U.S. finally gets universal health care, but at what cost?

Debt ceiling crisis could be far worse than a shutdown
J. Scott Applewhite / AP

As he stepped into the White House Rose Garden on Tuesday, the first day that uninsured Americans could begin enrolling in health insurance plans, regardless of their medical history or income level, President Barack Obama sought to make clear that recent Republican efforts to derail the signature achievement of his presidency never stood a chance.

More than 60 years after Harry Truman first proposed national health insurance, and long after virtually every other developed country in the world adopted some form of universal health care, the United States of America finally joined the club.

As the stroke of midnight started the new fiscal year, the enrolment period opened for Obamacare.

Yet at the same moment, large swaths of the government came to a halt. Some 800,000 “non-essential” federal employees were furloughed. National parks, monuments and museums closed. Tax audits were suspended. Elderly veterans in wheelchairs were turned away from the National World War II Memorial, until a small act of civil disobedience toppled the barriers to let them in. But amid the drama, millions of uninsured Americans began signing up for coverage they had previously been unable to access or afford.

In their efforts to block the new program, and the taxes and regulations that come with it, Republicans had run out of traditional political cards to play. So the most conservative faction in the House of Representatives resorted to refusing to pay for government operations unless Obama and Senate Democrats caved and agreed to cut off funding for, or at least delay until the next budget battle, the health care plan. But Obama and Senate Democrats refused to pay what they portrayed as a ransom to hostage takers, betting that, if a shutdown came, the Republicans would get most of the blame.

Early opinion polls suggest they were right. This was not an impasse in some complex eleventh-hour negotiation. It was not a failure to meet in the middle. It was a one-sided attempt to achieve legislative change that had failed at the ballot box.

The Affordable Care Act, dubbed Obamacare—a label first used mockingly by opponents, and later embraced by the President, who said he liked the message that “Obama cares”—became law back in 2010, when Democrats controlled both the House and Senate.

The law had survived a summer of heated Tea Party town-hall protests and the November 2010 congressional election that handed control of the House to Republicans. It then endured more than 40 repeal votes in the House—each doomed from the start by Democratic control of the Senate.

Later, it narrowly survived a series of constitutional challenges that culminated in a dramatic showdown at the U.S. Supreme Court in 2012: The law was upheld 5-4, the decisive vote coming from Chief Justice John Roberts, an appointee of George W. Bush. And, perhaps most important, it survived the 2012 elections in which Republicans made repealing the law a centrepiece of their failed presidential campaign against Obama.

And so, while many government offices shut down on Tuesday, millions of uninsured Americans began enrolling in government-run “exchanges,” where they could shop for private insurance plans that will kick in on Jan. 1.

The new health care law also brought in new regulations for private health plans: They could not turn away, or charge more, for patients with pre-existing medical conditions; they were required to keep young adults on their parents’ plans until age 26; and they were forced to spend 80 per cent of patient premiums on health care, or refund the money.

On the flip side, the law required Americans to obtain health insurance or pay a fine, although those who could not afford premiums would receive subsidies. To pay for them, it included a bunch of new taxes: on medical equipment, on the wealthy, on salon tanning, to name a few.

There were already technical snags on Day 1, with some enrolment websites—run in most cases by state governments—not coping with the crush of people trying to sign up. The President compared the “glitches” to those during Apple’s rolling-out of a new operating system. “I don’t remember anybody suggesting Apple should stop selling iPhones or iPads or threatening to shut down the company if they didn’t,” Obama said. “That’s not how we do things in America. We don’t actively root for failure. We get to work, we make things happen, we make them better, we keep going.”

Benefits will begin flowing in January—that is, if Obamacare can endure one more hurdle: Republican threats to refuse to raise the ceiling on government debt later this month. This last battle is potentially the most dangerous. The economic effects of a temporary government shutdown pale in comparison to the potential economic impact of a failure to raise the so-called debt ceiling—the legislated limit on how much money the federal government can borrow. According to the U.S. Treasury, the money runs out Oct. 17. The U.S. will need to issue new bonds to pay interest on outstanding debts. Some House Republicans have said they will not agree unless the health care law is delayed by a year, and have set other conditions, including approving the Keystone XL pipeline from Canada.

The shutdown appeared unlikely to end unless moderate Republicans revolted or were allowed by their leadership to join forces with the Democratic minority to pass full government funding. Rep. Peter King, a Republican congressman from Long Island who opposed the shutdown, said it would not have had majority support if House Speaker John Boehner had allowed members to vote according to their conscience.

Obama said he would not be negotiating over the debt ceiling. “I will not negotiate with anybody over bills Congress has already racked up,” he said. Taking the tone of a disappointed parent, the President lectured Republicans for causing unnecessary damage to the U.S. economy with their repeated brinksmanship and government by crisis. “That’s not how adults operate,” he said. “We’re better than this.”

Unlike a government shutdown, a default would be unprecedented and potentially disastrous for the world economy. Republicans are betting that’s one price Obama is not willing to pay—not even for Obamacare.