A lesson and bad news for ObamaCare

Obamacare_health-care-chartSome scary truths have emerged since ObamaCare was signed in March that should concern even those who prostrate before President Obama’s altar of government expansion. Namely, experts are predicting it will cost a lot more than expected and won’t empower the consumer with more choices as we were promised. As evinced by the Obama administration’s upcoming $125 million propaganda campaign to (re)sell the legislation to America, these likelihoods worry him, too.

As we draw closer to the day when ObamaCare will begin to impact us, we ought to consider a similar story of bureaucratic control and its consequences from 1933.

The New Deal’s National Recovery Administration (NRA) was a system of government-sponsored economic collaboration created to combat the supposed ills of the private sector. According to General Hugh Johnson, the director of the program, the “need” for the NRA stemmed from “the murderous doctrine of savage and wolfish competition and rugged individualism”

This notion justified an elaborate collection of 11,000 administrative price orders on everything from steel to artificial flowers and feathers.

But early on, the overbearing policy caused problems. It sent more than one-seventh of the American workforce into some industrial conflict, rendering more work stoppages after its passage than any year since the Great Depression began. Small businesses and entrepreneurs suffered. For example, Jacob Maged, a 49-year-old owner of a dry cleaning business, was jailed for three months after he charged 35-cents to press a suit rather than the 40-cents mandated by NRA bureaucrats.

Now jump forward 77 years and see how ObamaCare started and continues on a similar collision course.

The justification for health care reform legislation also began with the assumption of a fundamentally flawed free market, as Obama ran around the country accusing insurance companies of having “skewed incentives” that promote “quantity over care.”

Obama’s solution, like FDR’s, was a labyrinth of bureaucracy, policy, and tsarist oversight. The Patient Protection and Affordable Care Act stands at 2,409 pages and references the Secretary of Health and Human Services almost 2,200 times.

In light of recent reports, we are beginning to fully recognize that the lesson learned from the New Deal applies to us today: heaps of silly regulation and petty bureaucracy compromise efficiency.

Consider some of the law’s provisions.

Section 9006 requires businesses to file IRS 1099 forms (ordinarily used to keep track of individual income) for every vendor with which they do $600 in business. This means that the local deli that buys supplies every week will have to keep track of each purchase, ushering in a Sisyphean level of paperwork. The law creates 159 new federal agencies, offices, or programs to enforce this, according to a chart published by the Center for Health Transformation.

And like the NRA, there will be consequences. Obama’s Medicare Chief Actuary now predicts that the sweeping changes to our system will increase U.S. health costs by $311 billion and that “a “significant portion of the increased demand for Medicaid [will] be difficult to meet.”

The law will likely contradict Obama’s most common assurance: you can keep your plan if you want to. According to a study conducted by Douglas Holtz-Eakin of the American Action Forum, 35 million Americans will be forced into the government-managed system because their employers will be unable to resist the subsidies. The Department of Health and Human Services also estimates that 80-percent of small businesses will end up losing their grandfathered status by as early as 2013 because of regulations that prevent them from altering their plans.

And then there will be situations, like the drycleaner jailed for charging 5-cents too little, which would be laughable if they weren’t so destructive. One provision will severely penalize businesses for the health care decisions of their employees: if they spend more than 9.5-percent of their income on insurance premiums, the business will be slapped with thousands of dollars in fines.

Then there’s the provision that punishes couples for getting married. The Heritage Foundation estimates that married couples will receive up to $10,000 less than cohabitating couples in health care benefits because their income will be counted jointly.

We are all beginning to see that this is truly bad policy that will do great damage to our health care system. And if Republicans don’t rise again to prominence, starve the beast, and repeal, we’re likely to discover even more unimaginable horrors buried in its depths.

By the end of the New Deal, FDR’s aide Raymond Moley had learned a very practical lesson: “Economic planning on a national scale in a politically free society involves contradictions that cannot be resolved in practice.”

It would do President Obama and the 111th Congress well to consider this hindsight from the administration they so love to resemble.


Deputy Director of Strategic Development for Renewing American Leadership and attends Georgetown University, where he is Chief of Staff of the College Republicans.

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About kevinpreskenis

Deputy Director of Strategic Development for Renewing American Leadership and attends Georgetown University, where he is Chief of Staff of the College Republicans.
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