care, or education, or finance, etc., etc., decade after decade, and somehow never getting it right.
That said, a lot of the negative consequences of ObamaCare don’t fall under the Law of Unintended Consequences, because they were, in fact, done on purpose. They fall under a different principle.
8. The Law of Intended Consequences.
I use the Law of Intended Consequences to remind us that many of the destructive consequences of government action turn out, on closer inspection, to be part of the original purpose of the law.
We’ve already seen some evidence—unguarded comments from Harry Reid—that the elimination of private insurance is one of the intended consequences of the Democrats’ “reform.” Or consider the defense we’re now hearing about why so many people are having their existing health-insurance plans cancelled: that this was intended all along because those insurance policies don’t count as “real” insurance, and because herding everyone into the government-run exchanges is better for the common good, even if a few individuals need to be sacrificed by being forced to pay higher rates.
That’s why “everyone knew” that President Obama’s promise wasn’t true, but none of them raised the alarm: they thought it was a good thing that people would be pushed off of their health insurance and onto the exchanges. They intended this consequence to happen. The only thing they didn’t intend was for the public to figure it out.
Or to put it in different terms, they intended to “help” us, without bothering to get our input or permission. That leads us to our next lesson.
9. The nine most terrifying words in the English language are “I’m from the government, and I’m here to help.”
So said Ronald Reagan. He understood that when government officials come to help you, they give you the kind of help they think you need, not the kind of help you think you need. Or worse: they do something intended to make a public show of their compassion, to make them feel good about themselves and to position themselves as morally superior to their political opponents—those cruel, heartless Republicans—without really caring whether it makes a positive difference for the supposed beneficiaries.
Charles Krauthammer recently described his personal journey from the political left to the political right, and one of the key steps was when the data came in about the consequences of the Great Society welfare state. It turned out that the War on Poverty did not, in fact, lift people out of poverty but instead trapped them in a cycle of dependence on government. The great symbols of this failed welfare state were the high-rise public housing projects, which turned out to be government-run ghettos more violent and hopeless than the ones they had replaced. There’s a reason most of those projects have since been demolished: nobody wanted the reminder. Perhaps we should have kept a few around, like the remaining sections of the Berlin Wall, as a museum to remind us of the horrors of government “help.”
Ayn Rand, who learned the lessons of 20th-century statism better than anyone, once described the architects of the welfare state as “monument builders.” Like the kings and dictators who preceded them, who laid waste to whole continents so they could build heroic monuments to their own vanity, modern politicians and bureaucrats use the welfare state as a costly monument to the moral vanity of their own self-proclaimed compassion.
ObamaCare is building another such monument. It will “help” millions of the uninsured by taxing them for their failure to buy health insurance through online exchanges that don’t work—and it will “help” millions of others by forcing them out of their existing health insurance and into plans where they pay more money for fewer benefits and a more restricted network of doctors.
The comparison of welfare-state politicians and bureaucrats to the old aristocracy indicates our final lesson.
10. Freedom is indivisible.
The lie about being able to keep our health insurance, and the left’s defense of that lie, lays bare the arrogant paternalism of big government. The message is that it’s OK to lie to us, because we don’t know enough to pick out our own insurance plans anyway, so the experts have to herd us into the plans that they know are really good for us. But notice how seamlessly the advocates of big government go from economic paternalism to political paternalism. If it’s OK for elites to control our economic decisions because we don’t know what’s good for us, then it’s a small step to say that it’s OK for them to lie to us to manipulate us into voting the way they want us to. That’s the most ominous lesson of Obama’s lie about keeping our insurance, and his ongoing lies about lying.
On a practical level, government regulation of economics is itself an encroachment on our liberty and gives the government leverage to impose further encroachments. On an ideological level, if we can’t be trusted to choose an insurance plan, why would the big-government elites trust us to choose a political leader or a political platform? In excusing the president for telling a Big Lie to the American people, the defenders of ObamaCare are declaring their hostility to freedom across the board.
As Margaret Thatcher used to say, “freedom is indivisible.” “Once the customer is dependent on the state for all his needs; once the worker can turn only to the state for work; once there is no possibility of the promotion of the arts except by patronage of the state; then, not only enterprise, but freedom itself is destroyed.” Read the whole speech, which stated this big lesson of the 20th century with timeless eloquence.
As ObamaCare is implemented, there will no doubt be many more examples of these ten lessons. We had better start learning them now, in the hope that this time they will stick and we will be spared the next big demonstration of the failure of big government.