Yesterday’s confirmation that
the Obama administration will extend a previous administrative
tweak allowing individuals with non-compliant health plans to keep
their current coverage through 2016 reveals two things about the
White House and its approach to the health law.
The first is that President Obama is willing to deviate from the
statute of the legislation as much as he sees fit, regardless of
his legal authority to do so. The second is that the politics and
policy considerations surrounding the law are at odds—and that
right now, short-term political considerations are winning.
The legal authority for the delay is murky at best. When
President Obama announced the first fix back in November, the
administration was
vague about the basis of its power to alter the provision. This
time around, administration officials are
describing the move as a “transitional policy.” But what it
boils down to is that the executive branch is simply declining to
enforce part of the law, because it’s inconvenient for them to do
so.
This makes 20 alterations to the health law through some sort of
administrative action, according to a count
by the Galen Institute, many without obvious legal authority. That
the administration has gone forth with so many dubious tweaks
suggests that they do not feel bound by such considerations, or, at
the very least, that they are more worried about the law’s failures
than about the legal niceties.
The legal haziness of the latest fix raises some thorny issues
for insurers—among them, that they might be liable to be sued by
someone who stayed on a non-compliant plan. If someone stays on
their current plan, files a claim for coverage that is not covered
by that plan but is mandated under Obamacare, then what happens? As
Case Western Reserve law professor Jonathan Adler
told National Journal’s Sam Baker when this question
was raised last year, the law is still the law. The administration
may be declining to enforce the provision. But what would the
courts say?
Aside from the legal liability, insurers have other concerns.
When the initial tweak was announced, Karen Ignagni, the head of
the biggest insurer trade group, said that the change could
“destabilize the market and result in higher premiums for
consumers.” If people are allowed to stay on their old plans, then
they won’t be buying into the new coverage insurers are selling
through the exchanges. And since the people most likely to stay on
the old plans are healthier and cheaper, that leaves the exchanges
with a sicker, more expensive population than expected—and raises
the likelihood that premiums will rise as a result. Already,
insurer has reported that the composition of the exchanges is more
adverse than expected, and
cited last November’s tweak as a reason why.
The latest tweak further undermines the policy foundation of the
law. So why did he go through with it? Because the immediate
political problems were even greater.
When the Obama administration announced the tweak, it took the
unusual step of
noting a group of legislators it had consulted with in
determining the change. Oddly enough, the group consisted almost
entirely of Democrats in tight races taking fire for their support
of the unpopular health law. Asked whether the change was made in
response to political concerns, a senior administration official
told reporters that he could “understand why some folks could look
at it” that way,
according to The Hill, but then insisted that there
were no political considerations involved. None whatsoever.
The timeline tells another story. The first change was announced
in response the outcry that resulted when the public found out that
President Obama had repeatedly misled about the effects of his
health law. If you like your plan, you can keep your plan, he
promised over and over. Despite his promise, millions of people
found out that they could not. So Obama announced that in some
circumstances they could, at least for another year. But that
merely pushed off the wave of cancellations until an election
year—a big problem, especially with so many Democrats already
vulnerable because of their support for Obamacare. The newest
change extends the transition period beyond the next presidential
election.
In other words, Obama chose to postpone the law’s political
consequences at the expense of its policy design. The result will
be plans that are sicker, smaller, and likely more expensive for
years. Additional risk corridor funding included in the change may
mitigate some of the cost, but the fundamental problem remains: the
law is politically problematic for Democrats, but solving its
political difficulties requires exacerbating its policy problems.
Each time Obama chooses to fix the law this way, he only makes it
worse.
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