A kludge is “a workaround or quick-and-dirty solution that is clumsy, inelegant, inefficient, difficult to extend and hard to maintain.” (Wikipedia) Originated by engineers, the term has been picked up enthusiastically by public policy wonks. Niskanen Center’s Steven Teles argues that the U.S. government is so prone to kludges that it has become a kludgeocracy.
Obamacare is the mother of all kludges. Born of the praiseworthy intention to provide universal access to healthcare, it is struggling because it is an ill-fitting combination of three approaches to universal healthcare access: Expansion of Medicaid, mandates for employer sponsored insurance, and subsidized individual policies sold on insurance exchanges.
The first component was mauled when the Supreme Court determined that states could opt out of Medicaid expansion. The decision was close. Better drafting might have saved the day.
Yesterday, President Trump struck at two other vulnerabilities of the Obamacare kludge.
First, he announced new rules that will let small businesses band together in associations to purchase insurance. That actually sounds like a good thing, and in and of itself, it is. The problem is with the way association insurance will interact with other parts of the kludge. Some association policies may offer only skimpy coverage, and, by siphoning off some healthy individuals, association policies will put upward pressure on premiums for everyone else.
Second, Trump announced that the government would withdraw its appeal of Burwell, a case that challenges the cost sharing reduction (CSR) payments that help low-income households meet out-of-pocket healthcare costs. More bad drafting: One section of the original ACA allows such payments, but another section appears to prohibit them. When a lower court struck down CSR payments, the Obama Administration appealed, but now that the appeal is withdrawn, the lower court ban on CSR will apparently stand and payments will stop. Some insurers are likely to exit the ACA marketplaces as a result.
The antidote to kludgeocracy is found in another great engineering principle: KISS (Keep It Simple, Stupid). Let’s hope the drafters of the next healthcare bill keep KISS in mind.