Today, we’re going to tie together a number of threads that we’ve been following with respect to the implementation of the Patient Protection and Affordable Care Act (a.k.a. “Obamacare”), because they just all intersected each other.
First, let’s begin by filling in more of the map showing the number of individual health insurance policies that have been terminated as a direct result of the requirements of the Obamacare law, which we have now updated through all the information we have available through November 15, 2013:
An interactive version of this map is available here, which also includes the recently released data on the number of individuals who have placed a health insurance plan in the shopping cart in their state’s or the federal government’s health insurance “marketplace.” Through November 15, 2013, we now count 4,886,923 individuals, in the 33 states for which we have at least partial data, who have received notifications from their health insurance companies that their policies are either being cancelled or will not be renewed because of the requirements of the Obamacare law.
Because President Obama and many of the members of his political party had repeatedly promised the American people that “if you like your plan, you can keep your plan,” including after the law had been passed, having so many people lose the plans that they specifically shopped for and chose based on their actual individual needs has created a political crisis — one that destroys their credibility with the American people, which is putting them at risk of losing their political power.
Under intense pressure from the members of his political party serving in the U.S. Congress who fear for their political futures, President Obama was forced to pledge at his November 14, 2013 press conference that he would allow health insurers to continue offering health insurance plans that fail to meet the requirements of the Affordable Care Act law for another year.
That creates major problems — particularly for the health insurance companies who have partnered with the Obama administration in participating in the state and federal government-run health insurance exchanges. In addition to the massive logistical headache of trying to revamp all their business systems to support the President’s arbitrary choice to allow the older plans to continue to be available, they must face the negative impact to their business.
Here, because younger and healthier customers now have the option to continue their more affordable current coverage, the health insurers are at risk of being forced to operate at a loss — putting their businesses at risk of survival.
And to deal with that problem, it would appear that President Obama will provide the health insurers with a bailout. The Heritage Foundation’s Chris Jacobs explains:
As previously reported, the Administration’s latest plan waives many of the costly mandates included in Obamacare that are scheduled to take effect on January 1, 2014. The guidance says that these requirements will be waived—in clear violation of the text of the law—for one year for all plans renewed between January 1, 2014, and October 1, 2014. CMS also implies these waivers could be extended, stating it will “assess...whether to extend [the waivers] beyond the specified timeframe.”
However, the real story is buried in the final paragraph of the three-page memo, where CMS implies it is exploring options to provide additional payments to insurers to offset their losses from this Obamacare debacle:
Though this transitional policy was not anticipated by health insurance issuers when setting rates for 2014, the risk corridor program should help ameliorate unanticipated changes in premium revenue. We intend to explore ways to modify the risk corridor program final rules to provide additional assistance.
To translate into English: If some Americans can keep their pre-Obamacare health plans next year, they will not enroll in the Obamacare exchanges. That means the enrollees in the exchanges are likely to be sicker than insurers previously expected. Already this afternoon, the health insurance industry trade association has alleged the President’s “fix” could have a significant impact on premiums in the marketplace, for that very reason.
In the absence of a new budget passed by the U.S. Congress to specifically authorize such an expenditure, there is only one place from which President Obama can tap funds to support such a bailout of his crony corporate insurance companies: the Health Insurance Reform Implementation Fund (HIRIF), a.k.a. the “Obamacare Slush Fund.“
Previously, we estimated back on October 31, 2013 that this fund had just $189 million left of its original $1 billion total. In addition to being the Department of Health and Human Services’ source of funds for repairing the dysfunctional Healthcare.gov website and the deficient back-end IT systems that support it, HHS was also planning to spend $163 billion of that amount in the federal government’s current 2014 fiscal year on other things to make the implementation of Obamacare a success.
Since a very large portion of that money is now going to have to go to fix the Healthcare.gov website and to bail out health insurers at risk of going under as a result of President Obama’s arbitrary choice, that means that it is now even more likely that the implementation of Obamacare will fail.
Unless, that is, President Obama and the members of his political party in Congress, who are solely responsible for the passage of the Affordable Care Act in the first place, compromise with their political opposition on a new budget for the federal government.
That will provide an interesting dynamic to the debate as it develops, as both President Obama and the U.S. Congress will have to revisit the debt ceiling crisis in January 2014. Only this time, President Obama and the members of his party will have to compromise with their political opposition to avoid having Obamacare become an unmitigated failure at the same time the nation risks entering into a full or technical default on its obligations under their watch.