Old and busted: “Those cancellations are exactly what we want, because people can sign up for better plans now!” New hotness: Those catastrophic plans we derided for the last five years will work just fine for all of you who got screwed by the Affordable Care Act. Or, hey, don’t bother getting insurance at all!
The Obama administration on Thursday night significantly relaxed the rules of the federal health-care law for millions of consumers whose individual insurance policies have been canceled, saying they can buy bare-bones plans or entirely avoid a requirement that most Americans have health coverage.
The surprise announcement, days before the Dec. 23 deadline for people to choose plans that will begin Jan. 1, triggered an immediate backlash from the health insurance industry and raised fairness questions about a law intended to promote affordable and comprehensive coverage on a widespread basis.
The only “surprise” about this announcement is that they made it on Thursday night, rather than opt for the Friday-night news dump strategy. Maybe they figured that the media had more or less gone home for the holiday already. Maybe HHS is taking the day off today, and needed to release it yesterday. They managed to take most of the days off in the 42-month web portal development cycle, so what’s another day, eh?
Otherwise, this has been the inevitable end game with the Monday deadline for January 1 coverage rapidly approaching. The front end of Healthcare.gov is still a disaster, and the back end largely non-existent. Millions of people have had their existing insurance cancelled already, and only a few hundred thousand had managed to sign up — and many of those are Medicaid enrollments. Even if the White House wanted to pretend that all is well, their utter incompetence and dishonesty would have had the effect of making millions of people income-tax cheats.
But can these people actually buy the kind of catastrophic insurance that made sense for most of them before ObamaCare? ObamaCare, don’t forget, forced insurers to drop those kinds of plans in favor of ridiculously comprehensive plans that most healthy people won’t need anyway. And what happens if the millions of newly-uninsured sign up for such low-cost policies — or don’t bother to sign up at all? The insurance industry just found out what it’s like under the Obama bus:
It is unclear how many people facing canceled policies will choose no insurance, bare-bones coverage or a plan through the insurance exchanges that meet new federal standards. But the prospect that healthy people with canceled insurance might opt out of the new health plans set off immediate alarm among insurance industry leaders, who already have been worried whether enough people who are inexpensive to cover will sign up.
“This latest rule change could cause significant instability in the marketplace and lead to further confusion and disruption for consumers,” said Karen Ignagni, president of America’s Health Insurance Plans, the industry’s main trade group.
No kidding. And don’t forget that without the mandate, they don’t have to buy insurance at all. If they actually need coverage during the year, they can buy it then, thanks to the must-cover mandate in ObamaCare. Now the uninsured won’t even have to pay a fine to make that cost-saving choice.
The White House figures that this will only impact less than 500,000 people:
It wasn’t immediately clear how many people might qualify under such an arrangement. The administration said Thursday that it believed that fewer than 500,000 people whose existing coverage had been terminated hadn’t yet enrolled in another plan.
First, that number is highly suspect. More than 5 million cancellations went out, and only 365,000 people total had signed up in federal and state exchanges at the beginning of December. But there’s another reason to be skeptical, too. No one has really enrolled until they make their first premium payment, assuming that the insurers even have the correct enrollee information in the first place. This is an open call for all of those who are getting shafted by high premiums to simply decide not to send that payment at all and take advantage of the amnesty. That choice will be most likely made by the healthiest (and youngest) “enrollees” who don’t need comprehensive coverage — leaving the less healthy and older to seriously disrupt the risk pools.
It’s a complete catastrophe. And the insurers aren’t going to have catastrophic coverage for this debacle.
Update: Daniel Halper makes a good point about this “hardship” exemption:
Today, the administration agreed with a group of senators, led by Mark Warner of Virginia, who argued that having your insurance plan canceled counted as “an unexpected natural or human-caused event.” For these people, in other words, Obamacare itself is the hardship. You can read HHS Secretary Kathleen Sebelius’ full letter here. HHS’s formal guidance is here.
Yes, ObamaCare is the hardship. However, there’s another point, too. The individual mandate is a tax, don’t forget, and not just a regulatory requirement. Is there a “hardship exemption” from paying taxes on an individual basis? Not one of which I’m aware, and certainly not without Congressional action.
Update: Dang it, I thought I was being original with the headline, but Jeryl Bier beat me to it last night:
— Jeryl Bier (@JerylBier) December 20, 2013
You gotta get up early to beat Jeryl … or stay up really late.