Freedom Line Blog

In what sometimes seems like an era of constantly expanding government and demonization of free markets, a recent Gallup poll offers refreshing news – Americans overwhelmingly view free markets positively, especially relative to the federal government:

Political candidates would be wise to emphasize this in an election year 2022, and elected leaders would be wise to translate Americans’ preference into concrete action.

A revealing commentary this week in The Wall Street Journal on reduced competition and insurance industry consolidation under ObamaCare coincides in an interesting manner with a new Gallup poll showing very low public confidence in big business.

In “How the Affordable Care Act Is Reducing Competition,” physician and American Enterprise Institute (AEI) resident fellow Scott Gottlieb lays out how ObamaCare by design requires industry consolidation to accommodate its massive regulatory burdens and higher operating costs:

To sustain themselves, insurers must spread fixed costs over a larger base of members.  The bigger they are, the easier it is to meet the government-imposed cap on their operating costs while cutting their way to profitability.  This pressure discourages new health plans from launching.  Startups often must channel more money into initial operating expenses.  But the caps largely prevent this, so the market stagnates…  ObamaCare’s architects saw these trends coming – and welcomed them.  They mistakenly believed that consolidation would be good for patients, on the theory that larger companies would have more capital to invest in innovations that are thought to improve coordination of medical care, such as electronic health records, integrated teams of medical providers and telemedicine.

This was a profound miscalculation.  The truth is that the greatest innovations in healthcare delivery haven’t come from federally contrived oligopolies or enormous hospital chains.  Novel concepts – whether practice-management companies, home healthcare or the first for-profit HMO – almost always have come from entrepreneurial firms, often backed by venture capital.  That venture capital has been drying up since ObamaCare was passed.”

Meanwhile, a new Gallup survey reveals that is precisely the sort of big-business favoritism that Americans distrust:

Americans are more than three times as likely to express confidence in small business as they are in big business.  Sixty-seven percent of U.S. adults report having a ‘great deal’ or ‘quite a lot’ of confidence in small business, far eclipsing the 21% who are similarly confident in big business.  Confidence in small business is up slightly from last year’s 62%, while confidence in big business is unchanged.”

This helps explain why, despite Barack Obama’s ongoing protestations and false assurances, the healthcare law bearing his name remains widely unpopular with Americans it affects.  Each week brings a fresh wave of bad news about ObamaCare, such as this week’s news of skyrocketing costs unanticipated only by those who supported the law.  Its unpopularity, along with the unpopularity of big government and big business more generally, provide optimism that Americans remain open to conservative and libertarian efforts toward replacement and reform.

An article at the website Accounting Today starts with the headline, “ObamaCare Weighing Less on Hiring Plans.” In it, the author analyzes new poll results asking accountants who work with small businesses how the health law is impacting their hiring practices.

Last year, an identical poll found that 66 percent of small businesses said ObamaCare made it less likely they would hire new employees. This year’s survey reported a drop to 54 percent.

This is great news, according to the firm that commissioned the poll. “[W]hile planning for the Affordable Care Act is still impacting many businesses’ plans for hiring, it is causing significantly fewer businesses to slow hiring in the coming year in comparison to last year, which is positive.”

It would be more accurate to say, “less negative.”

Imagine the euphoria if ObamaCare wasn’t a factor at all. That would allow 54 percent of small businesses to base hiring decisions on opportunities to win market share. Instead, a stout majority are holding tight on their headcount because they can’t afford ObamaCare’s increased compliance costs.

Going forward, we’re likely to see more poll numbers and reporting like this that makes it seem like ObamaCare’s influence on economic growth is diminishing, when in fact businesses have already absorbed the initial hit that comes with ObamaCare, and have fundamentally changed their operations.

There is a ‘new normal’ of less full-time jobs, more part-timers and an increasing reliance on independent contractors. Dramatic year-to-year changes are likely to diminish over time as employers factor in ObamaCare’s increased labor costs and staff accordingly.

The real story here isn’t how many businesses will hire less people because of ObamaCare; it is how many jobs are not being created because of ObamaCare.

The launch of the Obamacare website for small businesses will be delayed until November 2014 – a full year from when it is required by law to go online.

Along with the Obama administration’s inability to create functioning health insurance portals, today’s announcement is yet another craven attempt by Washington liberals to shield themselves from the political consequences of their failures.

By pushing back the federally-run small business exchange (called SHOP) until after the 2014 midterm elections, President Barack Obama and Democrats in Congress want to avoid a fresh round of voter anger when the newest website inevitably implodes.

But doing so means that three federal elections will have taken place between the time Obamacare passed into law in 2010 and its full implementation in 2014. That time period will cover half of the Obama presidency. If performance predicts the future, all we have to look forward to in 2014 is more failure.

Republicans should spare Americans the experience and put forward a slate of candidates that run and win on a promise to repeal Obamacare, without delay.

Sally Pipes identifies an “escape hatch” for small businesses trying to avoid the costly employer mandates threatening employers with costly insurance premiums or fines:

A RAND analysis found that a fifth of firms with 50-200 workers had self-insured by 2010, the year Obamacare became law — up from 14 percent of such companies in 2006.

A survey by Munich Health North America found that 82 percent of health insurance executives report seeing growing interest in self-funded coverage among employers. A California-based benefits consulting firm that helps companies self-insure told Kaiser Health News that its business has doubled in the past six months. And Cigna says that it saw self-coverage for small businesses grow by a fifth last year.

Companies with younger, healthier workforces are leading the way. After all, with their population of low-risk employees, they have the most to gain. And that’s bad news for Obamacare’s exchanges.

The problem for ObamaCare is that the only way health insurance premiums will be (theoretically) affordable is if legions of young, healthy people join the exchanges’ insurance pools. That’s because they are needed to pay into the system so that older and sicker people can draw down the benefits.

But if small businesses opt to self-insure – especially if they are newer businesses more likely to employ younger and healthier workers – then that will drain the ObamaCare pools of the very people who will make them (barely) affordable.

With this in mind, don’t be surprised to see an IRS or HHS rule come down that prohibits self-insurance to prop up ObamaCare’s exchange pools.

As with the so-called “family glitch,” it’s a ploy the Obama administration will be ready to use if its slapdash law continues to produce embarrassing unintended consequences.

Fox News is reporting that the implementation of one of the two state-based, federally-regulated health insurance exchanges is being delayed for an entire year (2015 instead of 2014).

The decision applies to the exchange that will be created to let small businesses shop for affordable insurance policies, not the similar and more well-known exchange for individuals and families looking for insurance.

While it would be easy to blame poor planning and bad execution on the part of the federal government, another explanation seems just as likely.

As originally written, ObamaCare contained a so-called “public option” that would have been offered by the federal government on the exchange as competition with private alternatives.  Conservatives opposed the public option because it threatened to undercut private competitors with an artificially low price since the government, unlike a private business, doesn’t have to make a profit.

After a few years of running private businesses out of the market with artificially low prices, conservatives reasoned, the public option would become the only option as more and more consumers opted for a deal that would be too-good-to-be-true.  When that happened, government could claim the market failed, paving the way for a government-run, single-payer health system.

Of course, the public option was stripped out of the final version of ObamaCare.  But the intent to move America toward government-run health care did not.  Since there’s no requirement under the law for small businesses to provide health insurance, many may now stop bothering if the small business exchange is delayed.  That puts their employees on the individual and family exchange, which as estimates are showing, will cost people much more than originally advertised, even including the government subsidy.

With private insurance unable to deliver a product that covers the heightened floor created in ObamaCare that is also affordable for the people required to buy it thanks to the individual mandate, don’t be surprised if activists and policymakers start clamoring for government to declare a market failure and nationalize the system.

Such a scenario may sound far-fetched, but can anyone seriously say that with the Obama Administration in charge that it’s not at least possible?

The newest item available in the gift shop at Mitt Romney’s campaign website:

As my colleague Mollie Hemingway notes at Ricochet, indignation at the president’s remarks seems to be taking root with a swath of the American people much broader than the conservative base. One can only hope that trend will lead to this t-shirt someday being featured in the wing of the Obama Presidential Library describing what went wrong in 2012.