LOLbamacare: Administration extends health plan fix for two years

Nearly an hour after the House of Representatives passed a measure to ostensibly delay enforcement of the individual mandate, the Centers for Medicare and Medicaid Services announced that it would extend the “administrative fix” for canceled health plans through 2016 as well as extended the open enrollment period for 2015:

The Obama administration announced Wednesday it will let people with health insurance plans that don’t comply with the Affordable Care Act standard to keep them into 2017 if their states permit.

The administration also extended Obamacare’s open enrollment for next year by one month—it now will run from Nov. 15, 2014, until Feb. 15, 2015—and gave insurers more financial help in dealing with costs from new ACA enrollees.

The announced rule changes also simplified the paperwork that larger employers will have to file when the rule obliging them to offer affordable health insurance to workers begins in 2015.
Under the new rule, people who maintain those plans, and who renew them as late as Oct. 1, 2016, will be able to keep them until as late as 2017. The administration said the rule will apply to anyone currently in a non-compliant small-group plan, as well as an individual plan, and said it would be up to individual states to allow the extension, and to what extent.

These latest changes to Obamacare have less to do with implementing Obamacare, and more to do with helping Democrats maintain control of the Senate in this year’s mid-term elections, the prospect of which is getting dimmer by the day.

Now, this change doesn’t apply uniformly across the country. State insurance commissioners will decide whether or not to participate, meaning that many people will still receive cancellations letters from their insurer because of Obamacare’s narrowly written “grandfathered plan” regulations. The original administrative fix, for example, spared only 500,000 people from losing their health plans, a small number out of the nearly 5 million who saw their policies canceled.

The changes to the law, however, didn’t stop at the extension of the administrative fix and the 2015 open enrollment period. There were also adjustments to the Obamacare bailout provision, as Philip Klein notes.

In an attempt to limit the disruption to the insurance industry that would be caused by the move, HHS also announced that the “risk corridor” program (which has been described as a “bailout” to insurers) would be further modified to funnel more money to insurers in states affected by the change.

The extent to which this will effect taxpayers remains to be seen, and whether the White House accounted for the change in its $5.5 billion budget request for the insurer bailout is unknown. But it’s a key question now that the administration has practically removed hundreds of thousands of people from the insurance market. It’s a point that Klein raises:

Looking at the issue more broadly, the change undermines a central rationale for Obama’s health care law.

Obama and his allies long-defended the outlawing of certain health care plans, arguing that they were substandard. And they argued that depriving people of the ability to purchase such plans was essential to making the health care law work. If young and healthy people can purchase cheap health insurance with fewer benefits, they argue, it would make coverage more expensive for older and sicker Americans.

Now, not only is Obama saying that these legacy plans can remain, but he’s saying they can stay alive for three years longer than intended. If they can be extended for three years, the new rules may never fully go into effect (unless Obama will allow a wave of cancellations in October 2016, just before the presidential election). And maintaining these plans will further drive up the cost of insurance on the exchanges.

It’s hard to see how this two-tiered health care system can sustain itself. Obama is saying that some individuals get to keep their old, cheaper and better health insurance plans. But other individuals are forced into an increasingly expensive insurance market.

Basically, Obamacare has been gutted to a great extent. Of course, it’s not dead. Taxpayer-backed bailouts will keep insurers around for as long as the money is guaranteed. But we’re looking at a scenario that much like payment cuts to Medicare. Yes, the cuts are scheduled, but they never come to fruition because it’s politically unpopular. That’s what the health plans canceled by Obamacare have become.

So when October 2016 rolls around, just before a presidential election, expect the administration to do this again. Nevermind that Obamacare is “the law,” as we’ve been told endlessly. Politics is all that matters.

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