Can’t the White House rewrite ObamaCare’s regs to reinstate canceled plans before the end of the year?

posted at 6:31 pm on November 11, 2013 by Allahpundit

The House is set to vote this week on Fred Upton’s “Keep Your Plan Act,” which would “re-grandfather” the insurance plans that were canceled because of O-Care’s new regulations. I myself floated the idea of re-grandfathering in a post or two last week, just because it seems like an obvious stopgap solution until the website is fixed. If millions of people who’ve had their plans dropped are now at risk of not having coverage on January 1 thanks to Healthcare.gov’s Glitchapalooza, there’s an obvious solution: Reinstate the canceled plans. Easy peasy, right?

Nope, neither easy nor peasy. For starters, each state has regulations of its own that a plan needs to comply with before it can be offered there. (Obama conveniently neglects to mention this when he dismisses canceled plans as “cut rate” and “bad apples.”) Some of the canceled plans may no longer meet those state regs; even ones that do would somehow need to be approved by the responsible state agency with less than two months to go in the calendar year. Even if you could get the states to waive their regs for previously offered plans as an emergency solution, though, there are other logistical difficulties insurers would have to deal with. The man to read on this, as usual, is Bob Laszewski:

Ideally, we could just say, never mind––let these people simply stay on their current policies. But here’s maybe the biggest irony in this whole mess. The Obama administration may not be ready for Obamacare but the insurance industry is. The health insurance companies spent the last many months rolling their old policies off the books and replacing them with the 2014 Obamacare compliant products––Bronze, Silver, Gold, and Platinum.

Cancellation letters have been sent. Their computer systems took months to program in order to be able to send the letters out and set up the terminations on their systems. Even post-Obamacare, the states regulate the insurance market. The old products are no longer filed for sale and rates are not approved. I suppose it might be possible to get insurance commissioners to waive their requirements but even if they did how could the insurance industry reprogram systems in less than a month that took months to program in the first place, contact the millions impacted, explain their new options (they could still try to get one of the new policies with a subsidy), and get their approval?

The solution to government tech chaos can’t be insurance industry tech chaos. But never mind the logistics: The real problem with re-grandfathering healthy people is that healthy people are only part of the equation. What happens to the sick people who’ve been doggedly signing up for new plans on the exchanges over the past five weeks? They’re not going to be deterred by Healthcare.gov’s failures; they’ll go to individual insurers and buy directly from them. They’re not going to be deterred by the fact that they don’t know what subsidies they’re eligible for yet either; when you have a preexisting condition that costs hundreds of thousands of dollars to treat, you’re happy to have insurance at virtually any cost. Thousands of these people have signed up since October 1, undoubtedly, and now insurers need to figure out how to pay for them. Letting healthy people revert to old, comparatively cheaper plans doesn’t solve that problem because the revenue target for those plans was set before the law required insurers to assume much greater expenditures by letting the sick enroll. Greater costs from the sick mean you need greater revenue from the healthy, which is why so many middle-class people are now finding themselves gouged by premiums for their new “comprehensive” plans. Letting them go back to the old plans at this point would be like losing your management job as a 50-year-old and deciding to resume the burger-flipping job you had when you were 18. It’s a nonstarter. Your expenses are much greater now than they were then.

So what now? Experts have no idea:

Obama has directed his health care advisers to look for a way to deal with the wave of cancellation notices hitting some policyholders. But health policy experts have no idea what the White House could actually do to alleviate the sticker shock some consumers are facing.

“I can’t imagine what they’re thinking about,” said Tim Jost, a Washington & Lee University law professor and an expert on the Affordable Care Act…

Insurance companies have already set their premiums for 2014, so the high prices some consumers are experiencing aren’t going to change this year. And insurers’ business models already account for moving people into the health care law’s new insurance marketplaces.

“In short, I’m flummoxed,” University of Michigan law professor Nicholas Bagley wrote at the Incidental Economist blog. “Maybe the administration has something creative up its sleeve, and it’s certainly prudent to reserve any kind of final judgment until we learn more. For now, though, color me skeptical.”

If the White House could figure out a way to let the healthy be re-grandfathered, it could offer insurers some sort of bailout to cover the sick temporarily, until people are willing and able to enroll on Healthcare.gov en masse. I don’t know where that money would come from. Lori Gottlieb discovered recently that her liberal friends who support O-Care don’t seem to give one wet shinola that she’s paying thousands more for coverage this year, so maybe Obama could test their largesse by proposing an excise tax to pay for preexisting conditions. Let’s see how that plays before the midterms with America’s generous centrist Democratic voters. Even that would only solve part of the problem, though, since there’d still be millions of people whose plans have been canceled who are staring at a lapse of coverage on January 1 unless they can enroll within the next month. Maybe there’s some sort of one-size-fits-all (or two- or three-sizes) coverage scheme insurers could cobble together for the healthy, with the feds on the hook for any losses until risk pools start to normalize next year. Again, though: Where’s the money coming from? Is a temporary one-size-fits-all plan even logistically possible? We’re only beginning to grasp the magnitude of this train wreck. Frankly, I don’t know what insurers were thinking in relying on Obama and Sebelius to have Healthcare.gov working perfectly by October 1 given the massive disruption to the industry that might result if they proved to be grossly incompetent. For people whose business is measuring risk, that was a glaringly poor measurement.


Related Posts:

Breaking on Hot Air

Blowback

Note from Hot Air management: This section is for comments from Hot Air's community of registered readers. Please don't assume that Hot Air management agrees with or otherwise endorses any particular comment just because we let it stand. A reminder: Anyone who fails to comply with our terms of use may lose their posting privilege.

Trackbacks/Pings

Trackback URL

Comments

Comment pages: 1 2

Trial Lawyers may have cut off their own money supply.

APACHEWHOKNOWS on November 11, 2013 at 8:35 PM

Their next venue is: the US government mandating something it promised it could provide and taxing you if you don’t do it.

That is breach of promise on the part of the US government to the People of the US.

I can smell a large-scale, all-lawyer employing class action lawsuit a mile away. And this one is on the horizon.

ajacksonian on November 11, 2013 at 8:38 PM

at least it is not $6 Trillion uh? The bright side… APACHEWHKNOWS

Totalled up. Fed and State?

It’s more than that.

wolly4321 on November 11, 2013 at 8:38 PM

The crap sandwich called obama…..

crosshugger on November 11, 2013 at 8:39 PM

That is breach of promise on the part of the US government to the People of the US.

I’d like my SS contributions back lump sum as well.

wolly4321 on November 11, 2013 at 8:46 PM

Maybe 40 acres of Fed land and a mule, too.

wolly4321 on November 11, 2013 at 8:48 PM

and free-range cheese balls.

Bishop on November 11, 2013 at 6:56 PM

You are the best, Bishop. LOL

Those free-range cheese balls also can serve as troll bait.

onlineanalyst on November 11, 2013 at 9:06 PM

All of those computer systems have back ups.

There is no reason why they couldn’t just re-install an old back up and send out a letter that says never mind.

If I can do that on a PC why can’t they do it on a main-frame?

thgrant on November 11, 2013 at 6:42 PM

Because it doesn’t work that way. When I worked for a few years as a developer at a P&C insurance company, we worked on code changes constantly. There were always new state laws that had to be complied with, new features being added/removed, new states being turned on and different combinations of policy levels being turned on/off for different states. At the same time, there are constant data changes… new policies started, policies discontinued, dependents added/subtracted, policyholder demographic changes (married name, etc).

You can’t just restore a backup because you will lose every feature / change / bug fix in the code for that last few months. There is some serious concern that this will actually make the code base more unstable. While nearly all code is stored in dated repositories, rolling them back in time can be problematic since what you really want is a rolling back of some features, while keeping others. This creates a whole new mess that must be retested. No matter how you approach it, you’re talking a few months of work to roll things back and keep it stable.

Then there are the issues of data. How do you rollback some policies, products, policyholders and not others? And we’re not talking small amounts of data either. Keep in mind that every single piece of paper related to a policy is scanned, imaged and linked to the policyholder. For our medium-sized P&C insurance company, a simple request for policy summaries for a class-action lawsuit resulted in a multi-GB (!!!) compressed file. We had terrabytes of data. You don’t just restore from a 3 month old backup, hoping that the code that goes with it still works, and think everything is going to go smoothly.

It won’t…

dominigan on November 11, 2013 at 9:07 PM

If I can do that on a PC why can’t they do it on a main-frame?

thgrant on November 11, 2013 at 6:42 PM

Also something to point out… data backups are to bring a system back up after it dies, as close as possible to when it went down. We backed up deltas nightly, with full backups each weekend. We kept 4 weeks of full backups and kept cycling the tapes.

In other words… data backups of our company’s size only went back ONE MONTH… not 3 months. Backups are for restoring a system back to what it was… not recreating data snapshots months or years back in time. That’s not the way it works.

dominigan on November 11, 2013 at 9:13 PM

at least it is not $6 Trillion uh? The bright side… APACHEWHKNOWS

Totalled up. Fed and State?

It’s more than that.

wolly4321 on November 11, 2013 at 8:38 PM

If you thought the TARP bank bailout of 2008/2009 was big, wait until you see what the federal gummint has put the taxpayers on the hook for, in 2014 when this crashes. Trillions of dollars for the damage done, coming soon to a Democrat near you, who previously didn’t care about the national debt, and soon will tell us that they must be put back into office to correct this…

DublOh7 on November 11, 2013 at 9:13 PM

Extending the “computer life” of expired plans should be an easy problem to solve. “Re-grandfathering” old plans are the only solution and the sooner we get started the better the job we can do.

MTF on November 11, 2013 at 9:35 PM

We’re only beginning to grasp the magnitude of this train wreck.

Ya think?

Sometime next spring stories will start popping about people with cancer or other serious conditions whose perfectly satisfactory insurance provided life-sustaining care until cancelled due to Obamacare, resulting in the disruption or termination of their treatment and their subsequent suffering and death.

Perhaps then the f*cking a$$holes who voted for Obama and this socialist wetdream turned nightmare will start to appreciate the magnitude of this train wreck.

Because people just have no conception of just how massive the damage will be. No idea at all.

novaculus on November 11, 2013 at 10:13 PM

Cancellation letters have been sent. Their computer systems took months to program in order to be able to send the letters out and set up the terminations on their systems. Even post-Obamacare, the states regulate the insurance market. The old products are no longer filed for sale and rates are not approved. I suppose it might be possible to get insurance commissioners to waive their requirements but even if they did how could the insurance industry reprogram systems in less than a month that took months to program in the first place, contact the millions impacted, explain their new options (they could still try to get one of the new policies with a subsidy), and get their approval?


I was thinking about a lengthy dissection of this statement – but let sum up …

Horseshite.

Frankly, I don’t know what insurers were thinking in relying on Obama and Sebelius to have Healthcare.gov working perfectly by October 1 given the massive disruption to the industry that might result if they proved to be grossly incompetent. For people whose business is measuring risk, that was a glaringly poor measurement.

.
Easy peasy – they are going to make MORE profit under Obamacare than they have been in the free competitive markets.

Seriously, AP, have you been hiding under a rock with respect to Obamacare and the “insider” deals made with the health insurance & pharmaceutical companies?

Because it doesn’t work that way. When I worked for a few years as a developer at a P&C insurance company, we worked on code changes constantly. There were always new state laws that had to be complied with, new features being added/removed, new states being turned on and different combinations of policy levels being turned on/off for different states. At the same time, there are constant data changes… new policies started, policies discontinued, dependents added/subtracted, policyholder demographic changes (married name, etc).

dominigan on November 11, 2013 at 9:07 PM

Any company or programmer CODING these items (as opposed to using variables which pull the relevant data from data tables) deserves to be out of business. Were you programming back in the pre-object oriented days?

While the “back-up tapes” are worthless in this discussion, the point ignored by EVERYONE so far is the insurance companies are STILL collecting premiums on ALL of the cancelled policies.

As noted above, all the “regulatory issues” are unmitigated HORSESHITE being peddled by people with conflicts of interest.

If the policices are good NOW … if the policies are good through the end of the YEAR … then YES … appropriately motivated politicians, bureaucrats and insurance comapnies/personnel could make ALL of them work NEXT YEAR.

Oh … and with regard to the “pre-exisiting conditions and couldn’t get insurance” victims – so far, less than 49,000 people are beating down the barriers for Obamacare. This is an easily manageable nationwide reinsurance pool even if you quadruple the numbers.

PolAgnostic on November 11, 2013 at 10:37 PM

Obama wants a mulligan. Can you imagine how this guy must cheat at golf, or more likely, just make up rules as he goes along? And if his golf partners won’t let him change the rules, I can just hear him saying, “Who do you think you are, congress? Heh heh heh.” I can’t wait for this guy to be gone. I still wonder how he’s going to get through another three years at his rate of effing-up.

smellthecoffee on November 11, 2013 at 10:53 PM

The House is set to vote this week on Fred Upton’s “Keep Your Plan Act,”

How about also doing a “Keep Your Light Bulbs Act” to undo the “work” of Fred Upton and his Democrat buddies.

RJL on November 11, 2013 at 11:04 PM

Obama could use the old Russian RESET button routine.

(At least they know how to spell it in English.)

Just issue another magical executive order that simply turns the insurance grandfather clause clock back one year.

Period.

The cost of letting this ObamaTax folly proceed will be infinitely worse than forcing a short term paperwork and software restore to immediately reinstate all O-cancelled policies.

profitsbeard on November 11, 2013 at 11:08 PM

This is the cold and merciless heart of Obamacare.

There is no mercy or compassion in arithmetic.

thatsafactjack on November 11, 2013 at 7:23 PM

“The Cold Equations”, 1954, said it all.

AesopFan on November 12, 2013 at 12:10 AM

For people whose business is measuring risk, that was a glaringly poor measurement.

Did they have a choice? What would have been the alternative? It was the law and they were commanded to obey it.

Common Sense on November 12, 2013 at 12:34 AM

“It’s the law of the land” The Democrats “It’s Constitutional bit-hes”Beyonce “I will not negotiate with these terrorists over The Affordable Care Act” Da Prez “We will not negotiate with these hostage takers over a delay in implementing The Affordable Care Act” Harry Reid and ALL DEMOCRATS “Deem and Pass” Harry Reid ” We will have to pass it to see whats in it” Nancy Pelosi ” I WON” Barack Hussein Obama mmmm mmmm mmmm

neyney on November 12, 2013 at 1:33 AM

This is no accident. This is an intentional act to crash the system. The Corruptocrats that have been elected, and given passes for various bad actions by this President have created the ideal crapstorm to make the sacrifices of all our past countrymen a historical footnote.

trl on November 12, 2013 at 6:24 AM

Conservatives will be the new Jews and Republicans will be the collaborators – what is old is now new again.

rgranger on November 12, 2013 at 9:55 AM

I still can’t believe how amateurish this roll out has been.

The law should have required the exchanges be up an running one year before the mandates kicked in.

Only an idiot dismantles the functioning system before making sure the “new and improved” system is running smoothly.

taznar on November 12, 2013 at 10:12 AM

Comment pages: 1 2