Lake Erie Conservative

thoughtful discussion(s) about issue(s)

… The Continuing Problems with the Latest ObamaCrapCare change …

Posted by paulfromwloh on Monday,December 23rd,2013

.. the other night , the Obama administration announced two big changes to Obamacare, for people who have seen their individual-market insurance plans canceled this year: They won’t have to comply with the individual mandate, meaning they can go without insurance and not pay the not-insubstantial fine (1 percent of their income, basically); and if they do want insurance, they can buy a “catastrophic” plan on the exchanges, which is cheaper than any of the other plans available.

..  This will make life easier , in the short term , for some number of Americans — millions have seen their plans canceled, though the White House suggests just half a million of them still haven’t signed up for new plans, gotten Medicaid, or enrolled in an exchange plan .

.. These changes could be “a very big problem for the law.” Here is why :

[-] It violates our system of governance — Presidents are not dictators . They do not have the right to make these kind of changes at a whim .

[-] Lack of Congressional Oversight — for the obvious reasons .

[-] The way it treats the uninsured is unfair and potentially politically unsustainable.

Now that the law’s requirements have been significantly weakened for people who did have insurance in 2013, it’s going to be hard to stand by them for people who didn’t.

In theory, this does reflect one of the principles of how the health-insurance market works: Under pre-Obamacare law, consumers were guaranteed the right to renew their policies (with some cost changes, of course). If you were uninsured, on the other hand, you could have a much harder time finding coverage on the individual market — which is why, for instance, people are allowed to maintain employer coverage for a certain period of time after leaving a job. But Obamacare is supposed to be about expanding coverage, and the inequities this change will create can be really problematic.

More simply, of course, people whose plans have been canceled will now simply be able to go without insurance, period, at no cost. People who were uninsured in 2012, meanwhile, will have to pay the penalty — for now.

[-] The way it treats almost everyone else is unfair: The exchanges have been open for three months now, and plenty of Americans have committed to buy plans that were either more expensive than they want or that they didn’t want in the first place. If people whose individual-market plans have been canceled knew this was going to happen, they could have waited to buy a catastrophic plan, or bought one on the non-exchange market, or gone without insurance entirely.

[-] Adverse selection  — This means people who might otherwise buy insurance — say, middle-aged people with potentially looming health problems — can go without it, and if a serious health-care problem comes up, they can just enroll in the exchanges. Not everyone will take advantage of this, but at the margins, it allows people who might otherwise worry about catastrophic health-care bills to stay out of the exchanges, and ensures some flow of very sick, expensive people into them. Health insurance companies can’t change their rates to take account of that, and that information disconnect is what economists call “adverse selection.” On the margins, it will raise premiums for healthy people on the exchanges, and make insurers more wary of participating.

[-] More adverse selection — The catastrophic plans that the Obama administration will now let anyone with a canceled plan enroll in this year were originally set up for anyone under the age of 30, and for anyone who gets a hardship exemption. Now, they’ll see an influx of people who had their plans canceled, a group that insurers don’t actually know much about — and for whom they haven’t set their premiums.

[-] Even more adverse selection  — The catastrophic-insurance markets and the rest of the exchanges are separate risk pools. Within a given state, individual insurers don’t really have to worry about enrolling too many unhealthy or old people, because of something implemented by Obamacare called “risk adjustment.”

Insurers with sicker groups get compensated, basically, by insurers that enrolled healthier groups. In all, the insurers want healthier and bigger pools, because they can take on more financial risk safely and make more money, but risk adjustment means it’s lot less useful for them to try to attract healthy enrollees.

The Obama administration is now going to alter the parameters for the catastrophic pool and the normal exchange pool in every state. If their claim that just half a million people who are getting hardship exemptions is accurate, this will also just be a marginal adjustment — but still one the insurance industry wasn’t expecting.

[-] Increased confusion — While there are a lot of groups communicating directly with actual enrollees, the information trickling down from a CMS report, filtered through the media, is not going to help Americans make informed decisions about their plans.

Related articles

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

 
%d bloggers like this: