What 3 years of ObamaCare incompetence tells us about the White House

When the Affordable Care Act was first introduced in 2009, critics called the massive government expansion into the private health-insurance industry an unworkable mess. More than three years later, the Obama administration seems to be making the same argument in support of a series of waivers to provisions due to be enforced later this year or early in 2014. A series of retreats on implementing the requirements of ObamaCare highlights the massive complexity in the legislation as well as the inability of the administration to manage its own highest priority.

The first sounding of retreat came last week as most Americans paid more attention to their holiday plans than news coming out of Washington. The administration announced that after more than three years, officials still couldn't figure out how to apply the employer mandate and would therefore waive the requirement until January 2015, rather than the original date of January 2014. The business community had loudly protested the mandate, claiming that it increased costs of hiring and of maintaining full-time employment both by requiring coverage and by tightening the conditions of approval of health insurance. However, the mandate is part of an elaborate effort to minimize the application of taxpayer subsidies for individual purchases of health insurance by forcing employers to either cover their employees or pay a fine for non-compliance to the IRS, based on monthly reporting. Waiving the requirement, even for a short time, will cost taxpayers $10 billion in fines that was supposed to help fund those subsidies.

The decision to postpone enforcement certainly appears to be driven by the desire to avoid a fight with the business community in the middle of the midterm elections, a fight that will make the cycle more difficult for Democrats backing ObamaCare. The defense from the White House? Incompetence. In the three years they've had to build the infrastructure of the ACA, they claim, they've been unable to produce a workable reporting system for businesses to comply with the mandate.

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Unfortunately for the White House, this part of the ACA has been written into statutory law, not regulation that is in their discretion to waive. The employer mandate requires monthly reporting to the IRS beginning in January 2014, with failure to comply punishable by fines and other actions. Former 10th Circuit Court of Appeals Judge Michael McConnell, writing in the Wall Street Journal, called this action a violation of Article II, Section 3 of the U.S. Constitution, which requires that the president "take Care that the Laws be faithfully executed." This provision was explicitly included to prevent the executive from ignoring the legislative branch, in order to prevent a repeat of monarchial privilege to ignore Parliament, which had resulted in the Glorious Revolution almost exactly a century earlier in England.

While presidents can refuse to enforce laws that they believe are unconstitutional, they cannot do so with laws that they consider constitutional. This White House went to court to defend the ACA's constitutionality and won, which makes this waiver even more suspect. Obama must go to Congress in order to amend the statutes in question, which would create an even bigger political problem, considering that the House will take its 39th vote in favor of full repeal of the ACA this week.

Nor is this the only demonstration of incompetence regarding the three years of preparation this administration has had on ObamaCare. The penalty for tobacco users has also been waived, supposedly because of "a computer glitch." Bear in mind that insurers have been applying a penalty for tobacco use for years without any assistance from the federal government, as tobacco use increases the costs to the risk pool. After three years, the Department of Health and Human Services still hasn't figured out how to re-create that mechanism.

What's true for the simple is also true for the complex. The individual mandate will get a waiver of its own, one likely to cost taxpayers billions in unneeded subsidies. The ACA offers public assistance to taxpayers at certain income levels to make the mandated health insurance more affordable, predicated on proof of income levels and insurance requirements. The law requires the exchanges to verify those income levels, but at least for the first year, the White House wants to waive verification. Instead, taxpayer subsidies will get assigned on an honor system.

Bear in mind that the IRS, which knows practically every detail of taxpayer income, will have the role of enforcer in this mandate. Why, then, does the administration need a delay in verification when taxpayer money is on the line? They have had more than three years to develop a system that communicates between state exchanges and the IRS to expedite verification so that qualifying applicants can get the necessary subsidies to buy the required insurance. National Journal provided a handy chart to explain the complexity involved as a way to defend the delay.

Interestingly, the White House didn't go as far on the individual mandate as it did for businesses. If the administration can't handle the verification process for the individual mandate, why not delay the imposition of it along with the employer mandate until 2015? Perhaps they don't want the political headache of suspending the subsidies they've promised for more than three years to a significant chunk of the electorate right before the 2014 midterm elections. Instead, they seem more than happy to open the system up to at least a full year of potential fraud and abuse in a system that's supposed to reduce both through greater governmental intervention.

This series of retreats after three years of preparation makes it clear that the law's critics were correct. The ACA creates far too much complexity for government to handle, even a government that made this the crowning achievement of its administration. The Obama administration's serial admissions of incompetence on the rollout of its signature legislation not only calls into question the future of the health-insurance industry under the provisions of ObamaCare, but also the competency of the administration on tasks with lower priorities for the White House.