November 15, 2013
Enjoy Chicken Pox? Youíll Love Shingles!

A retired insurance executive sends along this discouraging analysis of Obamaís latest cave-in to the insurance companies and the Republicans or ó as the president no doubt considers it ó to reality.

I am appalled that Obamaís advisers, in trying to get him out of the jam created by promising that the insurance companies would not kick anyone off a plan they liked, allowed him to go out there and promise to fix the problem by allowing the insurance companies to continue offering the old plans for another year.

Itís repeating the exact flaw from the first pledge: in order for the promises to work, both rely on totally voluntary actions by the insurance companies! No government official can force an insurer to offer any policy, ever. There are some options governmental players can use to force insurers to comply with certain requirements once they do decide to issue a policy or a plan ó but that presumes that the carriers have decided to offer a plan. No one ó President, governor or insurance commissioner ó can force an insurer to offer a plan in the first instance.

So Obamaís political advisers are telling him to fix a problem caused by implicitly promising that insurers will continue to offer certain plans by ... promising that insurers will resume offering certain plans.

It is not unlikely that the insurers will behave that way ó it is impossible. Even if they wanted to do this, which they donít (who wants the headache and expense of offering a bunch of small little plans for a dwindling number of policyholders when the business is shifting to a new and much larger arena with much better economies of scale) they actually physically, logistically and legally canít do it.

Issuing a health care plan is incredibly difficult, cumbersome and complex. Launching a new plan requires at least a year of hard work and prep ó designing the benefit, underwriting it, getting the actuarial work done, getting the state rate filing process accomplished including time for a rate appeal, making sure the right network of providers are in place ... on and on it goes.

Bottom line is that the fix the president just promised canít happen until January 2015, even if it was a good idea, which it is not. And even if the issuers wanted to keep offering the old plans, which they donít ó something we know to a 100% certainty because they dropped these grandfathered plans even though they already are currently free to continue to offer these plans.

Obamacare allowed the issuers to continue the grandfathered plans ó and the plans chose to drop them instead. So now the president announces that the plans can re-offer the grandfathered plans they were already allowed to offer, but chose to drop. Which the plans not just wonít, but canít do, making the president again look like a liar.

This is political malpractice ó the president has just made another healthcare promise on which he cannot deliver. And just like the first time, he appears to have no clue that he is doing so. This is going to be like chickenpox ó the first time, it is bad enough. But when the same virus comes back the second time you get shingles, a much worse and more painful condition.

Itís almost as if no Democrat has ever worked in the health insurance industry or at least the White House isnít checking with them. Youíd think the political and communications advisers would want to get the policy part right to make sure the reality would match the message, but they appear oblivious.

So weird. Potentially devastating and entirely self-inflicted.



Posted by Jerome Doolittle at November 15, 2013 12:10 PM
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