Today Is a Very Bad Day for Obamacare

With three days until the enrollment deadline, Obamacare is stumbling, not running, thanks to a critical administration retreat and exasperation from key partners.

With three days until the first enrollment deadline, Obamacare is stumbling, not running, thanks to a critical administration retreat and exasperation from key partners.

Late on Thursday evening, the Department of Health and Human Services announced that those with cancelled plans would get a de facto one-year exemption from the individual mandate. Were the exemption not in place, those with no plans would need to enroll by December 23 in order to have coverage on January 1. If you're not covered for at least nine months of 2014, a penalty is applied — but for those with cancelled plans, that penalty is now being waived. In other words, there's not really any mandate for them to get insurance until next year.

The mandate is the linchpin of Obamacare, the thing that was the centerpiece of the Supreme Court ruling that upheld the policy and the only way in which the system can work economically. With no individual mandate, healthy people won't sign up for insurance. If they don't sign up for insurance, insurers can't offer affordable plans to the sick. This is known as the "death spiral," which The New Republic on Thursday suggested was unlikely. That was before the HHS announcement.

The delay, as Ezra Klein notes at the Washington Post, is a political problem more than a procedural one.

Normally, the individual mandate applies to anyone who can purchase qualifying insurance for less than 8 percent of their income. Either that threshold is right or it's wrong. But it's hard to argue that it's right for the currently uninsured but wrong for people whose plans were canceled.

The Los Angeles Times says the move "constitutes the first crack in the wall for the requirement to buy coverage" — a wall that Republicans have been beating their heads against for months. Klein's point is that Republicans will now throw themselves against the wall full-force.

Another key component of the Obamacare implementation was the expansion of Medicaid on a state-by-state basis to enroll more low-income people into the program. That was a boon for health care providers, who could do more preventative care for people who might otherwise delay treatment until it necessitated an emergency room visit. But now, in the face of similar Republican opposition, the providers are giving up on advocating for expansion in states that chose not to adopt the program. Talking Points Memo's Dylan Scott explains:

[T]op officials for powerful trade organizations in three of the largest states not expanding Medicaid under Obamacare told TPM that they have effectively given up that fight until political conditions change, setting their sights on 2015 at the earliest.

"What I'm really struggling with is -- I don't even know how to talk about expanding Medicaid without just pissing Republicans the hell off and making them think I'm part of the problem," said a top official for one of the industry groups …

"The more you talk about Medicaid expansion," the official continued, "the more you're talking about Obamacare, the more you're talking about Obama, the more you're talking about a problem." Instead of the launch of the healthcare exchanges acting as a catalyst for the broad adoption of other components of the policy, the botched launch has instead made any expansion much harder.

There's little chance at this point that Obamacare will fail and be scrapped. But as key deadlines approach, even the prospect of that happening could deter new enrollments, which could help push the program closer to the death spiral. Not the Christmas that President Obama was hoping to have.