The bad news on Obamacare keeps rolling in. The botched rollout of the federal healthcare website may turn out to be one of the program’s lesser problems, depending on how bad the back-end problems turn out to be. Now the Congressional Budget Office (CBO) has concluded that the law’s perverse incentive structure creates a situation where millions of full-time workers will have the incentive to reduce the number of hours they work or quit working entirely. If this is true, we can expect also a tidal wave of individuals looking for ways to underreport their incomes for the same reason. In both cases, the unintended consequences of a law meant to help individuals and the country will be negative for both. Obamacare’s goal was to provide healthcare for 30 million uninsured Americans. The CBO estimates that at the end of the road in 2024, after we have totally restructured America’s healthcare and health insurance business, gotten millions of people thrown out of work or just off their insurance policies and spent a $1.5 trillion (50 percent more than what we were told it would cost), what we will have to show for the effort is 29 million people still uninsured.
Obamacare is becoming this administration’s version of China’s ironically named Great Leap Forward. The Great Leap Forward was a campaign led by Communist Party head Mao Zedong with the goal of rapidly transforming the country into a communist society through rapid industrialization and collectivization. This period is famous, among other things, for the ludicrous demand that local communities melt down all their pots and pans in backyard furnaces so that steel production numbers could be inflated. It also was the period when all Chinese agriculture was collectivized, a campaign that caused the Great Chinese Famine.
We should not have been surprised by the problems afflicting the Obamacare website. Agencies of the federal government from the FBI to DoD and the Veterans Administration have a record of failure on major IT projects that is just eye-watering. The Air Force is just now picking up the pieces of a $1 billion failed attempt to introduce standard commercial enterprise resource planning software into its logistics system.
These IT fiascos follow on repeated failures of government at all levels to successfully implement major construction projects on time, on budget and without significant and negative unintended consequences. Remember the “Big Dig” in Boston? Even NASA, the place from which the race to the moon was managed, fell on its face in its attempts to develop a successor to the Shuttle.
The landscape at the Pentagon is littered by failed efforts to reform the way that massive institution does its business. There is the 1986 Goldwater-Nichols Department of Defense Reorganization Act that changed the command structure of the U.S. military, changed the relationship between civilian and uniformed leaders and promoted jointness over service independence. How has that worked out for us? Were we more successful in the conflicts that followed the G-N reforms (Desert Storm, Iraq and Afghanistan) than in the ones that came before it (Korea, Vietnam)? I don’t think so. The same is true for acquisition reform. The current reform scheme, Better Buying Power, hasn’t shown any appreciable change in the cost of defense programs, speed of defense procurements or quality of defense goods.
Even major league sports are guilty of excessive central planning. Fans have complained for years about the National Football League’s efforts to make the game more television worthy by altering the rules to favor the offense. What happened last week in the Superbowl? The defense won. There are so many examples of teams that made it to the playoffs and even to the Superbowl on the strength of their defense that the NFL needs to learn a lesson and just back off.
The conclusion one must draw from the unfolding of Obamacare, like that gleaned from the Great Leap Forward, is that central planning doesn’t work. This is a lesson that economists like Hayek and Friedman taught us. Even if government mega-projects achieve their stated objectives, they are usually years late and billions of dollars over the initial price tag.
It is time to give the American people and the national treasury a break. No more big reform programs. No more wars on poverty, cancer, comprehensive immigration reform, etc. Pentagon acquisition reform should be pursued in relatively small, manageable steps in keeping with the ability of government to manage programs and the willingness of the people to absorb them. Government also needs to rely more on the private sector and commercial best practices whether it is for a healthcare website, defense acquisition reform or, as NASA is doing, building a new vehicle for manned space flight.
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