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Critical Condition

NRO’s health-care blog.

Wreckage of Obamacare



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The Obama administration is refusing to accept the disastrous dynamics it has set into play with its monstrous health-overhaul law.

Instead of recognizing the economic reality of what they’ve done, officials are railing at the companies and industries that are responding in perfectly rational ways to the incentive structures they have set up.

But the result is an avalanche of bad news for consumers who surely will not “be able to keep the coverage” they have:

840,000 Midwesterners to lose policies. The Principal Group announced its plans to drop health insurance from its roster of products, which the New York Times calls “another sign of upheaval emerging among insurers as the new federal health law starts to take effect.”

The Iowa-based company provides coverage to about 840,000 people who receive their insurance through an employer.

Principal is just the latest in a long list of insurers to announce plans to drop coverage. It may have done so anyway, but Obamacare undoubtedly accelerated the decision.

30,000 retail workers at risk of losing coverage — and likely millions more. The Wall Street Journal broke the story about 30,000 hourly workers of McDonald’s who are likely losing their insurance “as the law ripples through the real world.”

The plans can’t meet the requirements of new regulations that HHS is writing to implement Obamacare. Because McDonald’s has relatively high employee turnover, it spends more on signing people up and other administrative costs than the new rules will allow (85 percent medical care and 15 percent administration).

The plans are called “mini-meds” and offer limited coverage, but it’s coverage that allows people to go to doctors, get their medicines, preventive care, etc. The new rules “would deny our people this current benefit that positively impacts their lives and protects their health,” McDonald’s said in a memo to HHS.

“There is not any issuer of limited benefit coverage that could meet the . . . standards,” said Neil Trautwein, vice president of the National Retail Federation. Millions more policies are at risk for employees of Home Depot, Disney, CVS, Staples, Blockbuster, etc., the Journal reports.

22,000 New England seniors can’t keep the coverage they have. Harvard Pilgrim announced this week that it is getting out of the market for Medicare Advantage in response to the massive cuts coming to this popular program.

These policies offer more comprehensive benefits than traditional Medicare to seniors, most of whom have modest incomes but who don’t have retiree coverage or can’t afford expensive Medigap policies.

Obamacare targets the most vulnerable seniors, dumping them back into the fee-for-service market where they are likely to have a very difficult time finding a physician to see them — all so the government can get private plans out of Medicare.

Why, we wonder, don’t they target AARP’s sweet deal for the private Medigap plans it markets, raking in hundreds of millions of dollars in royalties that it can use to lobby for Obamacare?

Child-only policies vanishing: HHS Secretary Kathleen Sebelius is angry with a number of insurers for announcing they plan to stop offering child-only insurance policies. But does she really not get it? If you tell companies they must sell to anyone who applies, even if the children are already sick, then it simply is not a sustainable insurance or business model.

And when one company in an area announces it plans to stop offering the policies, that creates instant adverse selection for other companies that remain in the market, setting off a cascade of dropped policies.

The cascade began just a few days after Obamacare was signed into law when AT&T, Caterpillar, John Deere, Verizon and several other large employers said the law would take a bite out of their future earnings. They were about to be hauled before the House of Representatives to explain their disloyalty until it became clear that they were likely to testify that they also are considering dropping employee coverage.

After that, we learned that retiree medical coverage was in jeopardy. Next, there was another casualty of Obamacare — the fledgling insurance company in Virginia, nHealth, that shut down after investors concluded it wasn’t possible to navigate the maze of new regulations and succeed.

And then Sebelius railed at insurance companies for explaining that the Sept. 23 mandates will indeed increase the cost of premiums for customers. Michael Barone called her response “gangster government.”

Do they not understand that the wreckage is the result of Obamacare? This is only the beginning as thousands and thousands more pages of regulation will further disrupt virtually every aspect of our health sector.

Instead of acknowledging where the fault lies, the administration continues to lash out at people who have the audacity to tell the truth.



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