New Obamacare Lows

Let’s make sure that everyone understands this: The president’s announcement yesterday that state insurance commissioners would be allowed to let people continue to keep their insurance plans for an extra year is designed to ensure that if one loses one’s insurance plan, one will blame the state insurance commissioners and the insurance companies–who are trying to comply with Obamacare regulations and policies–instead of blaming the president, his administration, and Democrats in Congress who sold a bad law by repeatedly and deliberately deceiving the American people regarding the contents of that law. For the sake of maintaining some semblance of honesty and decency in this debate, no one–nobody–should allow the president and his administration to get away with this shameless bit of buck-passing.

Additionally–and this is just as important–no one should pretend that this “fix” on the part of the administration will actually strengthen Obamacare. In addition to throwing under the bus the insurers and insurance commissioners with whom the White House would have to work in order to make the implementation of Obamacare a success, the president also threw his own law under that very same bus:

Facing growing outrage from Americans, President Barack Obama reversed course Thursday and offered to let insurance companies sell existing plans even if they don’t meet the minimum standards set by his new problem-fraught health care law.

But Obama’s much-delayed attempt to make good on his promise that Americans could keep their insurance plans if they liked them faces strong opposition from insurance companies, which warn that rates might spike, and it risks undermining the basic premise of his law, which requires quality, affordable insurance.

[. . .]

On Thursday, Obama announced that he’d allow – but not require – insurance companies to extend existing policies for a year as long as they notified customers that their benefits might be diminished with their current plans and that alternative policies might be available to them.

Insurance companies already have devised plans for next year, received the necessary approval from states and begun to sell policies. They aren’t required to continue to offer their existing policies and state insurance commissioners aren’t required to approve those 2013 plans.

“Changing the rules after health plans have already met the requirements of the law could destabilize the market and result in higher premiums for consumers,” Karen Ignagni, the president and CEO of America’s Health Insurance Plans, which represents the industry.

Here is a dirty little secret that shouldn’t be secret anymore: The reason that Obamacare needs to be repealed is that for it to “work,” people need to lose plans and access to the doctors and hospitals they are comfortable with seeing. Otherwise, as the excerpt points out, consumers will see massive premium increases because the health insurance exchanges will consist primarily/overwhelmingly of poorer consumers with pre-existing conditions–many of whom will be in rather bad health indeed. Unless healthy, younger and wealthier people are forced to lose their plans and forced to go into the exchanges, the risk won’t be acceptably balanced for insurers in the exchanges. Premium increases–which may be very significant–will be the only way to balance out those risks, and if you massively increase the premiums of poorer and sicker people, well, there goes the “affordable” part of the Affordable Care Act.

More here:

After the president announced the proposed changes, insurance regulators participated in a heated conference call, according to one regulator, where many expressed deep unhappiness about the proposal.

Some on the call felt “the president kind of threw us under the bus today,” the regulator said on the condition of anonymity because the discussion was supposed to be private.

What emerged from the call was a strongly worded statement warning of the possible effects of the president’s proposal.

“This decision continues different rules for different policies and threatens to undermine the new market, and may lead to higher premiums and market disruptions in 2014 and beyond,” said Jim Donelon, Louisiana’s insurance regulator and the president of the National Association of Insurance Commissioners.

[. . .]

Insurers also expressed concern about the cost of reinstating policies that had already been purged from their computers and that had not been included in negotiations with doctors and hospitals. Carl McDonald, an analyst with Citigroup, said the president’s plan created an “enormous administrative burden” for insurers and predicted many would choose not to extend coverage.

“The complexity of trying to uncancel millions of canceled individual policies with only six weeks left in the year is staggering,” he wrote in a report.

Insurers who are new to the market could be particularly hurt by the proposal, with many people choosing to stay with their existing plans because they are less expensive rather than shop on the exchange. Consumer-operated plans, called co-ops, were set up to compete with existing insurers and must rely solely on attracting new customers.

The president’s new proposal is a deeply irresponsible one. And he and his White House knew that it was irresponsible when they put it out yesterday. The whole purpose of the president’ press conference and new policy is to save Barack Obama’s political skin. It has nothing whatsoever to do with making good policy that serves the interests of the American people.

Writing at Ezra Klein’s liberal blog, which has historically been supportive of Obamacare (though even Klein now realizes that the law is a complete mess), Sarah Kliff is surprisingly unsparing in disccussing the shortcomings of the administration’s new plan:

When the drafters of the Affordable Care Act began working on a health reform law, there was a principle underpinning their goals: If they were going to make people buy insurance, they needed to make sure the insurance was worth buying. That meant covering the most important benefits and not charging older or sicker people exorbitant amounts.

What the White House announced today, under political pressure, is a temporary step back from that policy stance. The Obama administration will allow insurance companies to renew policies that do not meet health law standards through the end of 2014, senior White House officials told reporters on a call this morning.

And whether or not this quells the current political battle over cancellation notices, it is nearly certain to create a big mess for insurance companies and the state officials who regulate them.

“It’s just a big mess right now. . . . I don’t know what to tell people,” Kansas Insurance Commissioner Sandy Praeger told The Washington Post.

[. . .]

Here’s how Robert Laszewksi, an insurance consultant, put it in a note to clients earlier this morning:

This means that the insurance companies have 32 days to reprogram their computer systems for policies, rates, and eligibility, send notices to the policyholders via US Mail, send a very complex letter that describes just what the differences are between specific policies and Obamacare compliant plans, ask the consumer for their decision —  and give them a reasonable time to make that decision —  and then enter those decisions back into their systems without creating massive billing, claim payment, and provider eligibility list mistakes.

All by January 1.

Have I mentioned this is an incredibly irresponsible, deeply flawed, entirely opportunistic proposal that will make a very bad law even worse and is solely designed to take the political heat off of a floundering president and a sinking administration? Because I think that point ought to be made repeatedly.

No wonder USA Today’s editorial board recently came out with this:

The health insurance signup numbers the White House released Wednesday afternoon were deeply disappointing, though not particularly surprising.

Everyone knows that the website has been performing abysmally, and the actual numbers confirmed what everyone could only guess at until now because the White House had withheld the data.

Overall, only about one-fifth of the people the White House expected to sign up for insurance in the first month actually did so: 106,185 against a forecast of 500,000. That’s just slightly less than a capacity crowd at Penn State’s Beaver Stadium. And of those who signed up, only 26,794 did so on the federally run exchanges in 36 states. The rest enrolled on state-run exchanges.

The White House was pre-spinning the numbers weeks ago, as soon as it was clear that the website, which it had three-and-a-half years to make ready, was dysfunctional. Aides also pointed out that Massachusetts had similarly low sign-up rates when it first rolled out its universal health coverage plan. True, it’s human nature to wait until the last minute to do something, especially when that something involves paying money. And the number of people visiting the online marketplaces (26.9 million) does show potentially strong demand for the policies being offered.

But when the White House isn’t cluelessly advising people whose health insurance policies are being canceled to go shop at its barely functional website, it’s acting as if there’s plenty of time for people to sign up because the open enrollment period doesn’t end until March 31. Tell that to millions of would-be enrollees who don’t have the luxury of waiting that long because their insurance expires at the end of this year.

Megan McArdle:

This may be a near-perfect specimen of that Washington perennial: the nonsolution solution. Insurers are already warning that they can’t simply allow people to stay on their old plans, firstly because all plans have to be approved by state insurers who haven’t signed onto this, and secondly because getting their computer systems to reissue the canceled policies is a hefty programming task that may not be possible to complete by the end of the year. But that’s not the administration’s problem, is it? They can say, “Hey, we changed the rule — if your insurer went ahead and canceled your policy anyway, that’s not our fault!”

The insurers are predictably furious. And it’s hard to blame them. One thing I haven’t seen anyone point out is that if insurers do go along with this, we’re talking about a massive cash transfer from the insurers to the customers in those grandfathered plans. Some of the left-wing commentators I’ve seen seem to be under the impression that health insurers make fabulous profits, and canceling plans was a venal move to further line their overflowing pockets with your hard-earned dollars. In fact, health insurance profits are quite modest (though relatively steady). Their business and rates are very heavily regulated, and never more so than post-Obamacare, when insurers with excess profits in the individual market have to contribute half their overage to a reinsurance fund. Those people suggested that insurers would decline to renew the policies so that they could keep all that extra cash.

Todd Purdum points out the lies keep coming:

. . . As recently as last week, the White House website itself was still pledging, “Nothing in the proposal forces anyone to change the insurance they have. Period.”

[. . .]

After the law’s razor-thin partisan passage in 2010, Rep. Nancy Pelosi, then House speaker, predicted that it would create “four million jobs, 400,000 jobs almost immediately.” In fact, some respected studies suggest that the law will have little net impact on overall employment, pro or con. That is so in part because of a tension inherent in the Affordable Care Act: It contains penalties for employers with 50 or more full-time workers who fail to provide coverage — which might cause some to lay off workers rather than comply — but also includes expansion of Medicaid and government subsidies that are expected to increase demands for treatment from doctors and hospitals.

Pelosi also predicted that that law would help Democrats in the 2010 mid-term elections (a claim made again just the other day by Rep. Debbie Wasserman Schultz, the Democratic National Committee chair, with reference to next year’s elections). When the precise opposite proved true, health care became an all but forbidden topic in the White House. It survived a challenge in the Supreme Court, only to again become an issue in Obama’s reelection campaign, when he was once more moved to defend it with sweeping optimistic predictions — like the one about keeping coverage.

The reality was always much less certain.

“There’s a piece of me that says this thing is just so complicated that God couldn’t have implemented it,” said Tom Peters, the veteran management guru and co-author of “In Search of Excellence.” “Every time you make one little adjustment, there are probably 150, if not 1,000, regulations that have to be taken into account. Would it be doable if it was inside a Google, with all the things the private sector allows you to do? But presumably at the top of the administration, I have to assume there was de facto no oversight of this thing.”

Just last summer, Bryan Sivak, chief technology officer of the Department of Health and Human Services, told Alex Howard of The Atlantic that the healthcare website was “fast, built in static HTML, completely stable and secure,” and Howard declared: “ is the rarest of birds: a next generation website that also happens to be a .gov.”

And keep coming. House Democrats appear to have serious problems with reality–problems so severe that no one who actually cares about responsible government ought to trust them to possess any power whatsoever:

. . . Obama assured Americans they could keep health care policies they liked. And it wasn’t just Obama. “One of our core principles is that if you like the health care you have, you can keep it,” Senate Majority Leader Harry Reid said in August 2009. “If you like what you have, you can keep it,” said then-House Speaker Nancy Pelosi in October of the same year.

Many, many Democrats promised the same thing. They had to. If they had declared openly that millions of Americans would lose their current coverage and face higher premiums and deductibles — if Obama and Democratic leaders had said that, they would not have been able to maintain party unity in support of the bill, and the Affordable Care Act would never have passed Congress.

It would not have mattered that Republicans opposed the bill unanimously. A frank public discussion of Obamacare would have divided Democratic support, with the result being no new law at all.

But now, as the reality of Obamacare begins to present itself in the lives of millions of Americans, the president and his party can no longer avoid an honest look at the law they passed. And one part of that honesty will be examining what they said when they passed Obamacare. There will likely be a lot of accountability in coming months.

For example, on Thursday afternoon, CNN’s Jake Tapper asked Rep. Steve Israel, a leading congressional Democrat, whether the bill’s supporters “were as forthright about some of the issues as they could have been” during the Obamacare debate. Tapper specified not just the president’s keep-your-coverage promise but “some of the tradeoffs” of the law that favor some Americans over others. “If you could go back in time, do you think there should have been more honest salesmanship?” Tapper asked.

“Well, there should have been certainly more precise education and more precise salesmanship, there’s no question about that,” Israel said. “But you can’t go back in time.”

Yes, you can. Not literally; of course Democrats can’t have a do-over. But the American people can certainly go back in time and examine the Democratic sales job for Obamacare in light of today’s reality. The president and his party knew full well the tradeoffs they were making; they just didn’t tell the rest of the country.

And with any luck, power will utterly and completely ebb away from the party as a consequence of this botched law and the lies that led to its passage:

The reaction to the incompetence, arrogance and deception has ranged from ridicule to anger. But more is in jeopardy than just panicked congressional Democrats. This is the signature legislative achievement of the Obama presidency, the embodiment of his new entitlement-state liberalism. If Obamacare goes down, there will be little left of its underlying ideology.

Perhaps it won’t go down. Perhaps the Web portal hums beautifully on Nov. 30. Perhaps they’ll find a way to restore the canceled policies without wrecking the financial underpinning of the exchanges.

Perhaps. The more likely scenario, however, is that Obamacare does fail. It either fails politically, renounced by a wide consensus that includes a growing number of Democrats, or it succumbs to the financial complications (the insurance “death spiral”) of the very amendments desperately tacked on to save it.

If it does fail, the effect will be historic. Obamacare will take down with it more than Mary Landrieu and Co. It will discredit Obama’s new liberalism for years to come.

The notion that Obamacare’s disastrous rollout could crush Democratic hopes is an entirely reasonable one, according to Ronald Brownstein:

The aftershocks from this failure are already rattling many windows. The most immediate damage is measured in Obama’s declining ratings for competence, trustworthiness, and overall performance. Although surveys have not yet found any gusting demand for repeal, they continue to record gale-force misgivings about the law’s impact, particularly among whites. In the exit polls taken during Virginia gubernatorial election last week, two-thirds of whites said they opposed the law; incredibly, a 52 percent majority of white voters said they strongly opposed it (three-fourths of minorities, meanwhile, said they backed the law).

This resurgence of resistance has emboldened Republicans and significantly increased the odds that the 2016 GOP presidential nominee will again run on repealing the law, as Mitt Romney did in 2012. It has also unnerved the president’s party. The Democratic confusion was visible in former President Clinton’s suggestion this week that Obama should allow consumers receiving cancellation notices in the existing individual market to keep their current plans.

Because the individual market now largely excludes the sick (through rules such as denying coverage for preexisting conditions), the relatively modest number of Americans who use it tend to be healthy. If they are allowed to remain outside the new system, the more comprehensive policies sold on the exchanges could tilt too heavily toward the old and sick. And that, notes Jonathan Gruber, a Massachusetts Institute of Technology economist, “would generate a huge [premium] rate shock in 2015” that could further discourage the healthy from enrolling and risk a fatal downward spiral.

Even if the former president intended to distance Hillary Rodham Clinton from the backlash with his remarks, his remedy would expose her, and other Democrats, to greater risk that the new system will sink entirely and submerge them all in future elections. Helping those losing policies to afford new coverage makes more sense for Democrats than allowing them to remain outside the system.

When the rollout of your health care plan is compared to the handling of Hurricane Katrina, you know that there are problems afoot. And as Kimberley Strassel writes, the president’s press conference yesterday and his faux-policy fix do nothing to alleviate pressures on Democrats:

The primary purpose of the White House “fix” was to get out ahead of the planned Friday vote on Michigan Republican Fred Upton’s “Keep Your Health Plan Act.” The stage was set for dozens of Democrats to join with the GOP for passage—potentially creating a veto-proof majority, and putting enormous pressure on Senate Majority Leader Harry Reid to follow suit.

The White House couldn’t risk such a bipartisan rebuke. Moreover, the Upton bill—while it lacks those GOP joy words of “delay” or “repeal”—poses a threat, since it would allow insurers to continue providing non-ObamaCare policies to any American who wants one. Democratic Sen. Mary Landrieu‘s version of the bill would in fact (unconstitutionally) order insurers to offer the plans in perpetuity. Both bills undermine the law’s central goal of forcing healthy people into costly ObamaCare exchange plans that subsidize the sick.

The president’s “fix” is designed to limit such grandfathering, but that’s why it is of dubious political help to Democrats. Within minutes of Mr. Obama’s announcement, several Democratic senators, including North Carolina’s Kay Hagan —whose poll numbers have plummeted in advance of her 2014 re-election bid—announced that they remain in favor of Landrieu-style legislation.

And the White House “fix” doesn’t save Democrats from having to take a vote on the Upton bill. A yes vote is a strike at the president and an admission that the law Democrats passed is failing. A no vote is tailor-made for political attack ads and requires a nuanced explanation of why the president’s “fix” is better than Upton’s. Which it isn’t. Politicians don’t do nuance very well. This explains why the Democratic leadership on Thursday promised to soon introduce its own legislation that would “reinforce” the White House change (and, it hopes, provide its members better cover).

Finally, let’s make sure that we all remember that the president’s announcement yesterday is a plainly unconstitutional exercise of his powers. Eugene Kontorovich:

President Obama in his speech on “fixing” the Affordable Care Act today did not specify what statutory authority, if any, he thinks authorizes him to make such dictats. Given the gargantuan length of the ObamaCare statute, he might still be looking. Press reports say the President is claiming a broad “enforcement discretion.”

It is true that the Chief Executive has some room to decide how strongly to enforce a law, and the timing of enforcement. But here, Obama is apparently suspending the enforcement of a law for a year – simply to head off actual legislation not to his liking. Congress is working on legislation quite similar to the president’s fix, but with differences he considers objectionable. This further demonstrates the primarily legislative nature of the fix.

Indeed, the fix goes far beyond “non-enforcement” because it requires insurers to certain new action to enjoy the delay. This is thus not simply a delay, but a new law.

Jonathan Adler:

According to the President’s announcement, insurance companies will be allowed to renew policies that were in force as of October 1, 2013 for one additional year, even if they fail to meet relevant PPACA requirements. What is the legal basis for this change? The Administration has not cited any. (See, e.g., this letter to state insurance commissioners explaining the change.) According to various press reports, the Administration argues it may do this as a matter of enforcement discretion (much as it did with immigration). In other words, the Administration is not changing the law. It’s just announcing it will not enforce federal law (while simultaneously threatening to vetolegislation that would authorize the step the President has decided to take).

Does this make the renewal of non-compliant policies legal? No. The legal requirement remains on the books so the relevant health insurance plans remain illegal under federal law. The President’s decision does not change relevant state laws either.  So insurers will still need to obtain approval from state insurance commissioners. This typically requires submitting rates and plan specifications for approval. This can take some time, and is disruptive because most insurance companies have already set their offerings for the next year. It’s no wonder that some insurance commissioners have already indicated they have no plans to approve non-compliant plans.

There is no way–none–that this latest move by the White House can be considered in any way legal. Someone with standing–likely the state insurance commissioners and/or the insurers themselves–should sue for an injunction that blocks the president’s fiat. Additionally, all of the people who made a big show of denouncing the alleged imperial presidency of George W. Bush should denounce the actions of the actual imperial presidency we have now.

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