Tag Archives: Affordable Care Act

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How the Obama administration made sure people would lose their health insurance plans

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Patrick Brennan writes about the NBC News bombshell from yesterday in National Review.

Excerpt:

Much derision has been heaped on White House consigliere Valerie Jarrett’s tweet last night claiming that “nothing in #Obamacare forces people out of their health plans. No change is required unless insurance companies change existing plans” (this is a “FACT,” she noted). There’s actually a little truth to this: Technically, individual-market plans that qualify as grandfathered under the ACA are exempt from some of the law’s mandates — but not all of them. As long as a grandfathered plan doesn’t undergo any “material changes” after 2010, it maintains its grandfathered status, so it doesn’t have to comply with all of the law’s strictures as other plans do on January 1. But those material changes are almost inevitable, in large part because of the ACA — meaning the plan will almost certainly be cancelled and replaced with a more expensive, more comprehensive plan, as millions of Americans have learned and continued to learn.

[…][I]nsurers lose their grandfathered status if the plan has a “material change,” defined as “(1) eliminating or significantly reducing benefits; (2) raising co-insurance or co-payments; (3) raising deductibles; (4) reducing employer contributions; or, (5) adding or increasing an annual limit”…

That sounds benign. It sounds as if the plans are only going to be changed if insurance companies change them voluntarily. But actually insurance companies must change the plans because Obamacare requires the plans to cover a whole bunch of new treatments, which will necessarily cause the plans to go up in price, as well.

Look:

[E]ven these grandfathered plans have to comply with a number of new Obamacare mandates — most important, they have to accept applicants regardless of preexisting conditions and charge them the same premiums, they have to eliminate lifetime-spending caps, and they have to cover dependents under 26 for free (there are other rules that also apply to grandfathered group plans). How, exactly, were health insurers supposed to comply with these new mandates (and other ways the ACA is raising costs) without raising customers’ contributions in the way the law says means losing grandfathered status? Obviously, they could have chosen to raise premiums alone — but then customers who don’t expect to use a lot of health care would switch to plans with higher cost-sharing, which ruins an insurance pool.

In other words, the ACA did make it incredibly hard for insurers to continue plans for the millions of Americans who don’t want comprehensive insurance — financially, insurers almost certainly had to adjust them in such a way that they would lose grandfathered status. This isn’t “normal turnover in the insurance market” (though there is plenty of that in the individual market); there’s a reason why an exceptionally large number of Americans are getting cancellation notices this fall.

The bottom line is that you can’t keep the vast majority of the plans that Obama said you could keep. He lied.

Newsbusters notes that the major news networks are not even talking about the NBC News revelation that the Obama administration knew that their law would cause people to lose their health care. I think the lesson here is that Democrats lie, and the media, being an extension of the Democrat Party, covers up for them. That’s why the Democrats win elections.

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NBC News: “Obama administration knew millions could not keep their health insurance”

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That’s the headline from the actual NBC News article.

Here’s the thesis:

President Obama repeatedly assured Americans that after the Affordable Care Act became law, people who liked their health insurance would be able to keep it. But millions of Americans are getting or are about to get cancellation letters for their health insurance under Obamacare, say experts, and the Obama administration has known that for at least three years.

According to recent estimates, it’s 16 million. A previous estimate by CBO in 2012 said that up to 20 million could lose their employer-based coverage.

More:

Four sources deeply involved in the Affordable Care Act tell NBC News that 50 to 75 percent of the 14 million consumers who buy their insurance individually can expect to receive a “cancellation” letter or the equivalent over the next year because their existing policies don’t meet the standards mandated by the new health care law. One expert predicts that number could reach as high as 80 percent. And all say that many of those forced to buy pricier new policies will experience “sticker shock.”

None of this should come as a shock to the Obama administration. The law states that policies in effect as of March 23, 2010 will be “grandfathered,” meaning consumers can keep those policies even though they don’t meet requirements of the new health care law. But the Department of Health and Human Services then wrote regulations that narrowed that provision, by saying that if any part of a policy was significantly changed since that date — the deductible, co-pay, or benefits, for example — the policy would not be grandfathered.

It’s the HHS regulations that make it so that “grandfathered” plans cannot be kept – and those are part of this Obamacare project, because the regulations deal with how it is implemented.

More:

Buried in Obamacare regulations from July 2010 is an estimate that because of normal turnover in the individual insurance market, “40 to 67 percent” of customers will not be able to keep their policy. And because many policies will have been changed since the key date, “the percentage of individual market policies losing grandfather status in a given year exceeds the 40 to 67 percent range.”

That means the administration knew that more than 40 to 67 percent of those in the individual market would not be able to keep their plans, even if they liked them.

Yet President Obama, who had promised in 2009, “if you like your health plan, you will be able to keep your health plan,” was still saying in 2012, “If [you] already have health insurance, you will keep your health insurance.”

“This says that when they made the promise, they knew half the people in this market outright couldn’t keep what they had and then they wrote the rules so that others couldn’t make it either,” said  Robert Laszewski, of Health Policy and Strategy Associates, a consultant who works for health industry firms. Laszewski estimates that 80 percent of those in the individual market will not be able to keep their current policies and will have to buy insurance that meets requirements of the new law, which generally requires a richer package of benefits than most policies today.

Obama knew, when he said those famous words, that they were not true. He’s a liar.

News

New study finds that many young people won’t purchase Obamacare plans

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Dr. David Hogberg of the National Center for Public Policy Research explains how Obamacare affects young people.

Here’s the executive summary:

If the ObamaCare health insurance exchanges are to function properly, it is crucial that a substantial number of people ages 18-34 join them. This age group that is young and relatively healthy must purchase health insurance on the exchanges in order to “cross-subsidize” people who are older and sicker. Without the young and healthy, the exchanges will enter a “death spiral” where only the older and sicker participate and price of insurance premiums will increase precipitously.

This study finds that in 2014 many single people aged 18-34 who do not have children will have a substantial financial incentive to forego insurance on the exchanges and instead pay the individual mandate penalty of $95 or one percent of income. About 3.7 million of those ages 18-34 will be at least $500 better off if they forgo insurance and pay the penalty. More than 3 million will be $1,000 better off if they go the same route. This raises the likelihood that an insufficient number of young and healthy people will participate in the exchanges, thereby leading to a death spiral. 

The design of the plan is to tax younger, healthier people – especially men – in order to obtain the money to pay for heavy users of health care.

To compel the young and healthy to purchase insurance, the architects of ObamaCare included an individual mandate that requires individuals to either buy insurance or pay a penalty. The penalty, which increases over time, is whichever is greater: $95 or one percent of income in 2014, $325 or two percent of income in 2015, and $695 or 2.5 percent of income in 2016 and thereafter.

[…]The gender breakdown of these individuals presents another problem. Women have higher rates of health utilization than men, including more visits to primary-care physicians and greater use of diagnostic tests and emergency care. However, as Table 3 shows, roughly two-thirds of the individuals for whom insurance will cost at least $1,000 more than the fine are men.

Hard to see why any young man would have voted Democrat, and yet many did. Did they know that they were voting for a tax on themselves at a time when many of them are poorly educated by government-run schools, and can’t even find jobs? How can you pay a fine for not having health care when you don’t have a proper education or a proper job?

The net effect of the “community rating” and “guaranteed issue” provisions of Obamacare will be to raise health insurance premiums and force private companies to stop offering plans:

If the exchanges do not attract a sufficient number of people in the 18-34 age demographic, they will eventually enter an insurance “death spiral.” This occurs when the young and healthy drop out of the “insurance pool.” This leads to “adverse selection” in which insurance is only attractive to those who are generally older and sicker. If the insurance pool is comprised largely of people who are older and sicker, then insurance prices will rise to cover their costs. That rate increase causes even more young and healthy people drop their insurance, leaving the pools even older and sicker than before, and so on. Eventually, all but a few insurers will be forced to discontinue their business on the exchanges because they can no longer make a profit. Fewer insurers means less competition, resulting in even higher insurance premiums.

Community rating and guaranteed issue are catalysts for a death spiral. In its strictest form, community rating means that insurers must charge everyone the same premium, regardless of factors such as health status and age. Guaranteed issue means that an insurer must sell a policy to a consumer anytime.

Under ObamaCare, the exchanges use a modified version of both of these regulations. Its form of community rating doesn’t allow insurers to vary rates based on health status. It does allow, however, for modification of premiums if one smokes and to compensate for age (although in a more restricted manner than the market currently does). Regarding guaranteed issue, insurers must sell policies to all comers but (with a few exceptions) only during the annual open enrollment period from October to December.

Both of these rules give young and healthy people big incentives to forgo insurance coverage altogether. Community rating means young people have a reduced incentive to buy insurance since they will pay a premium that is above the market rate. Many who are currently purchasing insurance in the individual market, for example, will see a substantial premium increase if they switch to the exchange.

In a market without guaranteed issue, consumers run the risk of insurers not selling them policies when they get seriously ill. But that risk is largely gone under the exchanges. For instance, a young person who gets a serious illness in June only has to wait until October to sign up for insurance and then wait until January 1 of the next year to receive coverage. Combined, community rating and guaranteed issue give the young and healthy big incentives to forgo insurance until they are sick.

“Community rating” and “guaranteed issue” have actually already been tried at the state level. What happened then?

This:

The late Conrad Meier, then a senior fellow in health care policy for the Heartland Institute, examined what happened when these two regulations were instituted on the state level in his 2005 monograph “Destroying Insurance Markets.” In the early 1990s eight states — Kentucky, Maine, Massachusetts, New Hampshire, New Jersey, New York, Vermont and Washington — imposed community rating and guaranteed issue on their individual insurance markets. The result, according to Meier, was the above-described death spiral.

For example, in 1992 the New Jersey legislature adopted community rating and guaranteed issue rules for its individual insurance market with the passage of the “Individual Health Coverage Program.” The monthly premium for family coverage from Aetna rose from $769 in 1994 to $6,005 in 2005, a whopping increase of 683 percent! Other insurers saw similar increases.

Before the reforms began, there were about 28 insurers covering the New Jersey individual market. By 2007 there were only seven. According to the Census Bureau, the number of people in New Jersey’s individual market fell from about 998,000 in 1994 to 630,000 in 2005, a decline of 37 percent.

It’s pretty clear that Obamacare was designed to replicate this same effect that’s been observed in states at a national level, paving the way for single payer health care. What will Americans think when their healthcare is controlled by the kind of people who run USPS, Amtrak, the Bureau of Motor Vehicles and the IRS?