I’ve been ruminating on the observation by an OTB commenter I mentioned the other day, that in the PPACA the Pelosi-Reid Congress enacted the “least disruptive meaningful change” to the system of healthcare insurance, trying to reconcile that observation with my own view of the law. Here’s what I’ve come up with.

I think it depends on how you define “meaningful”. I think that the Congressional Democrats defined meaning in terms of a list of buzz words, e.g. “guaranteed issue”, “community rating”, “market-based”, and so on, and their idea of meaningful resulted in the neoliberal mare’s nest of the PPACA. I don’t buy the apologist’s “60th senator” explanation. I think the PPACA is exactly what the Congressional leadership wanted.

I’ve remarked on this before but I think it’s worth talking about again. There are several different ideas out there about what “the rule of law” means. Stating them in their most extreme versions one might be thought of as a rules-based regime and the other as a discretion-based regime.

In a discretion-based regime a law serves as a place marker, a statement of intent. The practical, day-to-day details are worked out by benign and capable administrators.

In a rules-based regime a law is a statement of actions that are required or forbidden and the penalties for violation. Any issue not addressed by the law is at the discretion of the individual.

To those who think of laws in terms of a discretion-based regime a rules-based regime is simultaneously too rigid and too chaotic. To those who think of laws in terms of a rules-based system a discretion-based regime is arbitrary and potentially tyrannical.

In practice our system has some of both. We have a common law system so most of our law has been created by judges, the “benign and capable administrators” above, presumably according to a set of principles, a system of meta-law. However, because we have a common law system there is no presumption that everything falls within the circle of the law.

as applied to politics. Mickey Kaus proposes a campaign slogan for Democrats in 2014:

Only Democrats Can Fix the Mess They Made!

If Illinois is any gauge, Republicans will do their darnedest to convince people that’s exactly the case.

The editors of the Chicago Tribune bring up an interesting point. What happens if Healthcare.gov isn’t suitable to task by the November 30 deadline the Administration has established? It won’t be a confidence-builder, that’s for certain. But it would have real world implications as well:

Losing October and November to the computer meltdown means that millions of people will have, at best, days to cram through the insurance enrollment system by Dec. 15 if they want coverage that begins on Jan. 1, writes James Capretta of the American Enterprise Institute. If they can’t, “it will be nearly impossible to process the enrollments fast enough to prevent breaks in insurance coverage at the beginning of 2014.” Capretta’s prediction: “some very large number of Americans — probably in the millions — will experience a break in insurance coverage at the beginning of 2014.”

It will increase the peak load requirements for the site making it that much more difficult for it to achieve its purpose. And it will very likely mean a break in coverage for some number, possibly a very large number, of people.

It would also have psychological and, presumably, political implications.

BTW, why did President Obama make such a point of people who liked their insurance being able to keep it? Because of the way Bill Clinton bungled healthcare reform twenty years ago, the first step in that ill-fated operation being to put his wife, Hillary, in charge of it.

Now who is urging President Obama to find a way to make good on that promise? Bill Clinton.

Or “How to Lie With Statistics”. As I read James Taranto’s column today on the early reports of successful enrollments at Healthcare.gov, I realized that many people might not understand how sensitive error reporting can be to just how you discern and report errors. Take optical character recognition (OCR) software, for example. When reading the advertising blurbs for it you frequently encounter extremely high recognition rates, 99% or higher. 99% of what?

What they don’t generally tell you is that the recognition rate is characters. Not pages or, worse yet, documents. When you’re talking about a recognition rate of 99% of characters that means that on average the program will correctly recognize 99 out of 100 characters. That in turn means that on average for every page with more than a tweet-full of characters the page recognition rate is zero. The document recognition rate is zero. That can make the difference between a particular project making financial sense or not.

In the real world as opposed to in a lab that’s an important distinction. In dealing with a large project of thousands or even millions of documents it determines how many proofreaders you’ll need. It can determine how long the project will take and how much it will cost.

Twenty years ago the company of which I was a principle at the time had a project for the Federal Reserve that required us to scan, store, process, recognize, and index about a million pages worth of documents in a very tight timeframe. It was a monumental task, as you might imagine. The niggling little details matter.

That’s what I think of when I read reports of 50,000 or 500,000 enrollments. What’s the enrollment rate and how is it measured?

Let me also remind you that the open enrollment period for the healthcare exchanges ends on March 31, 2014 and that time is passing. What was 200 days is now more like 150. That affects the peak load requirements of the system. If anybody tells you that a system that can accept and process 100 applications a day can definitely accept and process 100,000 applications per day, fire him.

Can Healthcare.gov meet the challenge? Sure. Will it? Who knows? Pointing to the tremendously different processing requirements of the Massachusetts system as a model is fatuous. They are not comparable. We’re in unknown territory.

And speaking of worst case scenarios and predictions, Steve Forbes predicts that the PPACA will be repealed before the 2014 elections:

Prediction: even if HealthCare.gov is fixed by the end of the month (unlikely), Obamacare is going to be repealed well in advance of next year’s election. And if the website continues to fail, the push for repeal—from endangered Democrats—will occur very rapidly. The website is a sideshow: the real action is the number of people and businesses who are losing their health plans or having to pay a lot more. Fixing the website will only delay the inevitable.

My reaction to that is “No how, no way”. There are enough Democrats in safe seats in the House and Senate that a presidential veto, all but certain in the event of a vote to repeal, cannot be overridden.

Speaking of movie references, I’m guessing that Democrats’ main argument for the foreseeable future will be Han Solo’s “never tell me the odds”. Over at National Journal Alex Roarty suggests that it’s unlikely that President Obama’s approval ratings will bounce back:

In fact, no president in the last 60 years has watched his approval ratings bounce back during their second term. Either they didn’t make it to another stint in office (Ford, Carter, and George H.W. Bush), never dipped in the first place (Eisenhower and Clinton) or were removed from office at the nadir of their popularity (Nixon). Lyndon Johnson recovered somewhat, but only after announcing he would not seek another term. Ronald Reagan dropped from the low 60s to the high 40s amid the Iran-Contra scandal, and his popularity never recovered entirely until his last months in office. But it also never fell to lows experienced by Truman or Bush.

Or Obama, for that matter.

I’m in the analysis business not the prediction business but if I were to venture a guess my WAG as of this writing is that in 2014 the Republicans’ hold on the House will narrow a bit while the Democrats’ hold on the Senate narrows a bit. Things look different in the states holding elections for the Senate this time around than they do in the country at large. But, as I say, that’s no more than a guess.

Peter Suderman (Mr. Megan McArdle) reviews the worst case, hard landing scenario for the PPACA:

Over the weekend, several reports suggested that, despite continued assurances that Healthcare.gov, the problem-plagued online insurance enrollment portal run by the federal government, would be running smoothly for most users by the end of the month, it increasingly looks likely that the deadline will be missed.

Insurance industry consultant Robert Laszewski, who, thanks to his contacts with his insurers, has been a critical and frequently prophetic source of information about the law’s rollout, opened a blog post this weekend with the following assessment: “It is now becoming clear that the Obama administration will not have Health.care.gov fixed by December 1 so hundreds of thousands, or perhaps millions, of people will be able to smoothly enroll by January 1.” Laszewski says that months, not weeks, of work remain.

The dates he lists are important, and not only because of the administration’s self-imposed deadline of November 30. Anyone who wants to purchase insurance that kicks in at the beginning of next year must complete enrollment by December 15. If the system isn’t working smoothly at least a couple weeks prior to that rapidly approaching date, then large numbers of people simply won’t have a chance to sign up.

The quick summary is that millions of people would lose their healthcare insurance and suffer a discontinuity of insurance of unknown duration. The Obama Administration would have caused it and there would be nothing they could do about it.

He does propose one interesting stop-gap solution:

So the insurers have suggested a temporary measure: Let the insurers estimate the subsidies on their own. Any estimates that are too low would be reimbursable, and any estimates that are too high, the insurers would get to keep. In other words, the federal government, backed by taxpayers, would be on the hook for their bad estimates.

He thinks that’s pretty unlikely and I do, too.

His worst case scenario reminds me of the scene in Crocodile Dundee in which Mick, visiting New York, is confronted by a mugger armed with a switchblade knife:

Sue Charlton: [guardedly] Mick, give him your wallet.

Michael J. “Crocodile” Dundee: [amused] What for?

Sue Charlton: [cautiously] He’s got a knife.

Michael J. “Crocodile” Dundee: [chuckles] That’s not a knife.

[he pulls out a large bowie knife]

Michael J. “Crocodile” Dundee: THAT’s a knife.

What Mr. Suderman describes is no worst case scenario. IMO the worst case scenario is the above plus the contingency that most of the hardy few successfully enrolling for healthcare insurance under the exchanges are either a) Medicaid enrollees who qualified under the pre-PPACA rules or b) old and sick with pre-existing conditions.

The former condition would impose an intolerable fiscal strain on state governments. Medicaid enrollees who qualified for Medicaid under the pre-PPACA rules but for some reason weren’t enrolled in Medicaid don’t qualify for reimbursement by the federal government. Their entire tabs would be picked up by the states, many of which, like Illinois, are already teetering on the brink of fiscal disaster with no clear way to save themselves.

The latter condition would induce what’s been known as the “death spiral” in which insurers raise their rates and the PPACA’s costs soar in deadly embrace.

And that doesn’t even take what could happen in the group insurance market into account. We could be seeing millions of people formerly covered by their employers thrown into the exchanges.

I’m not predicting any of these scenarios. We’ll know in due course. All could be roses and lollipops.

Econ prof David Cutler declares victory over rising healthcare costs:

Even as coverage efforts are sputtering, success on the cost front is becoming more noticeable. Since 2010, the average rate of health-care cost increases has been less than half the average in the prior 40 years. The first wave of the cost slowdown emerged just after the recession and was attributed to the economic hangover. Three years later, the economy is growing, and costs show no sign of rising. Something deeper is at work.

The Affordable Care Act is a key to the underlying change. Starting in 2010, the ACA lowered the annual increases that Medicare pays to hospitals, home health agencies and private insurance plans. Together, these account for 5 percent of the post-2010 cost slowdown. Medicare payment changes always provoke fears — in this case, that private plans would flee the program and that the quality of care in hospitals would suffer. Neither of these fears has materialized, however. Enrollment in private plans is up since the ACA changes.

If the PPACA is the cause in the slowing of healthcare cost increases, well, good. If the relationship between the PPACA and healthcare costs is one of false causality, we’ll know in due course. It continues to be too early to tell and, frankly, I’d have more confidence in the pronouncement if an opponent of the PPACA were to proclaim it was lowering costs than when the Obama Administration’s senior healthcare advisor does so.

There are two things we should also bear in mind. First, healthcare costs continue to rise at a multiple of the rate that other costs are. Until healthcare costs are constrained to something affordable, i.e. rising no faster than income, rising no faster than revenues, etc., they’re still increasing too fast. Second, comparing “healthcare inflation” to “general inflation” is specious since healthcare is a major component of personal consumption expenditures. If healthcare comprised 100% of the economy, healthcare inflation (in the sense of rising costs) would by definition be the same as the general rate of inflation. If healthcare were 50% of the economy, its costs were increasing and that increase was twice as fast as the overall increases, all of the increases would be attributable to healthcare.

Healthcare is now a bit over a sixth of the economy. If healthcare costs increase at 6% per year, that’s nearly all of the increases in the entire economy.