Obamacare’s Mugged by Reality Moment
Nov 4, 2013, Vol. 19, No. 08 • By JAMES C. CAPRETTA
The problem will be most acute for the 19 million or so people who today purchase individual insurance. As industry expert Robert Laszewski has pointed out, today’s individual market is essentially being replaced by the Obamacare exchanges. Some insurance plans can continue operating into 2014 outside of the exchanges if they are “grandfathered.” But very few insurance plans qualify for grandfathered status under Obamacare because the rules strictly prohibit even the smallest changes in coverage or cost-sharing. Consequently, about 16 million Americans will shortly find out that they can’t keep the plans they have.
If and when they are able to look at their options on healthcare.gov or the state-built websites, many of these consumers will quickly become unhappy. The Obama administration keeps arguing that the premiums in the exchanges are below what was expected, based on hypothetical estimates produced by the Congressional Budget Office four years ago. But that’s not the relevant comparison. Consumers want to know how much more they are going to pay for insurance under Obamacare in 2014 than what the pre-Obamacare market offers them today.
The Heritage Foundation has carefully looked at this question, and the results are dismaying. The average family of four will see a premium increase in the exchanges of 10 to 30 percent. For young Americans, the premium hikes are much worse, in the range of 50 to 100 percent or more for 27-year-olds, including 71 percent in Nebraska and 170 percent in Georgia. And these premiums are for plans with, in most cases, very high deductibles, ranging from $2,000 to $2,500 for the so-called silver plans and $4,000 or more for bronze plans.
These realities of Obamacare are surfacing in the days following the GOP’s failed effort to roll back, or at least delay, Obamacare as part of the government shutdown/debt ceiling fight. Ironically, the fallout from that failure is leading some conservatives to recommend pulling back from another Obamacare showdown during the next round of budget wrangling, at the end of this year or in early January 2014. They would like to broaden the focus to spending restraint and modest entitlement reforms, of which Obamacare changes might be one element.
An important subtext of this shift in emphasis is that Obamacare’s woes are now so pronounced and intractable that perhaps the best tactic for the GOP is to stand back and let its flaws speak for themselves. There are many conservatives who fully expect the law to collapse under its own immense weight, and who anticipate that they will reap the political benefits of that collapse in 2014 no matter what they do now. So why engage in another politically risky showdown with the president?
Certainly the GOP shouldn’t repeat the mistaken tactics of the last month. But there’s every reason to continue making a delay of the individual mandate the GOP’s top priority in the negotiations with the Obama administration and Senate Democrats over the coming months.
For one thing, there will never be a better time to press the case for a mandate delay. The rollout of Obamacare is a complete mess. The voters can see for themselves that enrollment in Obamacare is a completely unreasonable proposition at this stage, even with the administration’s recent announcement that it will treat any enrollment commitments made before April 1 as satisfying the coverage requirement (previously, the cut-off to avoid the uninsured tax was thought to be mid-February, because the law allows for three months without coverage in a calendar year and it can take several weeks to go from an enrollment submission to initiation of insurance coverage). It should be obvious that the system for determining subsidy amounts for households has not been tested nearly enough to ensure it is reliable and will not waste billions in taxpayer dollars. It will be impossible for the administration to continue its defense of the individual mandate if these conditions remain substantially unchanged through the end of 2013.
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