Chen: If you thought 2013 was hard on Obamacare, just wait for 2014

The Internet health insurance exchange Healthcare.gov on Oct.

The Internet health insurance exchange Healthcare.gov on Oct. 21, 2013. (Credit: Getty Images)

At his end-of-the-year news conference, President Barack Obama called the botched rollout of the Affordable Care Act his single biggest mistake of 2013. That's putting it mildly. Supporters of Obamacare can't wait to put this year behind them: From dropped insurance coverage for millions of Americans to the delay of the law's employer mandate and the problems with HealthCare.gov, 2013 has been nothing short of a disaster.

There are two things that are important to recognize about Obamacare's difficulties this year. First, people shouldn't have been surprised that the law was so hard to implement and spawned so much bad press -- in fact, it was designed so that the law's more politically unpopular provisions would take effect only after the 2012 elections.

Second, as bad as 2013 has been for Obamacare, the year ahead doesn't look much better. In fact, 2014 has the potential to be even worse -- for the law, the Obama administration and congressional Democrats.


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The drafters of Obamacare recognized that many elements of the law would be unpopular, while other provisions -- allowing people up to the age of 25 to remain on their parents' plans, ending co-payments for preventive care or closing the "doughnut hole" in Medicare prescription drug coverage -- would be immensely popular with the voting public. These provisions all took effect shortly after the law was signed in 2010.

So, what was left for 2013 and beyond, after Obama had been re-elected president, were a series of provisions that Democrats knew would cause more political and policy trouble. Millions of Americans in the individual market being dropped from their existing plans is directly related to Obamacare's essential health benefits requirement, which mandates coverage across 10 categories and goes into effect in 2014. And the one-year delay in the effective date of the employer mandate, which now starts in 2015, was an attempt to delay some of the law's negative labor market effects -- cuts in wages, hours and employment -- until after the midterm elections in November 2014.

Now that 2013 is drawing to a close, we see why Obamacare's drafters did what they did. Obama's approval ratings are at or near all-time lows, but that matters little to a White House that already won four more years. And while Republicans in Washington and in state capitals across the U.S. have successfully directed the public's attention toward Obamacare's woes, their failure to win the White House or a Senate majority in 2012 means that outright repeal of the law remains a pipe dream for now.

Unfortunately for Obamacare's supporters, the story doesn't end there. Nor do the political ramifications for Democrats. It may be that 2014 is an even rougher year for the ACA than 2013 was, and I think that will be the crucial reason Republicans regain control of the Senate in the midterm elections. Here's why.

First, some of Obamacare's least popular provisions go into effect in 2014. This includes a new $60 billion tax on health insurers, which will be levied relative to premiums collected and directly passed on to consumers. And, of course, Obamacare's requirement that individuals secure health insurance coverage (or pay a tax penalty) kicks in during the coming year as well.

Second, millions of Americans who buy their coverage on the individual market or get it through small employers will be shocked by just how much their premiums go up in 2014. The young and healthy will be especially susceptible to this rate shock, and this in turn will further drive them away from purchasing coverage in future years. Given skyrocketing premiums, the economic incentives for many of these "young invincibles" are aligned against buying coverage in the coming years. But these are also the people that the ACA most needs to be enrolled through its health insurance exchanges to offset the comparatively higher risk and costs associated with insuring the sick and old. These dynamics may lead to even higher premiums in the coming years.

Third, not only will millions of Americans on the individual and small group markets who like their plans be unable to keep them in 2014, but many will experience what it's like to be unable to continue seeing the doctors they know and trust. As health insurers face pressure to keep costs down while providing the richer package of benefits that Obamacare mandates, many are limiting their networks of doctors and other health-care providers. A cancer survivor's opinion article in the Wall Street Journal illustrated the horrible situation that Obamacare will place some Americans in: Being forced to choose between doctors that have been critical to their care or, in some cases, not having access to any of their existing health- care providers.

Finally, Obamacare's Medicare cuts will continue to hurt senior citizens. For the 14 million people enrolled in the Medicare Advantage program, the ACA's $200 billion in cuts over the next 10 years will accelerate in 2014 and have tangible impacts on beneficiaries. Insurers predict that seniors in Medicare Advantage plans will see higher premiums, increased cost-sharing for primary and specialist visits, and limits on the doctors they can see. Although the ACA is not solely responsible for the headwinds the Medicare Advantage program faces, it will (and should) shoulder most of the blame.

While President Obama might hope he can put all of Obamacare's woes behind him when the clock strikes midnight on New Year's Eve, the reality is that the worst is only just beginning. Democrats in Congress and around the country will be the ones forced to deal with the collateral damage created by the president's misguided effort to remake the American health care system.

Lanhee Chen is a Bloomberg View columnist and a research fellow at the Hoover Institution at Stanford University. He was the policy director of Mitt Romney's 2012 presidential campaign.

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