Mimsy Were the Borogoves

Editorials: Where I rant to the wall about politics. And sometimes the wall rants back.

Fixes, fast and furious

Jerry Stratton, November 15, 2013

President Barack Obama threatens veto

H.R. 3350 is the closest to President Obama’s latest promise to allow continuing policies through 2014. His veto threat makes it difficult to trust his promise to not enforce the law against continuing them.

The executive summary is that Ron Johnson wants to ensure that individuals can keep their current plans and also add family members as necessary. Mary Landrieu wants to ensure that individuals can keep their current plans, but nobody else can get on. And Fred Upton wants to ensure that individuals can both keep their plan and that new individuals can continue buying plans, but only through 2014.

And President Obama hasn’t proposed any changes to the law, but he is crossing his fingers behind his back and telling insurers that even though these plans will remain illegal, he’ll wink at any transgressions and not enforce the law, no way, won’t you please break the law for me? You can tell he’s sincere because he’s promised to veto the law congress wants to pass to legalize what he’s asked insurers to do.

States and insurers are oddly not lining up for the President’s “fix”. If you think it’s confusing, imagine that you’re the state regulator having to take it into account, or that you’re a member of an insurance company’s legal staff tasked with giving advice to the board on whether they should or should not break the law at the President’s request.

Meanwhile, Marco Rubio has noticed that there’s an unlimited bailout for insurance companies hidden in Obamacare’s two thousand pages. His bill—not yet introduced—will remove that provision to ensure that taxpayers are not on the hook for lowballed insurance rates causing a bailout later. Maryland has already attempted to force insurance companies to lowball their rates; at least one, Aetna, chose to leave Maryland rather than join Maryland’s scam on taxpayers.

Since it’s the states that have set up exchanges that are most likely to try this scam, it’s important that Rubio’s bill not allow states to force insurance companies to make off-exchange policies pay for exchange policies. That is, the bill needs to make sure that insurance companies will have to charge enough on the exchanges to cover what they are going to pay out under the exchanges. Otherwise, the true cost of the exchanges will be hidden.

The “Promise” bills are all flawed in important ways, although the Upton bill is marginally the best. The other bills do little more than delay the day of reckoning. Upton’s bill fulfills the need of firewalling the failure—but only through 2014.

If insurance companies are going to be convinced to keep offering private insurance outside of the exchanges, it is absolutely necessary that they be allowed to sell it to new customers; otherwise, their pool of non-exchange policies dwindles every month and becomes more subject to the vagaries of chance.

I really think the new starting position for the GOP needs to be that people, insurance companies, and health care providers are allowed to opt out of the exchanges and the ACA regulations completely. Even to the point of not having insurance if they don’t want it. Make them affirmatively opt out—force them to make a choice—but let the ACA die by firewalling its failures rather than making “incorrect promises” to fix them. If I’m wrong and the exchanges, unlike the California exchanges, actually work, well, they’ll succeed in the marketplace, competing against non-exchange policies.

That plus, potentially, the Rubio bill, would quarantine Obamacare’s failures into a smaller and smaller problem, making it progressively easier to find a solution.

Obama, of course, has threatened to veto the Upton bill (and most likely the Landrieu and Johnson bills as well). To greater and lesser extents, these bills maintain a private insurance market outside of the exchanges. By existing alongside the exchanges they will make it obvious how bad of a deal Obamacare is. People will be able to compare private insurance to exchange insurance—prices, deductibles, and coverage.

But another lie in the making is that the Affordable Care Act calls for a bailout to insurance companies if payouts exceed payins under the exchanges. This allows, as Maryland tried to do, selling exchange policies under cost and bilking taxpayers for 80% of the rest. That is, the cost of policies won’t decrease, merely how they get paid for. That’s what Rubio’s bill fixes.

If Republicans are going to acquiesce to a fix, it should be that insurance companies can continue to sell non-exchange policies that are fully separate from the exchanges, and do not subsidize exchange policies. This will make the differences between the exchanges and private insurance obvious.

Here’s a summary of the current bills I’m aware of for enforcing President Obama’s promise:

The best solution is H.R. 3350’s open market combined with S.1642’s unlimited duration.

In response to Why we must not ration health care: Rationing health care means fewer cures.

  1. <- Firewall the failure
  2. Dark bureaucracy ->