With just a few days to go before the deadline for Americans to purchase health insurance under Obamacare the Obama administration has again illegally changed the rules. They have announced that people can continue to purchase catastrophic health insurance plans and they will grant hardship exemptions from people who can’t afford insurance.
The Washington Post says the rules were “relaxed.”
The Obama administration on Thursday night significantly relaxed the rules of the federal health-care law for millions of consumers whose individual insurance policies have been canceled, saying they can buy bare-bones plans or entirely avoid a requirement that most Americans have health coverage.
The surprise announcement, days before the Dec. 23 deadline for people to choose plans that will begin Jan. 1, triggered an immediate backlash from the health insurance industry and raised fairness questions about a law intended to promote affordable and comprehensive coverage on a widespread basis.
This “relaxation” of the rules came after Democrats wrote a letter to the White House asking them to do something about this mess of a law.
I don’t know how the insurance companies are even go to be able to go along with this. They’ve already created the policies they’re selling in 2014, and they need to get approval from state insurance regulators. It’s the same problem they had when the administration changed the rule about keeping your health plan if you like it. Those plans no longer exist. And as William Teach pointed out, the catastrophic plans that do exist aren’t much more affordable than the bronze plans on the exchanges.
So, basically almost everyone who has seen their insurance cancelled. Hey, didn’t Obama and all their peeps say that all those cancelled plans were “substandard“? That was the talking point for a couple weeks. The catastrophic plans themselves are barely less than the bronze plans, and are not eligible for any subsidies. Furthermore, the Exchanges are mostly not set up to offer the plans. Of course, said catastrophic plans must still, according to the text of the ACA, include all the same stuff all the other plans offer. You can see the difference between the new “catastrophic” plans and Bronze plans here.
If you ask me, these rule changes will only speed up the “death spirals” that are expected to start happening in the states.
Update: Avik Roy weighed in on what these new rules mean. For one, it’s the first time the administration has admitted that Obamacare has driven up the cost of insurance. (So much for affordable care, eh?) He also explains the catastrophic plans offered under Obamacare:
The major difference between the regular Obamacare “bronze” plan and the Obamacare “catastrophic” plan is that the catastrophic plan covers three primary care visits prior to hitting the deductible. Which isn’t that much of a difference at all.
The catastrophic plans are supposed to be available only to those under 30, and those older than 30 who can’t find coverage for less than 8 percent of their income. And the catastrophic plans are not eligible for Obamacare’s premium support subsidies.
The upshot of all this is that the catastrophic plans aren’t that much cheaper than the regular Obamacare plans.
Now the insurance companies are left scrambling.
This decision by the administration—characterized by HHS Secretary Kathleen Sebelius as an attempt to provide “the smoothest possible transition” into the Obamacare era—has instead thrown the individual insurance market into chaos.
Here’s why. Insurers like Aetna and Humana, when they priced their plans for the Obamacare exchanges, did so by averaging the expected health spending by the people who would sign up for those plans. This new “hardship exemption” will encourage healthier individuals, whose expected spending would be low, from dropping out of the pool. As a result, average spending per enrollee on the exchanges is likely to be substantially higher than the insurers had planned for, forcing them to lose money on their policies.
“This latest rule change could cause significant instability in the marketplace and lead to further confusion and disruption for consumers,” said Karen Ignagni, president of AHIP, the insurer trade group, last night. That’s especially true if enterprising Americans generate fake cancellation letters, in order to avoid Obamacare’s individual mandate.
And the catastrophic plans, as I noted above, were priced by the insurers on the assumption that the vast majority of enrollees would be under the age of 30. If healthy but older people sign up for these plans, insurers will lose money on them, too. “Panic mode” is how insurance executives are describing the administration’s moves—but the insurers themselves are going to have to wonder about the financial viability of their exchange-based plans.
Yeah, back to that death spiral.
Read the whole thing. He also pointed out how these exemptions are only available to some people and that this is just a temporary delay.