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Obamacare "Fix" Is About Shifting the Blame


President Obama went live earlier today to announce a “fix” to the cancellations that have been fueling public anger about his health care law. Democrats nervous about their re-election prospects—and the explainer-in-chief himself, Bill Clinton—have been pushing for a way to allow people to keep plans they liked, and Obama now claims to have provided it. In essence,  if your plan was cancelled, the federal government will now allow you to keep that plan for another year. Before, plans could be extended only until November 14th; now they can go until May 2015.

But there’s a catch. The government is now allowing this, but insurers may not. The “fix” gives insurers the option to renew these plans, but it does not require them to do so. It would be cynical to read this as an attempt to shift the blame onto the insurers, except for the fact that Obama more or less explicitly stated that was the purpose:

“What we want to do is to be able to say to these folks, you know what, the Affordable Care Act is not going to be the reason why insurers have to cancel your plan. Now, what folks may find is the insurance companies may still come back and say, we want to charge you 20 percent more than we did last year, or we’re not going to cover prescription drugs now.”

The trap here, however, is that Obama has given insurers the ability to renew plans for an extra year only after they had designed their new plans and calculated their prices on the assumption that the old plans were being phased out. So to take the President up on his offer to renew plans, insurance companies would have to recalculate their prices, rework all their packages, and do a lot of paperwork in a very short time frame. Many think this would be impossible to do.

So, needless to say, insurers are not happy with the President right now. And if they do manage to make the fix work as advertised, it would drive up premiums in the exchanges: people who already had insurance would stay on their old plans, leaving more of the previously uninsured, who are more likely to have pre-existing conditions.

Obama’s only hope now is that he can convince people to blame the insurers for that rather than himself, and that may have been one of the central political aims of this move.

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  • Andrew Allison

    VM missed not only the fact that the President attempted to duck responsibility by punting to the States but, having been caught in a lie and paid the price, compounded the stupidity by said punting. Which do you think people will remember: that he lied to get passage of the legislation and their policies got cancelled, or that their State did or did not, as the case may be, reinstate them? Worse yet, reinstatement will simply further pollute the ACA risk pool. It gets even worse: nobody is taking about what happens when the employer mandate kicks in and requires significantly higher premia to pay for the expanded coverage required. ACA is a perfect train wreck!

  • Corlyss

    I don’t understand how all these high-speed reversals of policy and law could possibly be legal. Someone somewhere needs to sue the feds in a class action. There’s no accountability in what they are doing.

    • Andrew Allison

      Corlyss my friend, you don’t understand: we’re from the government and we’re here to help you! Of course they’re not legal. It’s time to at least try to retake control of the leviathan.

    • f1b0nacc1

      They aren’t legal, but by the time all of this has wound its way through the court system, it will be irrelevant. That was the lesson from the Clinton administration…delay, obsfucate, and obstruct…then declare “let’s move on”…
      In this case, it won’t help Obama, and by the time the courts do rule, it might actually help the rest of us by providing a precedent against this sort of thing. It is annoying now, but little else…

      • Boritz

        Bill’s other lesson was deny, deny, deny and eventually all they will remember are the denials. If Obama put this to practice and denied for the next three years he ever promised you could keep your plan [period]. It’s entirely possible that five years from now John Q. Citizen would say: “All I remember about that is he denied he said it.”

  • Parker O’Brien

    The insurers get what they have coming to him. When you make a deal with the devil, you shouldn’t be surprised when you lose your soul. Their support for this bill aided its passage and they should be served their just desserts. If only the rest of America didn’t have to suffer as a consequence…

    • Andrew Allison

      The only winners from ACA are the insurance companies(higher premia), big pharma (more drugs) and the service providers (more customers for more services).

      • Corlyss

        Some will have to explain how the insurance companies are winners when the whole purpose of Obamacare was to destroy private insurance and nationalize the industry. Nobody wins from that scenario.

        • Andrew Allison

          OK, I’ll give it a shot [grin].
          Your premise is flawed: ACA was designed to enrich insurance companies (by providing them with more customers and higher premia). Were that not the case, the legislation would not have passed a bought-and-paid-for (Democrat-controlled at the time) Congress.

          • Corlyss

            Well, I disagree with your underlying premise. The act was designed to destroy the private insurance market on the way to government single payer health care that’s been the Progs #1 wet dream for 100+ years.

          • Andrew Allison

            My underlying premise is that our so-called “representatives” are not representing us at all. Is that what you disagree with?

  • NCMountainGirl

    Do people in the White House have a clue about how the insurance markets actually work? What company will issue an insurance contract that is in violation of the laws already on the books? What about the providers they have already notified are no longer in their networks? Will the state insurance commissions even allow this without a change in the federal statute?

    • Corlyss

      “Do people in the White House have a clue about how the insurance markets actually work?”

      Darlin’, they ain’t got a clue how ANY market works. Obama’s chief advisors are Val Jarrett and ‘Chelle. The next line of advisors are all academics. None of them have ever run so much as a lemonade stand or a scout troop.

    • Andrew Allison

      Do they care?

  • Jacksonian_Libertarian

    What a vile man, he is just looking for some way to shift the blame elsewhere. And this creature was elected “Twice” by the American people, how could so many people blind themselves to his lies and incompetence? It’s time to serve justice to all the power corrupted scum serving in Washington, by throwing them under the TEA Party bus!

    • Andrew Allison

      Sad truth be told, he was elected twice by 13% of the American people.

  • Bruce

    Even Dems (Kirsten Powers for one) are saying that this ploy to blame the insurance companies will not work. People now know where the blame lies. If it wasn’t so destructive to the country, watching this would be amusing. It may not be amusing – it is interesting to watch the implosion of this dysfunctional Marxist.

    • Andrew Allison

      Hopefully, the only thing which people are going to remember is that, like his “I did not have sexual relations with that woman” predecessor, Barry “it’s not my fault” Obama outright lied to us.

  • Corlyss

    Vide, Joe Rago’s stinging column in WSJ yesterday. Rago won the Pulitzer for his reporting on Obamacare.

    You know the politics of ObamaCare is bad when even President Obama is forced to concede that the rollout is a bloody mess. If only the new “administrative fix” he announced on Thursday did more to help the consumers who are losing their coverage than it does to help Democrats protect their political future.

    In a major political reversal, the President announced at a surprise press conference that he is suspending the regulations that he now admits are the reason that millions of health insurance plans have been terminated. Only days ago he was saying these were “substandard plans” sold by “bad-apple insurers.” Some of us have been warning for years about the coming insurance market destruction, but Mr. Obama went ahead anyway even though millions of middle-class folks preferred their coverage to ObamaCare.

    Now these mass cancellations are proving to be unpopular, and Democrats are panicking, so Mr. Obama is offering a temporary stay of execution. He is instructing his health regulators to suspend eight complicated rules that all insurance plans had to meet and had caused the market implosion.

    There is less reprieve here than Mr. Obama claims. It’s hard to un-cancel insurance. The rules Mr. Obama is repudiating were written in 2010, and insurers have been adapting to them for years. They will now have to scramble to revive the policies they can while throwing all of their actuarial assumptions out the window.

    The faux reprieve also lasts for only one year and applies only to anyone who was covered in 2013. The insurers are essentially being asked to agree to accept losses on behalf of a rump group of policy holders in a legacy business that would then turn into a pumpkin in 2015.

    The burden will also now fall on state insurance commissioners to decide if they want to try to reapprove old plans, or something similar to the outlawed products. But even the insurers that want to exercise this option will need to resuscitate plans in a mere six weeks. The first they heard about the President’s “fix” was at the press conference.

    Standing up new rates and benefits will be a major logistical undertaking, and at best only a small fraction of the dropped policies will return, mostly in Republican-led states. Liberal insurance commissioners are already saying they are going to stay the ObamaCare course.

    Such regulatory rewriting is also probably illegal. The Administration claims it has “enforcement discretion” to suspend the regulations. But like the employer mandate Mr. Obama also delayed for a year, their hard start-dates are defined in the statute—January 1, 2014. The black-letter law of the Affordable Care Act does not say the rules apply whenever they are politically convenient.

    The President’s regulatory rewrite looks all the more cynical because it was rolled out a day before a House vote on legislation that would do much more to solve the cancellation problem. Republican Fred Upton’s bill would allow insurers to sell policies to new customers as well as the old. This would increase the odds that the industry would want to sell profitable policies outside of ObamaCare’s exchanges.

    But Mr. Obama can’t tolerate that because it would begin to re-establish a viable private insurance market with more consumer choices that competes with his exchanges. Mr. Obama knows that those exchanges can’t succeed if people are allowed to choose a lower-cost, higher-quality alternative.

    That’s why even as he feigned concern for the cancellations he also went out of his way on Thursday to trivialize the anxiety and disruption he has caused. “You have an individual market that accounts for about 5% of the population,” Mr. Obama noted, as if 16 million Americans are a trifle. But in the liberal calculus of ObamaCare, these people are the necessary collateral damage of making entitlement history.

    The real justification for Thursday’s “fix” is defensive politics. Democrats needed some political cover against the daily headlines about cancelled policies, and even Bill Clinton was telling Mr. Obama to do something. His faux reprieve will now let Democrats shift the blame for cancellations to insurance companies, though all they have been doing is following the Administration’s orders.

    All of which fits the familiar ObamaCare script. Democrats jammed the law through Congress on a partisan vote and against public opinion. At every step since, Mr. Obama has refused to compromise or change the law. And even with this tactical retreat, he is merely trying to find a way to relieve the political pressure long enough to avoid having to work with Republicans in Congress on a larger improvement.

    Mr. Obama’s gamble is that he and the Democrats can dissemble and shift responsibility long enough to muscle through the “transition” while the website gets fixed and more people can sign up for subsidies. But none of this will change the fundamental ObamaCare problem that Democrats are trying to remake a sixth of the U.S. economy by government fiat.

    They are trying to impose on Americans insurance they don’t want, at prices they don’t want to pay, while limiting their choices of doctors and hospitals. This is the reality of modern liberal government.

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