The PJ Tatler

Fate of Obamacare Firmly Tied to Website

Amid rising calls for gutting or repealing Obamacare outright, there is the growing realization that all the “fixes” in the world won’t get most people’s cancelled insurance policies back, won’t put their doctors back on the “approved” list, and won’t alter the premiums for Americans who have seen their insurance costs skyrocket.

Simply put, it’s too late.

For many months, insurance companies worked with state regulators to develop policies and costs in line with provisions in the Affordable Care Act. This is a laborious process that got a late start anyway because the regulations governing coverages for Obamacare policies were delayed for political reasons — the 2012 election. Insurance companies were forced to scramble in order to meet the October 1 deadline.

Now the companies are being told that all that work was for naught — that they must undo what took them so long to develop and revisit policies that have already been cancelled. Their problems are compounded by the actuarial nightmare that all their careful planning with regard to premium costs are likely to go up in smoke as the risk pool on the exchanges will be heavily skewed toward older, sicker participants — consumers who won’t have to pay more than healthy patients no matter how much they use the health care system.

Some states will apparently try to accommodate consumers and allow insurance companies the option of offering the same coverages and price of policies that were cancelled. But it is more likely that most insurance regualtors will not allow the change because of the chaos that will result from Obama’s “fix.”

USA Today reports:

The insurance industry is none too pleased that the onus is now on them to satisfy consumers who are outraged about their policies being canceled. Insurers and insurance commissioners don’t have to let people extend their plans, but “it will no longer be implementation of the law that is forcing them to buy a new plan,” the White House said in a fact sheet.

The head of the insurance industry’s trade group says extensions could lead to higher premiums, just the effect Obama’s announcement was intended to prevent.

“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,” Karen Ignagni, CEO of American’s Health Insurance Plans, said in a statement.

And Washington state’s insurance commissioner came out quickly declaring he won’t allow insurance companies to extend policies.

“In the interest of keeping the consumer protections we have enacted and ensuring that we keep health insurance costs down for all consumers, we are staying the course,” Commissioner Mike Kreidler said in a statement.

One thing’s for sure: No one really knows how this will play out.

“It is unclear how, as a practical matter, the changes proposed today by the president can be put into effect,” National Association of Insurance Commissioners President Jim Donelon said in a statement.

In Illinois, insurance broker Allen Wishner says the carriers have been meeting with the state insurance commissioner since the president’s recent apology for the canceled policies. That led brokers to think an extension was in the works.

Few of Wishner’s clients with canceled policies had chosen new plans yet. He’s still waiting for all the regulatory guidance he needs from the state before he switches anyone’s policy back to a pre-ACA policy and says he’ll be on a conference call Friday morning with Blue Cross Blue Shield.

If he’s allowed to offer extensions, Wishner says he will tell clients that “if you want what you had, knowing it’s shortcomings, that’s your individual right to do that.” Obama said insurers would be required to tell consumers that there are other options on the new exchanges for them.

Aetna said it supports efforts to let people keep their plans, but urged state regulators to allow it to update the company’s policies and get rate approval so it can get its plans “back on the market,” said spokesman Matthew Wiggin. Aetna, like AHIP, says the administration has to take action to stabilize the market to keep the move from backfiring and hurting consumers.

If the “fix” is simply going to cause more confusion and lead to chaos in the market, why on earth would the president order it?

Yuval Levin writes:

It is very hard to know how many people will actually be keeping their 2013 plans as a result of this new policy, and of course it is also still possible that Congress will pass legislation. But by allowing insurers to keep current customers in pre-Obamacare plans outside the exchanges, and by letting the insurers choose which plans to keep, the administration makes it more likely that the exchanges will not be able to achieve the volume and the risk-balance necessary for them to function. The White House understands that, of course, and the decision to take this step suggests that they think the risk is worth it not just because the immediate political danger is so great but also because the chances of the exchanges actually functioning anyway seem lower and lower all the time.

That, to my mind, is what Thursday’s announcement really signals, and why I think it’s so significant. Prior instances of reckless presidential expediency in the debate over Obamacare have involved efforts to get past some immediate obstacle and just get the system into place, in the hope that once it was working the criticisms would fade away. This latest instance, however, involves roughly the opposite impulse: to sacrifice the prospects of the new system itself in the service of avoiding immediate political pain and embarrassment and without some larger goal in view.

It suggests that the administration is giving up on the long game of doing what it takes to get the system into place and then trusting that the public will come around and is adopting instead the mentality of a political war of attrition, fought news cycle by news cycle, in which the goal is to survive and gain some momentary advantage rather than to achieve a large and well-defined objective. It suggests, in other words, that the administration is coming to the view that Obamacare as they have envisioned it is not really going to happen, that they don’t know quite what is going to happen (and no one else does either), and that they need above all to keep their coalition together and keep the public from abandoning them so they can regroup when the dust clears.

A deeply cynical move by the president done largely to shift blame for the incompetence of the rollout may end up destroying Obamacare before it even leaves the paddock. Obama has been reduced to a completely reactive posture where he is putting out political fires in the short term while trusting to chance that the effects of his shortsightedness won’t completely undo his pet program.

And his biggest leap of faith has to do with the website. Since most Americans who have had their policies cancelled will not be able to get them back, the website becomes critical to Obamacare’s survival. To prevent a catastrophic rise in premiums for most of those younger, healthy Americans whose individual policies need to be replaced by more expensive Obamacare policies, the subsidy — which can only be provided through the website — becomes the linchpin that will hold Obamacare together.

But it certainly doesn’t look at this point that the website will be ready by November 30 — the date it’s supposed to be working well enough so that most people using it can get insurance.

Jeff Zients, the Obama administration’s point man in the repair mission, joined the daily update for reporters Friday and said there is a top priority punch list – with “50 priority fixes as we enter this week.”

And that doesn’t count the lower priority fixes in what Zients called an “iterative process.”

In the conference call he said the system is getting better – but it’s not where it needs to be.

“We clearly need the system to perform reliably with fast response times at higher volumes,” he said.

No website, no subsidy. No subsidy, few healthy customers for the exchanges. And with the prospect of further confusion in the individual market as some states will allow insurance companies to offer cancelled plans and others won’t, the possibility of a messy, total meltdown for Obamacare becomes an administrative nightmare they may not wake up from.