Dispatches from the Potomac#04 | Weakness in the Second Term Obama Administration — Is Recovery Possible?

The start of the actual implementation of the health care reform, which should be a historic achievement for the Obama administration, has met some unexpected snags. President Obama's approval rating has fallen to a record low of about 40%, and he appears to be following the downward path of former President Bush, who lost momentum at an early stage. Will President Obama be able to turn the tide?

This article was originally written in December for publication in the January 2014 edition of the Marubeni Group Magazine, M-SPIRIT.

Washington D.C. Office General Manager, Marubeni America Corporation    Takashi Imamura

Facing the major crisis of a stumbling health care reform

The health care reform act that was passed in 2010 was supposed to be an accomplishment of historic importance for the Democratic Party and President Obama, whose goal has been universal health insurance. In principle, US citizens are obligated to obtain private medical insurance. Those with incomes below a certain level will be eligible to receive subsidies for the costs. In this way, it is planned to reduce the uninsured population, currently about 48 million people (equivalent to about 15% of the total population). The Republican Party, who hates “big government,” has spent nearly the last three years trying to block and eliminate this reform, even to the point of causing a federal debt default crisis and forcing the temporary closure of the government last fall. Ultimately, their efforts were frustrated, and the health care reform law has finally started full-scale implementation as of January this year.

However, the reform stumbled from the start of operation of the insurance market that is a main policy element. The insurance market was opened in October as the registration site for individuals, but there were many connection failures. President Obama stated that people would be able to continue their existing insurance coverage if they wished, but the insurance companies began sending policy cancellation notices, stating that the “existing contract does not meet the minimum standards of the health insurance reform law.”

The missteps with the introduction of the main elements of the health care insurance reform, along with criticism for breach of promises has resulted in a drop in the approval rating of President Obama to around 40%, the lowest level since he took office. Furthermore, his disapproval rating reached a record high of nearly 55%, and confidence in President Obama, which has usually remained at a high level even when his approval rating has dropped, according to the most recent polls has declined to 49%. Looking back, in 2013 there was very little success on important issues where results were expected, such as a comprehensive immigration reform, tax reforms, and stronger gun control. Even diplomatically there is a continuing vagueness, with an ambiguous Asia-oriented stance, and a forced retreat from military strikes against Syria. Adding the faltering of the health insurance reforms completely blows away the successful defeat of the Republican Party over the government closure. Just one month ago it appeared that the Republican Party was on the verge of self-destruction, and that the Democrats would easily win the mid-term elections to be held this year. Now things have been reversed, and the Obama administration is facing their biggest crisis in the fifth year of their term.

Hard work continues, but the path is not clear

President Obama frankly acknowledged the situation, calling it an inexcusable blunder, and pledged to stabilize the insurance registration site by the end of November, which seems to have been successful. The site was updated with several hundred programs and facilities so that 800,000 users could be handled each day. In the first two months of operation only 26,000 people in the entire US were able to complete their registration on this site. After the repairs, 29,000 people were able to register in two days.

The registration site before the repair was a mess; operation was started without adequate testing, there were errors throughout the enormous amount of code, and the data handling capacity was woefully inadequate. The team of specialists assigned by the Obama administration to take over and repair the site rushed frantically to identify the sources of the trouble and make the corrections. They were barely able to achieve the goal before the promised deadline.

However this “achieving the goal” seems to be no more than solutions to part of the mountain of problems surrounding the health insurance reform. The target number of registrants by the end of March is seven million people. Based on the registration pace since the repairs in early December, it does not seem likely that this target will be reached. The system as a whole is a long way from being completed. The backend system to deliver the registration data of the users to the insurance companies is currently being modified. Even users who have completed their registration are not free of the fear that they may not be able to purchase insurance. In addition, the billing system and system of fee payments, which must operate reliably, are still under construction. There are still many issues to resolve before a stable system is achieved, allowing all users to purchase health insurance from the insurance market, correctly pay the insurance fees to the insurance companies, and provide coverage to the users. And, there is still the problem of the cancelled insurance policies. In mid-November the Obama administration announced measures to allow a one-year postponement of the existing policy cancellations by the insurance companies. This is only a measure to buy some time to stabilize the insurance market. It remains to be seen whether the majority of those with cancelled policies will be able to purchase better health insurance.

Aggressive outside recruitment is required

What is especially hard to understand is the fumbling of the Obama administration during the implementation phase of the health insurance reform. This surprising weakness of the Obama administration is regarded by some as evidence of an attitude problem at the White House. President Obama has an excessive tendency to select advisors from insiders he can trust, which makes the candidate pool very small. In fact, he shies away from recruiting from the outside, even for important policy issues where outside participation is essential. How the Obama camp that won information wars twice during the election campaigns could create such a sloppy registration site for the health insurance reform is a mystery; but, viewed in light of this tendency, the reasons can be understood. Added to this is a dislike for internal criticism within the White House. This can be a weakness in situations where productive criticism is essential, such as during the construction of the registration site.

Moving forward, will the Obama administration be flexible enough to change this attitude that has become a liability? For the repair of the registration site they took the plunge and recruited talented people from outside the circle, and were able to meet the commitment. Will they continue to actively seek outside talent in the future, or will this experience simply be an exception? Will there be any change in the practice of relying only on trusted insiders to handle important issues? If there is a change, such as a revision of the excessive attachment to their own circle, this will not only help to promote the progress of the problem-plagued health insurance reforms, but also may become the turning point for an increase in the president's approval rating and provide momentum for the activities of this administration, which has been stagnating in the second term. For this reason it will be important to pay attention to the people recruited by President Obama for the handling of the important issues in the future.