ObamaCare 'bends the cost curve' into a pretzel

Bad news comes in waves for ObamaCare, as each new provision of the badly-written law goes into effect and bursts like a pinata full of failure.  There’s already been plenty of “rate shock” from rising insurance premiums, under a regime that was supposed to lower premiums by a couple of thousand dollars per year.  National Journal warns that more calamity is yet to come, in an atmosphere of sheer chaos, as consumers try to understand what’s happening, and what they’re supposed to do about it:

If you like your Obamacare plan, you can keep it???but you might end up paying a whole lot more.

People who decide to stick with the coverage they’ve already gotten through Obamacare, rather than switching plans, are at risk for some of the biggest premium spikes anywhere in the system. And some people won’t even know their costs went up until they get a bill from the IRS.

Insurance plans generally raise their premiums every year, but those costs are just the tip of the iceberg for millions of Obamacare enrollees. A series of other, largely invisible factors will also push up many consumers’ premiums.

In some cases, even if an insurance company doesn’t raise its rates at all, its customers could still end up owing thousands of dollars more for their premiums. It’s all a byproduct of complicated technical changes triggered, ironically enough, by the law’s success at bolstering competition among insurers.

Many consumers will need to switch plans in order to keep their costs steady, but health care experts question how many people will do that. Switching plans can entail changing your doctor and adjusting to new out-of-pocket costs, never mind the fresh trek through The White House has already set up an auto-renewal process, making it easier to stick with the status quo.

And with so many behind-the-scenes factors at play, most people might not even know that they need to go back through just to keep the deal they already have.

“A lot of people aren’t going to understand this,” said Susan Pantely, an actuary at the Milliman consulting firm.

Who is going to understand any of this?  To repeat a theme from the discussion of President Obama’s “economic patriotism” campaign, confusion and deception are forms of compulsion.  The ideal package of health care reforms would eliminate layers of bureaucracy, move patients closer to their doctors, and give consumers a clear idea of what various benefits truly cost, so they can make rational decisions about what they want to buy.  This is the complete opposite of such an environment.

In fact, as many of the supposedly revolutionary provisions of ObamaCare fall by the wayside, what remains is starting to look more and more like the system which existed before the Affordable Care Act… except everything bad about it has been made worse.  We also got saddled with a huge Medicaid expansion that was not presented honestly to the American people, and Medicaid was not a robust program to begin with.

National Journal goes on to explain the “complex factors that make inertia so expensive to ObamaCare enrollees” at length.  The bottom line is that the whole system was rigged to delay the worst of the rate shocks until after dependency on the program had calcified enough to protect it from repeal.  Then everyone gets to discover just how “affordable” insurance has become, a discovery that will be even more eye-popping as the death spiral in some states pushes insurance companies into some combination of rate hikes and taxpayer bailouts to remain solvent.

The vast majority of enrollees don’t pay the full cost of their premiums???85 percent are getting financial help from the government. And many of those consumers will find that their subsidies don’t go as far next year, even for the same plans.

The size of each person’s subsidy is tied to a “benchmark” plan. Poorer consumers only have to spend a certain percentage of their income for that plan; the government pays the rest of the premium. If you choose a more expensive policy, you have to pay the difference on your own.

This year, about 3.4 million people picked the benchmark plan or went one option cheaper. But as those plans raise their rates and new options come to the market, they’ll often lose their benchmark status to cheaper competitors???and their customers will find themselves on the hook for a bigger share of their premiums.

“I would expect that probably the majority of 2014 enrollees are going to be impacted pretty substantially,” said Milliman analyst Paul Houchens.

And if the Halbig or King cases reach the Supreme Court and wipe out subsidies for federal exchange customers, that impact is going to be even more substantial, isn’t it?  That’s one reason I remain skeptical that the threat to ObamaCare’s subsidies will be allowed to prevail, no matter how patently obvious it becomes that those subsidies are illegal.  The judicial case against those subsidies is a total slam dunk – the Affordable Care Act states, without any real ambiguity, that only state exchange customers get subsidies, and there is mounting evidence that the people who wrote that provision knew exactly what they were doing, although some of the other power-hungry boobs who drafted the Affordable Care Act might not have been looped in.

But that’s the depressing part of all this: if the Halbig threat shuts down subsidies for federal exchange customers, there’s every reason to think the ObamaCare subsidy trap will snap shut exactly as its designers intended.  85 percent of the customers in 36 states suddenly get massive insurance hikes because their subsidies went away, even as ObamaCare rate shock is blasting their insurance premiums through the stratosphere?  Imagine what that one-two punch of artificially inflated prices and manufactured middle-class dependency will do to the political landscape in those 36 states.

If you’re thinking Obama’s billion-dollar boondoggle of a website will keep insurance customers as up-to-date as, say, does… well, okay, that’s an absurd rhetorical question, because nobody expects much from  But millions of people are about to find out just how bad it is, as the IRS gets involved in a catastrophe predicted by ObamaCare critics for years:

As cheaper plans come into the marketplace, millions of consumers will see the cost of keeping their plan rise. But they might not know it. isn’t able to automatically recalculate the subsidies existing consumers are eligible for. So, while the dollar value of your financial assistance drops, you can only find out that’s happening by going back into the system and asking for a redetermination as part of the shopping process.

Consumers who auto-renew their policies will get the same dollar value of subsidies they got last year???even though changes in the marketplace all but guarantee that will no longer be the right subsidy amount for millions of people.

“That’s the totally crazy part,” Pearson said. “They’re basically going to send them what they know to be the wrong subsidy.”

The IRS will eventually figure out how much financial assistance you should have received, and will reconcile the difference on your taxes. If you should have gotten a bigger subsidy, the government will issue you a tax credit. If your subsidy was too big, which would be the case if you keep your plan and lower-cost options come to the market, you’ll owe the IRS money.

Does anyone remember President Obama warning us that we’d have to return to battle with his crap website every frigging year, eternally shopping around to ensure we’re not getting chewed up by some combination of rising premiums and declining subsidies?  No, on the contrary, he promised a buttery-smooth experience to rival the finest online shopping emporiums.

So most people will end up paying more for insurance, and devoting a good portion of their time to double-checking their ObamaCare plans to ensure they’re not getting rooked – a process that sounds about as appealing as filing taxes every year.  The subsidy system might be about to detonate and plunge over half the country into a health-care panic.  But don’t worry, the true goals of ObamaCare are being met: the cost of insurance is going up, making more of the middle class dependent on taxpayer support for life’s necessities, and Obama’s Little Partners in the insurance industry will be just fine.  After years of deception and lies, their bailout is starting to take shape, and the Weekly Standard says House Oversight expects it to be well over a billion dollars:

The Oversight Committee found that, while insurers expected that only one-sixth of their exchange enrollment would come from people over 55 years of age, fully one-quarter of their actual enrollees fit that category.  Relatedly, the report finds that insurers and insurance co-ops now expect a third more money from the risk-corridor bailout than they did on October 1, 2013.  That bailout, Oversight reports, is now likely to be in the ballpark of $1 billion.  To put that into perspective, the year before Obama took office, the ten largest health insurers??? total profits were only $8 billion ??? combined. 

The Oversight report adds, ???It is impossible to know how much of the increase in the industries??? expectation for the size of the bailouts is the result of a less healthy exchange population than originally anticipated and how much of the increase is from the Administration???s rule changes to make the bailouts more generous; however, both factors are likely significant.???  Moreover, both relate to Obama???s lawless suspension of the portion of the legislation that was causing him the most political fallout.

So, what do Americans think of bailing out insurance companies on their own dime?  Recent polling by McLaughlin & Associates, commissioned by the 2017 Project, asked, ???If private insurance companies lose money selling health insurance under Obamacare, should taxpayers help cover their losses????  By a tally of 81 to 10 percent, respondents rejected that notion.

That’s nice, but if the middle class has been permanently subdued through ObamaCare dependency, it won’t matter what 81 percent of them think about insurance company bailouts.  Shut down the “risk corridor” cash pipeline, and the ObamaCare death spiral – too many expensive customers, not enough young and healthy suckers to cover the bills – will wipe out private insurance altogether.  And we all know what comes after that, don’t we?  In truth, the higher premiums and auto-renewal chaos foreseen by National Journal will only hasten the long-term goal ObamaCare’s architects had all along, the collapse of a confused, frightened, and weary America into single-payer socialized medicine.  Only time will tell whether today’s pretzel-bent cost curve proves to be a bug, or a feature, of the Affordable Care Act.