The Biden folks have released what they claim is a “fix” for the alleged “family glitch” this week (if you don’t know what the family glitch is, look it up). Somehow, the folks at IRS and Treasury got themselves a new set of tea leaves, because the statute hasn’t changed in many years, since 2010. In fact, Team Obama made it a top priority for eight years and came to the conclusion that they couldn’t do it.

They were right; the statute is clear. Absent Congressional action, the fix they are proposing is fanciful legalese at best and an outright lie & deception (imagine that, from Washington D.C.) at worst.

Let’s be specific – in spite of media hyperventilation and Democrat machinations, the so-called “family glitch” isn’t a glitch at all. The statute, passed as part of the laughingly named Affordable Care Act, in the middle of the night, as a budget reconciliation bill, with no severability clause and with absolutely no Republican support, was the direct result of political consideration and policy restraint, designed to keep the costs below the threshold supported by Obama, as well as avoiding any disruption to the employer-based healthcare system (that would come later). In short, its language could not be more succinct.

That has now all been thrown out by artful lawyering by political appointees at IRS and Treasury, opening a veritable can of worms (not to mention class actions law suits .. “were you denied subsidized health insurance? Call Dewey Cheatam & Howe today!”) and an explosion of federal spending in the forms of large premium tax credits, made larger by the American Rescue Plan Act.

But apparently everyone thinks this is such a great deal! Sure, lets shrink the employer based healthcare system, moving 20 million or more people from employer-based coverage to taxpayer-subsidized health insurance on marketplace exchanges, continue to expand the federal deficit (hey, no shortages there, right?) and strengthen government subsidized healthcare at the expense of private health insurance. Cool, eh? Why, even my lobbying group, NAHU, apparently is all in on this (while ignoring the fact that the very benefit professionals who pay them dues to keep their lights on are endangered to extinction with this illegal expansion of Obamacare).

The Obama Administration concluded that the fix could not be accomplished without legislation from Congress. This fact, coupled with this new “rule”, means that the IRS and Treasury are now thoroughly politicized (if that fact doesn’t worry you.. well, more tea anyone?). The “firewall” has been breached.

What firewall, you say? The ACA has a provision that prevents employees from choosing between premium tax credits to buy an subsidized plan and enrolling in their employers’ private health insurance. This was designed to prevent people from ditching their employer-based health insurance in favor of a subsidized marketplace exchange policy (read: massively cheaper). This isn’t about maintaining and strengthening the healthcare system as we know it, far from it! It’s clear that the vast majority of people who gain eligibility under this scheme already have access to employer-based coverage. Do the math.

You can’t beat a government with a printing press. Insurance companies love getting free money from the government, because it never stops. Displacing private spending with government subsidies will greatly expand federal spending and actually lead to making life more complicated for folks who can’t understand their health insurance now – wait until they have two or more policies to deal with. Strengthening the public sector at the expense of the private sector has been a long, time-honored tradition with Democrats back to the age of FDR – and Democrats have made no secret that their end game is the destruction of health insurance companies in favor of a single payor government system. Right, Jan?

But I’m the canary in the coal mine. Step right up, folks, the gravy trains a-rollin’.

It should not come as a surprise that the current Administration would eventually take steps to abolish or otherwise destroy Health Savings Accounts, which were legalized as part of a deal made with Democrats to get Medicare Part D passed in 2003. Democrats universally loathe the idea that you could be allowed to buy a higher deductible plan and then contribute to your own “medical IRA” to pay for out-of-pockets expenses; they’d prefer you give the whole amount to an insurer (and the government) so they can re-distribute it properly. They’ve been gunning for HSA’s for at least a decade.

Health Savings Accounts represent one of the fastest, if not the fastest, growth segment in health insurance, and this has not gone un-noticed by the one-size-fits-all redistributive Left. I originally thought HSA’s would be eliminated via executive fiat in 2012; lo and behold, the gov needed the flexibility of HSA’s to keep Obamacare from foundering on the rocks. Those days are long gone; since the ACA has weathered all of the legal arguments thrown against it, regulators at CMS feel confident that they can now move against HSA’s, at least as far as the exchanges are concerned (and this will have repercussions in the private, individual market as well, I’m sure).

For 2017, it is highly unlikely that HSA’s of any kind will be legal or allowable on any exchange, federally-facilitated or state-run. The reason for this has to do with the ever-increasing deductibles required by the ACA, as well as new requirements, laid out in a brand-new, 500+ page rule, that mandate that some services other than preventive care must now be covered under the deductible. Since, under HSA plans, services other than preventive can’t be covered until the deductible is met, this means that, in CMS’ convoluted reasoning, that HSA’s are simply not relevant to their ever-higher deductibles and ever-expanding “first-dollar” coverage requirements. Its – yes – death by executive fiat, via a thousand cuts.

What is of course not talked about yet is the idea that, as soon as the new benefit plan design become mandated, old plans will bo longer be ACA-qualified: in essence, the elimination of ALL HSA-qualified plans in own fell swoop, and also the elimination of ANY HSA deductions into your HSA account.

Based on this, HSA’s as a valid health coverage will disappear by 2018. Who are you voting for in 2016?

Here’s an article that explains it more fully – go here.

Along with the collapse of Colorado’s own co-op, Colorado HealthOP, comes new that about 50% of the non-profit health coops spawned as a result of Obamacare have failed, with the loss of $2.4B in loan money. See the story here.

Insurers have a new year of data and the numbers don’t look good. It will be very interesting to see what Colorado rate increases will look like. As usual, for those on subsidized policies, this news will be met with a shrug, since the “I got mine” mentality is in full swing. For everyone else, the rates increases, be they at the low end (say, 10%)) or the high end (say, upwards of 30%) will be particularly savage, and, as individual rates continue to resemble small group rates in all states, it will be increasingly difficult to absorb rate increases coupled with assessment fees to Connect For Health Colorado (on ALL health policies sold in Colorado), along with high deductible and out-of-pocket costs. The reaction I get from people with families looking for individual plans run the gamut, with “HOW MUCH??” and simply stunned silence the most common refrains.

More Health Insurers Seek Double Digit Premium Increases

Everyone’s aware of the infamous Gruber statements. Let me paraphrase: you’re all idiots – now pay me. Followed by an evil laugh.

Well, apparently the good folks over at your local Marketplace Exchange, Connect For Health Colorado, fell for it, too. (And I should add a disclaimer that I am a Certified Agent for C4H-CO, and I’m just reporting the facts, Ma’am).

Those pesky folks over at the Independence Institute, namely their Health Care Policy Center, run by the charming Linda Gorman, an economist by trade and a member of Colorado’s Blue Ribbon Commission on Health Care Reform, have published a very interesting piece of analysis titled “How The Gruber Model Failed In Colorado”. You can get it here. The bottom line assessment? “Its poor predictions will likely end up costing taxpayers billions of dollars”.

This is so good it’s hard to summarize: I think anyone interested in the effects of Obamacare and the lackeys employed to carry the water for it should read it, re-read it, and pass it around. And, if you know anyone in Vermont …

Seriously, I’m no economics expert (or anything else for that matter, except maybe good coffee) but for really educated folks to buy into Grubers’ predictions, as highlighted in the reports and analysis he got paid to do by Colorado, simply defies explanation. I mean, really: the idea that, based on somebody’s economic assumption, there wouldn’t be an almost catastrophic rise in Medicaid recipients is simply stunning. As almost anyone who’s been around the health insurance business knows, it isn’t the folks who can buy insurance and don’t who are the biggest problem, it’s the folks who couldn’t buy coverage at all due to extreme low-income or other circumstances. The farcical notion that many more people would get subsidies rather than a short trip to Medicaid says that no one really understood what’s been happening in Colorado. Guess what? Medicaid enrollment has exceeded expectations by 40%, and drastically overestimated the demand for subsidized policies (one-sixth of what was projected!).

Even unsubsidized policies are far below Grubers’ prediction. (And here’s an odd thing: why would anyone buy an unsubsidized policy through the exchange, anyway? There is simply no reason to buy an unsubsidized individual policy through the Marketplace exchange – something that comes as a surprise to many people.)

The reports go on to (laughably) suggest that insurance premiums would go down “27% on average”, with people buying richer plans because of their tax savings. I should send this to my clients who have a) had their premiums rise at least that much, b) their deductibles go up dramatically, and c) their networks and doctor choices curtailed, seeing that the market switched from PPO to HMO offerings almost immediately. That would be all of them, by the way.

The list of predictions that were wrong read like a list of Obama statements, that’s for sure! Like Grubers’ predictions that people in grandfathered plans would “see no change in their premiums”. Actual fact: they rose by 37% by early 2014.

And we won’t even talk about how Obamacare wrecked a high-risk pool that was actually cheaper than it’s replacement (and rather than an HMO was an any willing provider network, to boot).

This, my friends, is what happens when common sense and good public policy get replaced with redistributive ideology: any argument works so long as it advances the political objective, true or not. And the essence of Obamacare wasn’t about “health insurance reform”, it was about federalizing the health insurance markets prior to a move to a single-payor system (that’s my own opinion, by the way, not anything taken from the report).

Best take-away quote: “.. substituting tax subsidies for direct payment does not affect the cost of health insurance”. Of course not.

Download it, have a good read, and discuss it. Better yet, share it with every Colorado legislator you can! Good job, Ms. Gorman!

Anyone who thinks that Obamacare was about heath care, let alone health insurance, reform, is either, at best, naive, or, at worst, completely ignorant of the law – and how it was passed, and the consequences of its various statutes, regulations, rulings, and case law.

Obamacare was about social engineering – much the same way that Common Core is about federal control of school curriculum, to advance certain, shall we say, dogmas that most of us would find puzzling, if not outright outrageous.

But I digress. I’ve often told those that will listen that I could have written a health insurance reform proposal that would have numbered a few hundred pages and would have been much, much more successful than the Affordable Care Act, assuming that its goal was the elimination of the chronically un-insured in these United States, probably around twenty million or so (it wasn’t, re-read paragraph two). And, it certainly would not have cost upwards of $2T plus that we see now (and that figure will continue to rise, even as deductibles rise, and out-of-pocket expenses rise, and so on). And I would agree that reform was needed, just not what we got.

James C. Capretta is one of a handful of experts who I respect wholeheartedly with regards health care reform policy. In this article he lays out the compelling reason why we need, not just to repeal, but replace Obamacare: because reform is just as needed now, as it was in 2009.

Here is the most interesting conclusion that Mr. Capretta advances: “The hard work of developing a credible alternative plan has already been mostly completed. What is needed now is a spirit of practical compromise among key Republican policymakers. It will not be possible to beat an incumbent program — the ACA — with abstractions, good intentions, and idealistic concepts. What’s needed is a workable, politically viable plan, one that voters can see for themselves would work better than the ACA.” 

As the article points out, the hard work for a viable replacement for the ACA has already been done. It will take Republicans to advocate for it in a forceful way. And, if SCOTUS disallows the payment of premium credits in the federal exchanges, as detailed in King v. Burwell, then Republicans won’t need to wait for control of the White House to replace Obamacare.

Much ballyhooed numbers on Obamacare enrollment are released, with an estimated six million enrolling, but  Rep. Marsha Blackburn (R-Tenn.) expresses doubt. See the video and news story here.

Even in the face of such strong enrollment numbers, though, which have not yet been verified, the government has moved to extend the open-enrollment date for federal exchanges, even after a Centers for Medicare and Medicaid (CMS) spokesperson said “we don’t actually have the statutory authority to extend the open enrollment period in 2014.” And of course, she is correct, as reported here. The open enrollment period is specifically defined by statute, and isn’t open to interpretation. Forbes has an interesting article on it, go here.

What this means is that people who have recently fallen ill or are otherwise uncovered will be able to get health insurance beyond the open-enrollment date, something that troubles insurers, some of whom are predicting double digit rate increases for 2015.

UPDATE: Here are three little questions about those Obamacare enrollment numbers.

“The Associated Press-GfK survey finds that [only] 26 percent of Americans support the Affordable Care Act.” Read the full story here.

Compare this to the Kaiser Health Tracking Poll from April 2013, found here. One quote from the piece shows slippage in support over the last year: “This month, 35 percent report a favorable view, 40 percent an unfavorable view…”

The American Action Forum has published an eye-opening research paper on The Affordable Care Act, and comes to the conclusion that “regulatory costs exceed benefits by twofold”.

From the opening summary: “From a regulatory perspective, the law has imposed more than $27.2 billion in total private sector costs, $8 billion in unfunded state burdens, and more than 159 million paperwork hours on local governments and affected entities. What’s more troubling, the law has generated just $2.6 billion in annualized benefits, compared to $6.8 billion in annualized costs. In other words, the ACA has imposed 2.5 times more costs than it has produced in benefits.”

For the full report, including the employment impact and policy implications for small business, go here.

From The Foundry at The Heritage Network, originally published in National Review Online: “One excepted benefit that  .. could serve as a lifeboat if the voyage of the SS Obamacare goes as badly as we have feared: indemnity insurance .. anything that constitutes an excepted benefit under HIPAA remains exempt from all of Obamacare’s new insurance regulations.”

Well, not anymore it seems, as Centers for Medicare and Medicaid Services (CMS) unilaterally decided to amend HIPAA to suit themselves. As usual, the government drops its bad news on Friday evenings when we are all exhausted from working to pay for our health insurance premiums (or not, if you’ve decided to pay the penalty). Go here for the full story.

And this quote is especially telling: “.. this latest proposed Obamacare regulation, like many before it, isn’t even a remotely plausible interpretation of the statutes that Congress actually passed. This latest “fix” is worth fighting — both to keep the lifeboats intact during this dangerous voyage and to keep a sound insurance option in place for the long haul.”

One of the most frequently cited ways that insurers used to reduce costs for the new ACA compliant plans was to engineer new provider networks, primarily HMOs, with lower fee-for-service reimbursements, referred to as  per-member-per-month arrangements. These networks were reviewed at the state level for adequacy. In fact, the new networks were substantially smaller, as many physicians opted out of them due to reduced reimbursement rates or capitation necessitated by the new rules carriers must operate under due to Obamacare.

The federal government decided that this won’t be acceptable for 2015.  In a draft letter from the Centers for Medicare & Medicaid Services (CMS), insurers will be required to include 30% of “essential community providers” (ESPs) in their network.

ESPs serve primarily “underserved” populations, including community health centers, HIV/AIDS clinics, family planning clinics and children’s hospitals. From Insurance Business: “In order to assure this is the case, CMS plans to establish its own process for certifying adequate provider networks, cutting out the role of state regulators.” See the full story here.

CMS, in 2013, stated that, for 2014, they would “rely on state analyses and recommendations when the state has the authority and means to assess issuer network adequacy.” See the full text of the earlier guidance here. For 2015, with CMS expanding the ESP requirement,this will likely increase premiums further, due to an increase in network providers mandated by CMS.

Other changes that will have a cost effect on premiums include changes to stand-alone dental plans, and a new requirement to pay for a 30-day supply of any new drug that a new customer had been taking—even if the drug would not have ordinarily been covered.  For the complete 2015 guidance, go here.

Insurers are rightfully concerned about the new requirements, with America’s Health Insurance Plans (AHIP) already expressing its disapproval in comments filed on the proposed changes. Insurers have just weeks to present their changes, with some deadlines beginning in April of 2014.

Health industry officials say Obamacare premiums will likely double, and in some cases triple, in certain parts of the country next year, in part because of the flawed launch of the new exchange marketplaces mandated under The Affordable Care Act. Announcements of rate hikes could come within months, with the most significant cause of rate increases related to projections about the number of young healthy individuals and families who would enroll, which have proved to be way off the mark.

The projection of double or triple-rate increases fly in the face of remarks by HHS Secretary Kathleen Sebelius, who said that “the [rate] increases are far less significant than what they were prior to the Affordable Care Act,” in testimony before the House Ways and Means Committee last week. This runs contrary to the way health insurance industry officials view rates in the coming year.

We’ve all been hearing about how younger people aren’t signing up in anywhere near the numbers needed or projected. So, why are young people important? In a phrase: adverse selection, which means, far more older, sicker people than younger, healthier ones in the pool, which creates – wait for it – higher claims costs that are almost certainly not supportable by current premiums.

In an article entitled Young Invincibles Are Killing Obamacare, Megan McArdle writes for Bloomberg View: “Young healthy people, and a lot of them, are needed to keep the market stable and premiums low. As we head into the final few weeks, we have a pretty good idea of how many young healthy people there will be, and the answer is: a whole lot fewer than the healthcare wonks were expecting.” Unfortunately, her dismissive analysis of the coming “death spiral” of Obamacare was flawed, even if she herself says that reaching anywhere near projections for young enrollees is “not likely”. Surprisingly, she concludes: “… it is now probably impossible to achieve the demographic mix that the government has been forecasting. And keeping it from happening may well prove very expensive for the federal government”.

How expensive? In his blog ACA Death Spiral, Seth Chandler, a law professor at the University of Houston Law Center, writes a thoughtful analysis on the Kaiser Family Foundation study of early, low enrollment of younger participants in Obamacare, cited by Ms. McArdle in her column. His analysis and conclusion is posted as “The Kaiser analysis of ACA enrollment has problems”, and is a good, if somewhat dense, analysis of how difficult it is to make an accurate projection, and why the projected deficit in insurer profits isn’t 2.4%, as projected by KFF, but “rather a  [deficit] projection of 4.5%”.

This is not good news for premiums, or for costs related to Obamacare that the federal government will be required to pay for. With rates for 2015 likely being filed this summer for approval prior to 2014 open enrollment, it increasingly looks like Obamacare will be the election year issue of 2014.