Open thread: Obama to make statement on ObamaCare at 11:35 ET; Update: Scapegoat the insurers
posted at 10:41 am on November 14, 2013 by Allahpundit
Allotting for the usual Obama lateness, figure he’ll be at the podium sometime around 12:15. No mystery what this is about, either:
CNN JUST IN: On Obamacare fix, Nancy Pelosi said: "The president will offer a proposal today is my understanding"
— Vaughn Sterling (@vplus) November 14, 2013
Pelosi, who became Speaker in 2006 by calling for a strong Congress to check executive overreach, is now hoping that Obama proposes an “administrative fix” rather than come to Congress. She’s a fraud, as is Captain Keepyourplan, of course. If O does call on Congress to pass something, though, I think Noah Rothman’s right about what that something will be:
Consensus is that he'll request subsidies for those who have lost plans in order to afford the now more expensive plans, no?
— Noah Rothman (@NoahCRothman) November 14, 2013
Demanding higher subsidies would help him in two ways. First, it would spare him from having to endorse Landrieu’s “keep your plan” bill instead. Carney hinted yesterday that Obama might be open to that, but that’s only because he’s facing a ferocious revolt among congressional Dems. Landrieu’s bill would make the adverse selection trainwreck caused by the website’s failure even worse. It’s a last-resort option for O, something he’d do only if there was no other way to placate people who’ve received cancellation notices and the panicky Democrats who represent them in Congress. If you believe Politico, somewhere between 20 and 100 Dems could vote for Fred Upton’s “Keep Your Plan Act” tomorrow if O doesn’t offer them something else today. “Higher subsidies” is that something else. When in doubt, you can’t go wrong asking Democrats to support higher federal spending.
The other reason it helps him is that it would shift some of the spotlight he’s melting under right now to the GOP, in daring them to oppose a little extra cash for the same canceled policy-holders they claim to sympathize so much with. People want their old plans back because the new ones are too expensive? Fine — let’s subsidize them a little more, so that the rate shock isn’t so severe. That doesn’t solve the problem of higher deductibles and co-pays in many cases or the access shock that’s coming next year when people realize their new provider networks are smaller than their old ones, but so what? Obama’s not out there today because the law’s not working correctly. It’s working precisely the way it’s supposed to (in terms of cancellations). This is a political crisis and the standard liberal response to that is “more candy.” Let Republicans be the ones to tell people with cancelled plans that no, billions more in handouts to keep this boondoggle afloat isn’t the prudent thing to do when you’re $17 trillion in debt.
While we wait, enjoy this schadenfreudelicious reflection by ObamaCare superfan Ezra Klein, surveying the wreckage around him.
Update: Holy cow.
Breaking: source tells me potus will announce cancelled insurance policies for those in individual market can ml be renewed…
— Dana Bash (@DanaBashCNN) November 14, 2013
More on potus announce: insurance companies will be required to tell people renewing cancelled plans of alt options & benefits they'll lose
— Dana Bash (@DanaBashCNN) November 14, 2013
So … he’s embracing adverse selection? WaPo explains:
Any plans that are grandfathered – as these uncancelled plans would have to be – are kept financially separate from literally all other plans offered in the post-health law marketplace. Pre-Obamacare plans are put into what’s known as a separate “risk pool.” That means insurance companies can set premiums based just on how healthy or sick people are in this specific plan.
And since these are people insurers have decided to enroll, you can bet they tend to be a healthy bunch.
Everyone who gets insurance in an Obamacare-compliant plan would be in a different risk pool. Since those products have to take any applicants, they would likely have higher premiums.
“What they would allow the issuer to do is carve up the risk pool based on healthy and sick,” Corlette says. “Because the sicker people would be in the guaranteed issue market, over time you’d end up in the typical insurance death spiral.”
Plans offered on the exchange, which are already more expensive than canceled plans, will necessarily be even more expensive next year to make up for the loss of revenue insurers will suffer as healthy people revert to their now un-canceled plans. That’ll further discourage healthy people from enrolling next year or even dropping coverage that they’ve purchased on the exchange this year, which is where you get into death-spiral territory. One obvious way to prevent that would be for Uncle Sam to compensate insurers for their losses instead. Show of hands, Democrats: Who wants to run on that idea next year? Besides Debbie Wasserman-Schultz, I mean.
Or maybe I have this all wrong. Hard to tell from Bash’s tweets but it sounds like Obama’s adopting a variation of the Upton bill — insurers can un-cancel plans if they like but they’re not required to, as Landrieu’s bill would have them do. (In fact, per Klein, insurers already have the option to extend canceled plans through next year.) None of this solves O’s adverse selection problem but it does make it easier for him to scapegoat insurers: If they respond by declaring that it’s too late to un-cancel plans, too late to re-program their computer systems, too late to send out millions of un-cancellation notices, and just a bad idea given the death-spiral potential in all this, Obama can shrug his shoulders and say “damned greedy insurance companies.” It’s someone else’s fault. Always.
Update: Gooooood question.
What about plans in states where insurers have, you know, left the market?
— Ben Domenech (@bdomenech) November 14, 2013
And a good point:
NOTE to Obama–this announcement may have done good BEFORE insurance companies cancelled plans. You know, pre-shutdown.
— Amanda Carpenter (@amandacarpenter) November 14, 2013
Why didn’t he propose it before the shutdown? Because he didn’t need a scapegoat then.
Update: Needless to say, one of the grim pleasures in the aftermath of this today will be watching Democrats turn on a dime from attacking Upton’s proposal as a dangerous threat to ObamaCare that will only heighten the risk of adverse selection and higher premiums (which is true!) to praising Obama’s variation of the same idea as a smart bit of leadership aimed at keeping a presidential promise.
FYI: "Administration Fix" to #ObamaCare postpones cancellations until after 2014 elections. Not even pretending to hide political motive.
— Brad Dayspring (@BDayspring) November 14, 2013
Update: The scapegoats aren’t going to take it lying down:
Insurance source: WH fix places "onus on us even tho they know we can't" effectively extend cancelled policies given rates/logistics probs
— John Harwood (@JohnJHarwood) November 14, 2013
Update: Wait until Nancy finds out that Obama’s plan is, more or less, the Upton plan:
Pelosi: The Upton bill is a very dangerous bill. It undermines the Affordable Care Act. It disrupts the pools..
— Chad Pergram (@ChadPergram) November 14, 2013
Update: Here’s how the Journal describes Obama’s proposal. It’s not quite the full Upton — new insurance customers aren’t eligible for un-canceled plans in O’s scheme — but it’s close enough:
The Obama plan, which the official said could be implemented without passing legislation, would allow insurance companies to extend “substandard” plans in 2014 only if they are already in existence. Unlike the House bill, the administration plan wouldn’t allow insurance companies to offer such plans to new customers.
The policy also would require insurance companies, if they extend such policies, to notify these customers that alternative policies might be available under the government insurance exchange and to tell them what benefits they wouldn’t be getting if they remained with their current plans.
The Democratic official said he believed the proposal would satisfy many Democrats who have been considering voting for the House bill.
A week ago, the liberal line on forcibly moving healthy people into more expensive plans on the exchanges was that their old plans were garbage compared to the new “comprehensive” ObamaCare-approved plans. They’re paying more, sure, but they’re getting more. Who wouldn’t want that? Here’s Obama acknowledging that, yeah, sometimes the most luxurious option isn’t the best one for the middle class. There’s a reason not everyone drives a Cadillac. Especially when the “Cadillacs” being sold on the exchange turn out to be no better than the Hondas people used to drive.
Update: Another reminder from Team Klein that today’s “fix” is something that was already available:
Most insurers have the option to "early renew" policies in December 2013, to last through Nov. 2014 under current law.
— Sarah Kliff (@sarahkliff) November 14, 2013
Insurers could have extended canceled plans for another year, but why would they? That would only complicate the new risk pool created by ObamaCare. Go figure that they need more revenue from the healthy to pay for preexisting conditions for the sick. The scapegoats are unhappy:
More from insurance industry source on WH O-care fix: "This is a joke – doesn't change anything but allow WH to blame insurance companies"
— John Harwood (@JohnJHarwood) November 14, 2013
Update: Here’s how desperate The One is to pass the buck:
interesting time for Obama to go to war w/ insurance companies. he must not need their help on http://t.co/rRWEG5g3Zq workarounds
— Conn Carroll (@conncarroll) November 14, 2013
Right. Remember, “Plan B” for the Healthcare.gov’s failure is to have people enroll directly on insurance companies’ individual websites. The feds will need the companies’ cooperation on that in guesstimating taxpayer subsidies, as well as on helping to fix Healthcare.gov so that the “back end” transmission of applicant data works. Obama’s screwing them with today’s announcement despite all that. But then, insurers warned the White House long before the federal website launched last month that it was risk of problems and the White House reassured them that everything was fine. They’ve been screwed by Obama’s incompetence and buck-passing all year long.