WaPo: Get ready for the second wave of ObamaCare market disruptions
posted at 8:41 am on January 13, 2014 by Ed Morrissey
Over the weekend, it seems as though the national media finally figured out what most ObamaCare critics have predicted all along. On Friday night, the New York Times covered the mess made by the law’s incompetent implementation with providers and insurers, leaving consumers holding the bag. By Saturday night, the Washington Post had deduced that this was just the entrée. A much bigger wave of disruption will hit when the employer mandates go into effect for 2015 (via Instapundit):
When millions of health-insurance plans were canceled last fall, the Obama administration tried to be reassuring, saying the terminations affected only the small minority of Americans who bought individual policies.
But according to industry analysts, insurers and state regulators, the disruption will be far greater, potentially affecting millions of people who receive insurance through small employers by the end of 2014.
While some cancellation notices already have gone out, insurers say the bulk of the letters will be sent in October, shortly before the next open-enrollment period begins. The timing — right before the midterm elections — could be difficult for Democrats who are already fending off Republican attacks about the Affordable Care Act and its troubled rollout.
Golly, who could have predicted that? Well … we did. Politico even reported on it a month ago. Didn’t the Post try connecting the dots when HHS delayed the employer mandate to mid-November of this year rather than the first of October in a futile effort to delay the effect until after the midterms?
Oh, and by the way — we found out three months ago that HHS predicted this effect in 2010, shortly after the ObamaCare bill passed in Congress. Somewhere between 40% and 67% of people who have existing group insurance plans will lose them, which may mean as many as 93 million Americans will get thrown out of their existing insurance this fall, Avik Roy reported at the time for Forbes:
“The Departments’ mid-range estimate is that 66 percent of small employer plans and 45 percent of large employer plans will relinquish their grandfather status by the end of 2013,” wrote the administration on page 34552. All in all, more than half of employer-sponsored plans will lose their “grandfather status” and get canceled. According to the Congressional Budget Office, 156 million Americans—more than half the population—was covered by employer-sponsored insurance in 2013.
Another 25 million people, according to the CBO, have “nongroup and other” forms of insurance; that is to say, they participate in the market for individually-purchased insurance. In this market, the administration projected that “40 to 67 percent” of individually-purchased plans would lose their Obamacare-sanctioned “grandfather status” and get canceled, solely due to the fact that there is a high turnover of participants and insurance arrangements in this market. (Plans purchased after March 23, 2010 do not benefit from the “grandfather” clause.) The real turnover rate would be higher, because plans can lose their grandfather status for a number of other reasons.
How many people are exposed to these problems? 60 percent of Americans have private-sector health insurance—precisely the number that Jay Carney dismissed. As to the number of people facing cancellations, 51 percent of the employer-based market plus 53.5 percent of the non-group market (the middle of the administration’s range) amounts to 93 million Americans.
Even now, the Post is hedging its bets a bit:
The transformation of the small-group market is just one of the many ripple effects of the Affordable Care Act that will reshape the insurance industry in coming years. With millions of previously uninsured people getting coverage, the insurance industry’s business model is being upended, and that’s leading to changes involving all sorts of products, not just those sold through the online marketplaces to individuals.
The impact of cancellations in the small-group market is expected to be less dramatic than in the individual market, partly because a higher percentage of small-business policies provide more generous benefits. Still, the changes being made by the insurance industry are leaving some small-business owners confused and disillusioned about the law — whether it is directly to blame for the changes or not. …
Now that insurers aren’t able to charge more to people with preexisting conditions, companies with sicker workers may see lower premiums, while those with a healthier workforce may see higher premiums. Many small businesses are also discovering that the new plans have more restrictions on access to specific doctors, hospitals and prescription drugs.
The reason, said Robert Zirkelbach, a spokesman for America’s Health Insurance Plans, the industry’s main trade group, is that the law requires small businesses to purchase coverage that is more comprehensive than what some buy today, and that drives up costs.
In other words, the law is to blame for those cost hikes, thanks to the coverage mandates and price-fixing on riskier consumers. That will mean a lot of businesses opting to dump coverage — and a lot more Americans having to navigate the much more expensive individual exchanges for coverage, and probably a lot more of those opting to pay the fine and forget it. If you think this month is “disruption,” you ain’t seen nothing yet.