Addison Wiggin

We begin today by checking our premises: In order to imagine something working forever, it must begin to work in the first place.

When asked last Friday about what the future holds for the Affordable Care Act, Senate Majority Leader Harry Reid said, “What we’ve done with Obamacare is a step in the right direction, but we’re far from having something that’s going to work forever.”

The law takes full effect Jan. 1, 2014, and the online exchanges launch on Oct. 1, 2013. But lofty expectations are being played down as logistical problems become worse and worse.

“It’s only prudent to not assume everything is going to work perfectly on day one,” said Gary Cohen, Obama’s health insurance czar, according to a CQ Roll Call Report back in April. He was hedging the launch of the online insurance exchanges. Turns out that was a good bet. Something tells us it will turn out to be the understatement of the decade.

“The time for debating about the size of text on the screen, or the color, or is it a world-class user experience — that’s what we used to talk about two years ago,” said Cohen’s colleague, Harry Chao. “Now the philosophy is: ‘Let’s just make sure it’s not a third-world experience.’”

There are a lot of opportunities for good, low-cost health care in the Third World. But we’re sure Mr. Chao is imaging something along these lines (in which case, he couldn’t set the bar much lower)…

obamacare third world

Quality Control: As long as it’s better than this…

In recent months, implementing Obamacare has been hairier than its proponents seemed to realize. The biggest delay so far was the employer mandate. That’s been pushed back one year, adding $10 billion to the program’s price tag.

But the online exchanges are the life force of Obamacare. There will be consequences to winging it. What’s so hard about rolling these exchanges out on time, anyways? Here’s the organizational chart. Just follow the arrow… errr…

Obamacare Organizational Chart

How to not have a “third-world experience”: Create a complex flow chart

OK. We’ll be honest… We don’t have a clue what’s going on in that chart.

What we do know is that green box labeled “Federal Data Services HUB” is the communication hub we discussed yesterday. It was supposed to be ready by Sept. 4… and now it’s slated for Sept. 30, just one day before the online exchanges launch. A functioning hub is crucial so agencies can verify if individuals are eligible for the subsidies they’re claiming.

Those subsidies include the refundable tax credits for the poor. Those subsidies are capped at an income equal to 400% of the federal poverty level. If a household’s income is just $1 higher than that, they don’t get a subsidy. Depending on age and things like whether or not the enrollees smoke — that $1 in extra income could increase the household’s premium payments by as much as $9,355. If you also started smoking, your premium could go up even more.

But don’t worry. The government has a solution for Obamacare’s back-end problems. They’re simply waiving the verification process for claimed subsidies until the kinks are ironed out. It’s called “the honor system” — because that works so well on college campuses.

If we didn’t know any better, we’d think the government built the damn thing to fail. Heck, the transcript from Harry Reid’s above-mentioned interview bluntly blurts out as much. The interview asked him if Obamacare was a stepping stone to a single-payer system.

Reid’s answer? “Yes, yes. Absolutely, yes.”

Regards,

Addison Wiggin
for The Daily Reckoning

Ed. Note: This essay first appeared in The Daily Reckoning email edition — a free e-letter that seeks to provide a unique view of global economics and investment news. It currently goes out to over 300,000 subscribers each day around 4 p.m. And that number is growing. Find out for yourself what everyone’s talking about. Sign up for free, right here.

Addison Wiggin

Addison Wiggin is the executive publisher of Agora Financial, LLC, a fiercely independent economic forecasting and financial research firm. He's the creator and editorial director of Agora Financial's daily 5 Min. Forecast and editorial director of The Daily Reckoning. Wiggin is the founder of Agora Entertainment, executive producer and co-writer of I.O.U.S.A., which was nominated for the Grand Jury Prize at the 2008 Sundance Film Festival, the 2009 Critics Choice Award for Best Documentary Feature, and was also shortlisted for a 2009 Academy Award. He is the author of the companion book of the film I.O.U.S.A.and his second edition of The Demise of the Dollar, and Why it's Even Better for Your Investments was just fully revised and updated. Wiggin is a three-time New York Times best-selling author whose work has been recognized by The New York Times Magazine, The Economist, Worth, The New York Times, The Washington Post as well as major network news programs. He also co-authored international bestsellers Financial Reckoning Day and Empire of Debt with Bill Bonner.

  • http://KimHenryDMD.Wordpress.com/ Dr. Kim Henry

    Hey, check out the Federal green box on the right of the flow chart! They added an extra “F” to the “SERF Plan Management”. How funny is that?

  • Dave FL

    I cannot help but think that a program that has so many so upset must be on the right track…

  • Tom Sawyer

    The ACA is not perfect but a first step toward single payer which has been shown to provide the same care or better for more people at less cost. Republicans should be embracing this program as it gets people who have be passing the costs of non payment on by using the emergency room and passing the costs onto those who have insurance. Everyone elses premiums are higher because of non payers. Secondly those without insurance let small problems become big problems which those with insurance again pay with higher premiums.
    Another reason republicans should be for this program is now talented people who hate their jobs but stay because of the benefits will be able to leave and be more productive. Some will even be able to work for themselves even more will be able to start their own jobs and even hire people without worrying about providing health care or be able to provide health care. Home Depot I believe is dropping coverage for part time workers. GREAT! The coverage they will now get is better and less expensive under the ACA otherwise known as Obamacare.

Recent Articles

Can Money Printing Cause Deflation?

Marc Faber

"There has been an issue that has preoccupied my mind for a long time," writes Dr. Marc Faber. "In economics, it is generally accepted that if the quantity of money and credit is increased, prices will rise… However, since economics is so complex… I question whether the expansion of central banks' balance sheets and policies of zero interest rates could have a deflationary impact…" The good doctor wrestles with the question, in today's essay...


Forget the Oil Crash – Crush the Market With Biotech Stocks

Greg Guenthner

The Biotech iShares ETF is up 23% since the Oct. 15th bottom. No, that is not a typo. Biotechs have torched the S&P over the past two months--more than doubling the returns of the big index. And biotechs as a group are up more than 38% year-to-date. In fact, since we first highlighted the June comeback, the Biotech iShares have gone nowhere but up.


How Low Will Oil Go – And What Can You Do?

Matt Insley

The oil market has been under siege for six months. From service providers to producers this downturn has been painful. Of course, we’ve known all along that oil prices were a little toppy over the summer. In fact, when asked just how low oil prices could go I usually answered with a simple “lower than you’d expect…”


Cuba’s Berlin Wall Moment

Peter Coyne

Our forecast that Cuba would be open and integrated within 5-10 years is on track after yesterday's big announcement. Ahead of schedule, even. Click here to see how some investors have profited and what the island's likely future is...


The $4 LED Trend You Don’t Want to Miss

Chris Mayer

The opportunity to sell and install LEDs is enormous. We’re talking about over a billion lighting fixtures. And the areas with the largest potential -- like parking lots -- have barely begun to change. Banker to the presidents Chris Mayer says you could triple your money in this new tech trend. Here's what you need to know.


How to Make the Casinos Pay You for a Change

Greg Guenthner

It's a theme we've shared with you since April. And it's only gotten worse. The gaming industry has come under all sorts of pressure--a situation I first noticed in the charts. The powerful, multi-year uptrends started showing cracks. And it wasn't long before those cracks turned into gaping holes you could drive a friggin' truck through. That's where things stand today.