December 21, 2013

MEGAN MCARDLE: ObamaCare Initiates Self-Destruction Sequence.

Yesterday, we had a more official announcement from the administration: Anyone who has had their policies cancelled will be exempt from the individual mandate next year. The administration is also allowing those people to buy catastrophic plans, even if they’re over 30.

What to make of these two statements? On the one hand, the administration is trying to minimize the number of people who have been affected by cancellations, and on the other hand, it is unveiling a fix to the problem of cancellations. And these are not minor changes.

As Seth Chandler points out, Healthcare.gov doesn’t even let you see catastrophic plans if you’re more than 30 years old. Is now the time to be making technical changes to the website?

As Avik Roy points out, catastrophic plans aren’t that much cheaper than the so-called bronze plans. They’re also not eligible for subsidies. This is unlikely to be much help to folks who lost insurance; all it does is introduce some much-unneeded complexity to Healthcare.gov.

As Aaron Carroll points out, insurers calculated their premiums for this year on the expectation that the relatively healthy folks who were already buying insurance would be buying policies on the exchange. The insurers are not happy about this latest change, and Carroll predicts that they will ask the administration to push more money to them through the “risk corridors.” I think he’s right.

As Ezra Klein points out, this seriously undermines the political viability of the individual mandate: “But this puts the administration on some very difficult-to-defend ground. Normally, the individual mandate applies to anyone who can purchase qualifying insurance for less than 8 percent of their income. Either that threshold is right or it’s wrong. But it’s hard to argue that it’s right for the currently uninsured but wrong for people whose plans were canceled … Put more simply, Republicans will immediately begin calling for the uninsured to get this same exemption. What will the Obama administration say in response? Why are people whose plans were canceled more deserving of help than people who couldn’t afford a plan in the first place?”

Arnold Kling put it more pithily: “Obama Repeals Obamacare.”

I’d ask this: What do you do for an encore? Will the administration force these folks to buy insurance next year? Or will they keep allowing special exceptions rather than take the political heat for changing health insurance that people liked?

As I said before, by June they’ll be adopting Rand Paul’s healthcare plan and calling it a “modification” to ObamaCare.

Plus: “However incoherent these fixes may seem, they send two messages, loud and clear. The first is that although liberal pundits may think that the law is a done deal, impossible to repeal, the administration does not believe that.”

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