The Corner

Obamacare Enrollment Begins with Dems Trying to Defend the Indefensible

The Hill and other outlets are reporting that Democrats are joining forces to defend the “Affordable” Care Act after the announcement of sharp increases in premiums for the 2017 enrollment period that opened Tuesday. Here’s White House press secretary Josh Earnest:

Earnest pointed out that the vast majority of ObamaCare enrollees receive financial assistance to shield them from the effect of such increases, and he said about 7 in 10 people will still be able to find a plan for $75 or less a month.

“That’s a good deal, that’s about the cost of a cell phone bill,” Earnest said, according to a pool report. “That’s a particularly good deal when you consider what options were available to individuals on the individual market before” ObamaCare.

And here is Bill Clinton:

Bill Clinton sounded a similar theme during a campaign stop on behalf of his wife in North Carolina.

“All of the headlines are full of the stories that average premiums are going up 22 percent, but the subheadline is if you’re in the healthcare program, your subsidies will go up too, so the increases won’t be as much,” he said.

He noted that 20 million people have gained coverage under the law.

Never mind that a few weeks ago, Clinton was on the campaign trail calling Obamacare “the craziest thing in the world.”

Either way, Earnest and Clinton are making the same arguments made by the head of the Council of Economic Advisors, Jason Furman, which I debunked yesterday. Sure, most people enrolled at this point are heavily subsidized and while, if their premiums go up, they may have to change plans, they won’t face the financial burden of the premium hike because taxpayers will pick up the tab. This is not only a sign of how careless these guys are about the burden put on taxpayers but it’s also a disgraceful admission that all the talk about “cheaper” premiums and “cheaper” health care used to sell the law before it passed were misleading at best.

In addition, insurers are leaving the exchanges faster than we can say “death spiral.” In the last two years, over 40 percent of insurers have exited the exchanges. And, as I noted yesterday, a third of counties only have one insurer. In short: Consumers’ choice in health care is going down.

To illustrating the terrible spiral faced by consumers, insurers, and taxpayers, the Wall Street Journal looked at what is happening in Arizona.

When Affordable Care Act insurance marketplaces launched in fall 2013, Arizona seemed like a success. Eight insurers competed to sign up consumers, offering a wide variety of plans and some of the lowest premiums in the country.

Today, with ACA enrollment starting Nov. 1, Arizonans will find in most counties only one insurer selling exchange plans for 2017. Premiums for some plans will be more than double this year, some of the biggest increases in the nation. Only last-minute maneuvering prevented one Arizona county from becoming the first in the nation to have no exchange insurers at all.

The story is great in a sad sort of way because it is a good case study in government over-promising and failing to deliver. It is also a story about the unhealthy marriage of government and corporate interests. In this case, the insurance industry thought it could make a lot of money on the backs of captive consumers forced to buy insurance products to avoid paying a penalty. When that didn’t work out — because healthy and young consumers didn’t show up and profit margins began to erode — insurers thought they could shift the burden onto taxpayers through the risk-corridors program. But that didn’t work as planned, either.

On Oct. 1, 2015, insurers got a huge blow: Federal regulators announced the risk-corridor program, which many companies expected to limit their financial risk, would pay out only 12.6% of the amount expected. The program hadn’t taken in enough money from successful insurers to cover the requests of those with significant losses.

In fact, Congress voted twice to make sure that the Center for Medicare and Medicaid Services wouldn’t use taxpayers money to bailout insurers beyond what the law had planned and what it was collecting from insurers. Faced with crushed expectations, financial losses, and assuming that healthy consumers continue to bail on the exchanges, insurers have a simple choice: They can continue to lose a lot of money by staying in the exchanges or they can continue to exit.

This has to be the Obama administration’s worst nightmare (even though it was very predictable). As such, the administration is trying hard to convince consumers to buy insurance or prevent an even bigger insurer exodus by bailing the companies out against the will of Congress.

Over at Forbes, Andy Koenig explains:

Last month, Center for Medicare and Medicaid Services officials clarified that they believe these risk-corridor payments are ‘an obligation of the United States government,’ and went as far as stating that they are ‘open to discussing the resolution of those claims,’ suggesting that the administration is open to settling the cases behind closed doors — and potentially hand over billions of taxpayer dollars to insurers rather than defending itself in court.

How would the Obama administration dole out the unapproved funds to insurers? Through the Department of Treasury’s little-known “Judgment Fund,” a 1950s provision used to pay for legal claims against the United States. The fund has no limits on how much it can pay out to plaintiffs. All signs point toward the administration moving forward with a large settlement payment, which could have the added bonus of appeasing insurers, keeping some on the exchanges, and thus propping up the failing health-care law.

But that’s illegal, he writes, “[a]s a 1998 letter by the Government Accountability Office made explicit. . . . Even the Obama administration’s own Department of Justice rejects the White House’s moves — it’s actually fighting the insurers in federal courts. The fact is that under the law, the White House either has to wait until some insurers make larger profits that would cover other insurers’ loses or wait until Congress approves funding the insurance companies.”

Now, this will not stop the administration from trying — especially since the president is exiting the scene next January. The upcoming budget battle, the Omnibus, and the lame-duck congressional session will provide great opportunities for Mr. Obama to try to pass his insurers’ bailout and save his signature law. Yet, this is terrible policy that perpetuates so much of what is wrong with the health-care law. Taxpayers shouldn’t have to transfer billions of dollars to the insurance industry, period.


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