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Why Obamacare has some Democrats and Republicans trading places

Polls show that most Americans disparage Congress for its inability to agree on even simple issues. Now Obamacare gives a new meaning to "reaching across the aisle" because it has caused Democrats to adopt a traditional Republican principle while the GOP advances a position more often associated with Democrats.

A week ago, 46 Republican members of Congress sent a letter to Health and Human Services Secretary Sylvia Burwell, warning her not to settle lawsuits brought by health insurers seeking compensation for losses they suffered from participating in the Affordable Care Act (aka Obamacare).

Back in 2010 when the Affordable Care Act became law, health insurers were reluctant to participate in the statewide exchanges because they were unsure how many people, with what kinds of health histories, would sign up. This made setting premiums something of a crapshoot.

In order to insulate the insurers from possible losses and incentivize their participation, the administration set up a provision termed "risk corridors" in which it would pay the carriers that suffered losses on the exchanges with money from those that earned profits. Executive branch officials originally told insurers they would be made whole after the first year's results were totaled in 2015. Then, when the losses turned out to be far larger than the negligible profits, HHS officials and a Congressional mandate changed the terms. Last fall Congress required that payments for losses must be "budget neutral," meaning the government would only cover losses to the extent it had collected gains from carriers that earned profits.

A number of insurers then sued to recover what they claim had been promised to them. HHS Secretary Burwell recently sought to settle these suits but House Republicans see her tactic as a ruse for paying off insurers and, thereby, maintaining their participation in the Obamacare exchanges. Absent such participation, the president's signature measure would either collapse or require a radical metamorphosis.

So here's the sort of amusing irony that a botched health care plan can create. Republicans throughout their 162-year history have fashioned themselves as the party of business, frequently arguing that  general beneficence will follow from business prosperity. Yet here are 46 House Republicans threatening to sue the administration if it tries to make good the losses that giant insurance companies sustained during Obamacare's first year.

The Democrats, on the other hand, self-styled as "the party of the common man" since about 1830, occasionally opposed banks, insurance companies and railroads when doing so served their interests. Yet now President Obama's Department of Health and Human Services looks to grease insurers' palms to prop up his collapsing health care plan.

It is not terribly difficult to speculate how this will play out.

The Obama administration, and Hillary Clinton after him (assuming she is elected) will make a strong effort to subsidize the Obamacare exchanges by paying off insurers. Republicans will firmly oppose them and the Democrats will relent, partly to avert a constitutional crisis and a government shutdown, and more importantly because headlines about Democrats paralyzing the government to enrich insurance companies will look horrible for Clinton.

Assuming that more insurers abandon Obamacare, that would make the exchanges in most states uncompetitive. Premiums would become unaffordable, healthier people would refuse to buy coverage, and the whole mess would come crashing down.

If that happens, the gains made by Obamacare – 20-25 million more people getting coverage, insurers not banning people with pre-existing conditions, an end to policy terminations during a bout of serious illness – could also vanish. Last week, for example, the Commonwealth Fund estimated that 25 million people would lose coverage under a Trump or a Ryan plan.

That's when Democrats will tell Republicans that they tried to do it the all-American way in which the government guarantees the profits of private companies, They couldn't help it if Republicans prevented them from continuing the tradition of privatizing gains and socializing losses. Since neither party can bear the stigma of denying coverage to 25 million people, the Dems will suggest allowing states with uncompetitive exchanges to offer a public option, in other words, a state-run health care plan.

Republicans will swallow hard and flood the airwaves with cries of socialized medicine, death panels, putting the state between doctors and their patients, and similar slogans. In the end such taglines all translate to, "we don't care about exploitation and shredding the social safety net, because it's every man for himself."

That will eventually fade because impending chaos in health care will yield to the federalist tradition of allowing local control. As a practical solution a few blue states such as Massachusetts and Vermont will then offer public option plans. When people and small employers in Pennsylvania and New Jersey see that some New Englanders are getting better coverage with lower premiums, objective reality will overcome cries of doom from the "rugged individualists."

There are a lot of if's and maybe's between Obamacare's current problems and the widespread emergence of public option plans. But just keep in mind that when it comes to Obamacare, the worse it does, the better we are.

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