Don’t cry for these people, needless to say. They helped make ObamaCare happen. They were only too happy to see healthy young adults forced into buying their product by a constitutionally dubious mandate and to gouge healthy middle-class people with the new, more expensive plans required by the exchanges. They wouldn’t have partnered with the White House if this wasn’t a payday for them. But now they’re screwed twice over: Not only are Democrats trying to make them the fall guy for the cancellations, they’re looking at their payday melting down into red ink if they take Obama’s “advice” and re-create the old risk pool. Oh well. No honor among thieves.
They’re not going to take it lying down. An industry insider told BuzzFeed earlier of the White House’s “fix,” “This doesn’t change anything other than force insurers to be the political flack jackets for the administration.” And within the past hour, the president of America’s Health Insurance Plans released this statement:
“Making sure consumers have secure, affordable coverage is health plans’ top priority. The only reason consumers are getting notices about their current coverage changing is because the ACA requires all policies to cover a broad range of benefits that go beyond what many people choose to purchase today.
“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. Premiums have already been set for next year based on an assumption of when consumers will be transitioning to the new marketplace. If now fewer younger and healthier people choose to purchase coverage in the exchange, premiums will increase and there will be fewer choices for consumers. Additional steps must be taken to stabilize the marketplace and mitigate the adverse impact on consumers.”
There’s a reason un-canceling canceled plans started out as a GOP idea: It’s really bad for ObamaCare. There’s no policy upside for Democrats in supporting the idea; it’s pure political CYA, and insanely myopic in that it’ll only compound their political problem next year if AHIP’s prediction is borne out and exchange plans become even more expensive. In that sense, it’s an analog to HHS refusing to bring in outside contractors who might have improved Healthcare.gov before launch for fear that Republicans might subpoena them and the White House would be politically embarrassed. The political embarrassment they’ve suffered from the website meltdown is far worse than the embarrassment they would have suffered from discouraging chatter before the site debuted. How strange that Democrats would have taken such a long view of health-care reform in 2010, risking their majority in the House to pass it, when now they wet their pants at the first signs of trouble during implementation.
A little more insurance-industry anger from David Steinberg at PJM:
This [is] a new insanity.
I do not know how the insurance carriers and federal government are going to be dealing with this. First, many states require a 60-day notice of a change in plan or a cancellation. It’s November 15! How can they comply with this new element of federal law, and with their state laws?
Second, do they really think carriers are going to be willing to recreate the old plans, while also being mandated to offer the new ones that comply with the exchanges? I have a large number of clients, small to medium-sized businesses, who would much rather renew their old policies on 12/1 than sign up with the newly mandated exchange policies. Everyone is going to want the old ones! You really expect the insurance carriers to willingly deal with the financial loss and legal headaches of switching back?
It is going to be very difficult for carriers to honor this.
Of course it’s going to be difficult. That’s the point — the White House’s hope, I’m sure, is that most insurers will ignore the “fix” and refuse to un-cancel any plans. That would eliminate the extra risk of adverse selection to the exchanges and give O the scapegoat he’s looking for. If insurers really want to screw him, they’ll scramble to do just what he said: Un-cancel the plans, just as the president requested, and then lay the resulting premium hikes next fall squarely at his feet, just in time for the midterms. Problem is, that means heavy losses for them potentially; as much as they’d like to retaliate, it might end up as a kamikaze mission. On the other hand, my pal Karl is urging me and other righties on Twitter not to get caught up too much in a war between Obama and insurers. That’s exactly what the White House wants, after all. The more O can make it look like he’s on the side of the people, with the big bad insurance companies treating him as a sworn enemy, the more it’ll mitigate the political damage he’s suffered from this. He’s the guy who got reelected last year as a champion of the middle class, remember? He’d never do something that roundly screws middle-income people in the name of propping up some new Rube-Goldberg-esque redistribution scheme he’s concocted. That’s the insurers’ fault.
That reminds me, though: I think Rich Lowry cut to the heart of why this has become so politically dangerous to O. It’s harder for Democrats to hide the football this time.
The great engine of the welfare state is the hidden cost. Usually, the costs of a new program or regulation are too diffuse or distant to matter much politically in comparison to the promise of a direct benefit. This time, the costs aren’t hidden. They are immediate and concrete in the canceled policies and the higher premiums, and they are making the politics of Obamacare toxic.
When otherwise loyal Democrats are on TV seething over being lied to about what’s obviously a subsidization scheme, you know things have gone badly wrong with the usual M.O. On that note, via RCP, here’s Obama architect Jon Gruber lamenting the “discrimination” faced by sick people in the insurance industry compared to what the “genetic lottery winners” face. O could have sold ObamaCare that way, as a straightforward attempt to generate extra revenue that’ll be used to help the sick pay for their care; in a sane world, rather than push some mind-bendingly complicated insurance-industry rework, he would have simply proposed a tax to cover the cost of that care and let the political chips fall as they may. But, Obama being Obama, he wanted to sell his program as something that everyone would benefit from, even the suckers who are now being gouged in order to provide the dollars to pay for preexisting conditions. That’s how “if you like your plan, you can keep your plan” happened. And that’s why today’s “fix” is happening now.
Update: A new statement from the National Association of Insurance Commissioners. Iceberg, straight ahead:
For three years, state insurance regulators have been working to adapt to the Affordable Care Act in a way that best meets the needs of consumers in each state. We have been particularly concerned about the way the reforms would impact premiums, the solvency of insurance companies, and the overall health of the marketplace. The NAIC has been clear from the beginning that allowing insurers to have different rules for different policies would be detrimental to the overall market and result in higher premiums.
We have expressed these concerns with the Administration and are concerned by the President’s announcement today that the federal government would use its “enforcement discretion” to delay enforcement of the ACA’s market reforms in 2014 for plans that are currently in effect. 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.
In addition, it is unclear how, as a practical matter, the changes proposed today by the President can be put into effect. In many states, cancellation notices have already gone out to policyholders and rates and plans have already been approved for 2014. Changing the rules through administrative action at this late date creates uncertainty and may not address the underlying issues. We look forward to learning more details of this policy change and about how the administration proposes that regulators and insurers make this work for all consumers.