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Obama Exempts “If You Like It You Can Keep It” Cancelees from the Individual Mandate

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By Lambert Strether of Corrente

And we go to Happyville, instead of to Pain City. –Thomas Pynchon, Gravity’s Rainbow

In a six-part series on “ObamaCare’s relentless creation of second-class citizens,” I showed how people seeking health care through ObamaCare’s exchanges get randomly varying access to care because of age, geography (state and county), income, employment status, banking status, internet access, existing insurance status, language, demographics, and by CMS marketing category (1, 2, 3, 4, 5, and 6. In addition, people “on the bubble” for income eligibility are incentivized to corrupt the system by gaming it.)

These variations are in great contrast, both morally and economically, to single payer’s “everybody in, nobody out” model. None of these variations are in any way fair, or encourage equal access to health care, which Obama seemingly concedes is a right; they exist solely because of Obama’s determination to preserve the private insurance industry’s actuarial model, even though the private insurance industry is a wholly parasitical, rent extracting tapeworm on the body politic. All this would be true even the supposedly tech savvy Obama political operation had not turned healthcare.gov into the debacle it has been.

Be that as it may, the administration has now added yet another whimsical and arbitrary misfeature to Obama’s “signature domestic initiative.”[1] David Lauter of the LA Times explains why some people who were going to Pain City are now going to Happyville!

Under the new policy, people who have received notices that their health plans are being canceled would qualify for hardship exemptions allowed by the law. Under those exemptions, they could buy low-cost catastrophic health plans or skip buying health coverage altogether.

It’s worth noting that the rule change was not motivated by public policy, but — and I know this will come as a surprise to you — purely by political considerations.

The new policy stems from one of the biggest political problems Obama has faced with the troubled rollout of the healthcare law — his promise that the people who liked their existing health plans could keep them. When several million people nationwide began receiving notices that their plans would be canceled because the plans fell short of the new law’s requirements, Obama suffered a sharp drop in public trust.

Democrats in Congress, especially senators facing tough reelection challenges next year, were bitterly upset at the predicament in which Obama’s words had placed them. They have pressured the administration to respond to angry constituents.

Why is this important? (Consumer Reports, disgracefully, simply uses the story as click bait for its eligibility calculator.) Because the key feature of ObamaCare is “the marketplace” (the exchanges) and the individual mandate that forces people to buy products from that market[2], in order to guarantee the health insurance industry customers for the foreseeable future.[3] But this new hardship exemption blows a hole in the mandate. Reuters:

In the law, there are 14 categories of “hardships” that can be used to get an exemption from the mandate to buy insurance, such as a recent eviction or bankruptcy. But this is the first exemption prompted by the administration’s botched rollout of the law, and comes after months of insistence that there would be no delays in implementing the individual mandate.

No delays except for everybody and his brother who already got a delay, like employers, small businesses, health insurance companies, name it. Everybody but you. Until now! Again, needless to say, this delay is has no coherent basis whatever in ethics or policy. Even Ezra Klein is aghast:

A 45-year-old whose plan just got canceled can now purchase catastrophic coverage. A 45-year-old who didn’t have insurance at all can’t. Why don’t people who couldn’t afford a plan in the first place deserve the same kind of help as people whose plans were canceled?

Why, it’s almost like people who might cause Democrats electoral problems are a protected category, isn’t it? If lack of coverage for enough people like you makes Obama look bad, you’ve got a hardship. You’re a winner, and you get a ticket to Happyville! See how simple Federal rule-making can really be? Here’s how the exemption works, according to WaPo:

2. According to HHS, the exemption covers people who “experienced financial or domestic circumstances, including an unexpected natural or human-caused event, such that he or she had a significant, unexpected increase in essential expenses that prevented him or her from obtaining coverage under a qualified health plan.”

Now, if I were Pajama Boy, that lovable little scamp, and I wanted to beat back my Obot Mom’s Christmas assault, I might reason in this way:

[thinks] Hmm…. “unexpected … human-caused event” — that would be ObamaCare — with an “unexpected increase in essential expenses” — that would be the cost of ObamaCare, ’cause yeah, my Mom says it’s essential… “prevent… from obtaining coverage”… Yeah! The narrow networks definitely prevent me from obtaining coverage. Because they’re narrow!

“Hey Mom! I’m going to Happyville! The HHS says that if the plans I’m eligible for are lousy, I get a hardship exemption!”

And seriously, if you’re going to give a hardship exemption to the cancelees, why not give a hardship exemption to the sticker-shocked? (Or, as we might say, the informed consumers who put in the many hours needed to figure out if the plans on the Exchanges were any good or not.)

I hate to quote a stopped clock like Megan McArdle but give credit, she got it right on the Exchanges when all the Obots were either silent or waving their pom poms, so here she is on the political implications:

However incoherent these fixes may seem, they send two messages, loud and clear. The first is that although liberal pundits may think that the law is a done deal, impossible to repeal, the administration does not believe that. The willingness to take large risks with the program’s stability indicates that the administration thinks it has a huge amount to lose — that the White House is in a battle for the program’s very existence, not a few marginal House and Senate seats.

And the second is that enrollment probably isn’t what the administration was hoping. I don’t know that we’ll start Jan. 1 with fewer people insured than we had a year ago, but this certainly shouldn’t make us optimistic. It’s not like people who lost their insurance due to Obamacare, and now can’t afford to replace their policy, are going to be happy that they’re exempted from the mandate; they’re still going to be pretty mad. This is at best, damage control. Which suggests that the administration is expecting a fair amount of damage.

Oh, and the dishonesty and immorality of treating politically useful segments as protected categories was built into ObamaCare from the very beginning: That’s why asbestos sufferers in Baucus’s district got Medicare, and not people with chronic diseases anywhere else. And Libby’s website, naturally, worked from day one.

NOTES

[1] And how true, how very true that is.

[2] Obama keeps insisting otherwise, notably at his latest presser, but of course he’s lying. Again. The mandate and the exchanges are the only “core” features of ObamaCare; take them away, and all the other reforms, like children to 26 on their parent’s policies, or pre-existing conditions, could have been enacted as standalone pieces of legislation. It’s the exchange and the mandate that make ObamaCare ObamaCare — all the more because Obama ran against them in 2008, which Krugman called “poisoning the well for health care reform.” Had we but known.

[3] I meant to say, avoid the “free rider” problem. Sorry.


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47 comments

  1. Skeptic

    There is a long held theory that we are all criminals now. That is, that there are so many government laws and regulations that, at some point or other, we are each in some way in violation of one or more of them. As a result, we are more compliant and malleable than we otherwise would be. And, that this is not by chance but is designed that way. It makes governing so much easier.

    So too possibly with Obombercare. If you and your beloved family are dependent on your sickcare because of a here-today-could-be-gone-tomorrow beauracratic ruling you will be loathe to act in any way against the Government.

    I look at Obombercare as just another version of a TSA gropedown/scannerscam at the airport. Rights we once had exist now only at the whim of a public official.

    1. MaroonBulldog

      “Rights we once had now only exist at the whim of a public official.” Well, sort of. We had rights when we had obligations, because a right is nothing but a claim against an obligation, and, in a world of rights and obligations, we are all debtors and creditors of each other. There is no obligation in the whim of a public official, there is only “discretion,” which is supposed to be reasonable and not arbitrary, and, in the deceptive jargon of the corporatist administrative state, a claim against that discretion is referred to as an “entitlement”: you are “entitled” not to have public officials abuse their “discretion.” So, in short, an “entitlement” is something you have when you don’t have a “right.”

  2. scott

    I expected something other than surrender of the individual mandate from the administration. How about “If you’re uninsured because your plan was canceled, and you get sick after Jan 1, you can join the “Obamacare emergency exchange”, where we will give you health care for free in exchange for 9.5% of your salary” (up to $117K).

    Suddenly, you have 8 million self-employed and business owners enrolled in single-payer, and it will only take a year to suck in the rest (business won’t wait to cost-shift health care onto their employees).

    Come on, Obama/Jarret/Lucifer, use some imagination.

  3. Chromex

    While listening to the 3 minutes of the press conference that I could tolerate before I clicked awa, I was reminded of an old political cartoon from Skip Williamson. The president was addressing the people and making statements like “Chickens are frogs” and “snakes are ducks”. he characters say “why that man is genuinely crazy- not that this is unusual in presidents”.

  4. DakotabornKansan

    “Credibility Gaps” and “Credibility Traps”

    Or, what does it take to cause middle-class America to riot?

    Credibility Gap: almost any “gap” between the reality of a situation and what politicians and government agencies say about it [a disbelieving citizenry]

    http://en.wikipedia.org/wiki/Credibility_gap

    Credibility Trap: when the lies and the corruption become so widespread and embedded in a system that they become self-sustaining to the point of moral bankruptcy [a disbelieving government]

    http://jessescrossroadscafe.blogspot.com/2013/09/what-is-credibilty-trap.html

    At Disease Care Management Blog, Jaan Sidorov asks if the Obamacrats responsible for implementing the Affordable Care Act are falling victim to the credibility trap:

    “Statutory deadlines are now meaningless. Regulations can be ignored. Being “on message” trumps the truth. Czars go into private equity so that lobbyists can become insiders. Political expediency is allowed to batter markets. Blowback begets stopgap crisis management by an insular political elite.”

    “And as 2014 is threatened by death spirals, corrupted commercial enrollment data, unpleasant out-of-pocket surprises for consumers, small as well as large business market rate shocks, unpredictable legal challenges and further mischief by an emboldened Republican opposition, it becomes less a function of whose “fault” it is and more of a dreary exercise in keeping the Amtrak of health care from running off the rails.” – Jaan Sidorov, “The Looming Credibility Trap of Obamacare?”

    What does it take to cause middle-class America to riot?

    1. Banger

      Traditionally middle classes don’t riot since their income is dependent on the order the ruling elites provide–these days, Americans are slightly more aware of this situation. I see no evidence of a revolt other than more cynicism about what people are being told.

      When the supermarkets are closed then things might change–but it has to get pretty drastic before you’ll see the American middle take an interest in dramatic change and the public officials know this and know they can get away with keeping things stable.

      1. OpenThePodBayDoorsHAL

        Correct. People have a notion that revolutions are by peasant masses with torches & pitchforks. If the French Revolution is an example, that only happened when the minor nobility got screwed by the .01% and decided they’d had enough. The peasants & guillotines came later. So it’s only when the 2% in the US get fed up will we see the change coming. That’s probably a long way off, alas.

  5. ArkansasAngie

    Washington … Obamacare … Enough already. This is a boondoggle. Stop it.
    We’re going to have to come up with something different. May I suggest we NOT call it Obamacare.

    What a crock of odoriferous material.

  6. Bob Hertz

    Obama faced three choices if he wanted to cover the uninsured and improve things for the underinsured:
    a. expand Medicare — not even tried, because it would require a broad tax increase and Democrats would not all have voted for it. I am single payer guy so this was always my own preference.

    b. expand Medicaid — this was tried, but state’s rights got in the way

    c. incentivize and regulate private insurance — this is the monstrous task whose failure we are seeing now. I do not think Obama loved the insurers as you imply, rather than he did not think he had any other choice.

    One last note:

    I wonder if pre-existing conditions could have been solved with stand-alone legislation. The entire business model of the individual market was based on strict underwriting.

    However, It should be noted that high-risk drivers are seamlessly included in our privately run car insurance system. I believe this is done by industry-wide assessments, a kind of risk adjustment program.

    1. Waking Up

      Single payer advocates were forcibly removed from any discussion on the Senate floor during the health care “debates” (I put that in quotes since I fail to see how you can debate the issue and leave out discussions on single payer systems).

      Barack Obama also made deals with the insurance industry and Big Pharma in a meeting in March 2009. As reported in the Frontline show “Obama’s Deals”, “the insurance industry pledges support, but it’s keyed to the president backing an individual mandate requiring all Americans to buy health insurance. The industry also wants Obama to drop the idea of a “public option” — a government-run health care plan.” So, Obama had a “choice”, he just chose to side with corporate interests.

  7. Jim Haygood

    ‘People who have received notices that their health plans are being canceled … could buy low-cost catastrophic health plans or skip buying health coverage altogether.’

    By design, Obamacare phases out the individual market, replacing it with products offered on the exchanges. Thus, the widely-reported policy cancellations.

    Waving a federal magic wand will not necessarily induce insurers to reintroduce cancelled policies or to offer new catastrophic coverage for a single year, to a narrow customer base. Nor are state insurance commissioners obliged to approve such desperate fixes. Some Democratic commissioners, including those in Washington state and New York, already have announced hard-line, ‘send them to the exchanges and let God sort them out’ scorched-earth policies.

    Obamacare is proving to be an archetypical object lesson in the delusions of statism. A bunch of policy wonks thought their own brilliance and idealism, coupled with state coercion, could ‘reform’ what they saw as a fragmented, poorly-performing industry.

    We now know that they had no edge, or even a reverse edge: no tech savvy; no marketing savvy; no understanding of their customers’ needs and finances. Lacking P&L discipline, they wasted billions on the equivalent of marketing an Edsel that nobody wanted to ‘reform’ the auto industry.

    As Obama’s desperate rule-by-decree pronunciamentos illustrate, the state has far less flexibility than the private sector to write off a failed product launch and try something different. Obama, and parliamentarians who pushed this through on a straight party-line vote, are now writhing on a spider web of their own making, as a big ugly tarantula from the other wing of the duopoly bides its time to tap into their thoraxes and suck the fluids out of them.

    Statism: it’s enough to make you sick. But at least the coming grisly spectacle on the spider web can be studied by budding young political scientists.

    1. Cynthia

      Continuing to provide catastrophic coverage under ObamaCare will mean less profits for health insurers. But health insurers won’t stand for that, nor will Wall Street. In order to keep their stock prices well within the double digits, health insurers will demand that Obama provide them with even more federal subsidies. How can Obama claim that ObamaCare will significantly reduce healthcare costs when he keeps handing out even bigger corporate welfare checks to private insurance companies? And how can Obama claim that our healthcare system is based on the principles of free-market capitalism when health insurers can’t stay afloat, less make a reasonable profit, without receiving loads of support from the taxpayer?

  8. km4

    Oh, and the dishonesty and immorality of treating politically useful segments as protected categories was built into ObamaCare from the very beginning

    Spot on !

    1. jrs

      Yes politically useful. So all the people who would be Medicaid eligible only there state didn’t expand medicare, are THEY eligible to buy these catastrophic plans if they manage to scrape up the money? Or are THEY not politically useful? Please isn’t there a 4th Amendment they can be brought to court under, we all know the better off are are treated better in this society, but this is some of the most blatant discrimination yet.

      1. Alexa

        In a word, “no,” THEY are not politically useful.

        The Democratic Party has shown its true colors–exemption after exemption.

        Party of “The LIttle Guy”–don’t think so!

  9. ltr

    I have been grateful for every post you have written on the Affordable Care Act, and I am grateful again. This is simply awful.

  10. Ned Ludd

    Money corrupts, and every president will be corrupt.

    “All told, Obama has been bad for the economy, bad for civil liberties, bad for minorities, bad for foreign wars, and bad for health care. He has, however, been a very effective lackey-sock puppet for Wall Street, Big Pharma, the oil magnates, and the other 1% -vermin Kleptocrats who run the country and who will undoubtedly attend his $100,000-per-plate speaking engagements when he finally retires in comfort to some gated community where he’ll work on his memoirs and cash in on his 8 years of faithful service to the racketeer class.”

    Accumulation of wealth → The wealthy control the government.

    “The country is in a terrible state and yet Obama continues to approve bills that throw millions of people off unemployment benefits, sharply cut government spending, or undermine vital safetynet programs that keep the sick and the elderly from dying on the streets. It’s like he’s trying to reduce 300 million Americans to grinding third world poverty in his short eight-year term. Is that the goal?”

    A society of desperate people, competing for low-wage jobs and acting as indentured servants for the wealthy, is exactly the goal of Obama and his cohorts in the Democratic and Republican Parties. The “better” Democrats just do a better job of fooling the liberals; in the end, every president will sell us out for the paycheck that comes after they leave office.

    1. Crazy Horse

      Obama is truly a miracle worker. When faced with an impossibly difficult challenge— being a worse president than George Bush, he has triumphed against all odds.

      No Republican could have done a better job of getting guilt-ridden liberals to support the transition to an Orwellian state with finance fascism and international assassination as its main features.

      1. MaroonBulldog

        Obama worse that W? Sounds like an academic proposition to me. Historians and political scientists will be debating it for years.
        What Obama and W prove to me: votes for incompetents are votes for incompetence.

        1. hunkerdown

          Incompetence?! The Democratic Party and their apparatchiks are, by all evidence, sufficiently competent when they serve their favorite vested private interests that a) the ability to convincingly appear incompetent while serving ulterior goals seems to be the actual function of whatever selection processes are at play, and thus b) the charge of “incompetence” is best assumed to constitute running cover for authority until proven otherwise beyond the shadow of a doubt.

  11. Charles LeSeau

    What an unconscionable mess this whole thing is.

    Is it me, or have mainstream liberal/Democrat-supporting websites and general media been portraying opposition to the ACA as solely from the right wing/tea partiers? It seems a massive sin of omission to exclude criticism from other spheres of political thought.

    A few months ago Truthdig had an editorial by Prof. Bill Boyarski, accusing opponents of “whining” about it, and how it’s time to stop and support the thing. (An internet meme that I’ve come to despise in the millions of instances I’ve seen it is that of transposing legitimate criticism into “whining,” which of course is a simple word game way to undermine and trivialize criticism entirely.)

    1. Waking Up

      Accusing someone of “whining” is an elitist, status quo type of reaction. It is an authoritarian stance which treats the readers as if they are children who “just don’t know any better”. That applies whether someone is supposedly ideologically from the “left” or “right”. If what you are doing is morally right, you will welcome all discussions and opinions.

    2. Alexa

      It’s not at all, “just you.”

      It is largely due to the complicity of the corporatist MSM that a large chuck of the Democratic Party base has for decades remained completely “unaware of the truth,” in regards to their Party’s policies and/or the shenanigans of their Party Leadership.

      It’s called “manipulation.”

      ;-D

    3. NotTimothyGeithner

      Its a simple business decision. MSNBC (they are owned by Comcast/GE so I’m stretching) and the other Democratic outlets made a decision based on Obama’s polling. There were more pro-Obama nuts out there than sane people, so they went with the Obots, never expecting Obama to be so bad. The DailyKos types were deranged and nasty for years when faced with criticism of the President, and now they are reaping the rewards of their behavior.

      Their audiences have shrunk at a rate far exceeding off year election declines. Their audience is the shrinking number of Obots. If John Marshhall wrote a mea culpa tomorrow, would many former readers go back? No, they wouldn’t. His business plan is dependent on keeping the Obots faithful. The former readers have moved on. These people don’t represent local papers of record where geography matters, so they only have one choice left which to hope ACA works out and hold on to their existing audience because they can’t reach out to new people and they can’t win the old people back.

  12. Bridget

    This move will earn no gratitude from the Michael Olenicks of this world. These are people who voluntarily insured themselves, out of their very own pocketbooks. They need no mandate to incentivize them to purchase insurance, and will derive no benefit from the delay of same.. What they want is what they were promised…..to keep the policies they had. The cruddy, truly substandard, Obamacare catastrophic policies they are now being granted the “opportunity” to buy are no substitute for the plans that have been taken away from them, and they know it. They have been betrayed and in many cases, traumatized, by Obamacare, and people don’t easily forgive and forget this sort of thing. It’s really difficult to understand why the administration thinks this latest move will help.

    1. Elliot

      In my state they gave us the option (got a letter yesterday) to keep and renew the cancelled policy for a year when it comes up. Which was half good, as I can sort of afford it, but half bad as it is only temporary.

      I looked at the policies available after the cancellation, and the cheapest my insurer offers now is nearly TWICE what I was paying, and thus, unaffordable entirely. I don’t qualify for the subsidies or payment assistance, because in the world Obama made, you are worthless if you are poor, and you have to make a tidy chunk of money to be worthy of help. It’s hard for me to understand how they think we have the money to pay what they demand.

      I am mildly hopeful that in the bit over a year I have until the policy goes away again, that not only does it not double in price on renewal this summer, but that someone will notice that they yanked the rates too high, and reinstate catastrophic policies. My preference would be for the whole squealing calliope to crash to the ground, and let single payer rise from the ashes.

      I used to think it was ineptitude, or carelessness, but I now strongly believe that Obama, and the insurance agencies, and the legislatures, actively hate the poor. In parallel, I used to pity people that voted for Obama, as it was obvious when I first saw him he was a cold, calculating corporate Manchurian candidate, but now, I blame them. My “liberal” friends enabled this, looked the other way, and preened when it passed.

      1. jrs

        And your conservative friends who are also responsible for Medicaid not being expanded locally. Or do you not have conservative friends? :)

        1. Elliot

          Oh, I’m an equal opportunity blamer of the corporate class. It is, after all, class warfare, and truly bipartisan.
          But the conservative friends I have never blabbed on in idiotic sycophancy over the ACA.

          The most egregious of the Obamaphiles –whom I count as acquaintances mostly, not close friends–support such drek not because it is good for the country, or humane, but because it relieves them of having to do anything concrete for others.

          They though, did not have anything to do with medicaid not being expanded here…… and if you want the truth, that lack of expansion might be a good thing, since it claws homes away from ONLY the poorest, you don’t see the “creative class” having to cough up anything remotely hardship-causing to pay for their medical care.

          And for the love of Dog, the Obamaphiles and ACA apologists and “progressives” need to face reality. Same as with the NSA debacle: the guy in the Oval office right now does in fact hold responsibility for what is going on.
          Attempts to shut down anger over the policies he promotes/enables/presses for, by pointing at conservatives (“LOOK IT”S HALLEY”S COMET!”), are a sign they aren’t interesting in fixing things either.

      2. Banger

        I don’t think they “hate the poor” they simply know that the poor have little or no political power and therefore are not considered. Surely we should have learned by now that public policy comes about on the basis of who has political power. Miami Cubans have political power in terms of policies towards Cuba–the government hasn’t pursued the absurd policy it has because it is good policy but because of the pressure of the Cubans in Miami. At one time, there was some consideration for public benefits from policy but, I can assure you as a veteran of Washington, that this consideration has tended to disappear. If you have the power to put a hurt on a politician or reward him or her then you have power–if you can’t do it you’re not considered at all.

        1. Elliot

          I thought about it after I posted it, but I am going to stick with it.

          If you lashed a dog to a treadmill, and kept adjusting the speed beyond his abillty to keep up, that would be abuse, no?

          If you lash the poor to a financial treadmill, threaten them with fines (or illness or death~) for trying to get off that treadmill, and then keep adjusting the rates beyond their ability to pay, that is abuse, too. And intentional; it wasn’t a random throw of the dice that set the levels of subsidy and penalty.

          Saying “they don’t consider the poor” excuses them in a way they don’t deserve.

          As the article notes, only when people who are used to being coddled feel the same whip is there any outcry.

          I used to think policies like this that didn’t make sense didn’t make sense because I didn’t have all the details…so I researched, and studied (I’m no fool, I have a couple of college degrees and a substantial IQ) and finally realized that these things don’t make sense because they don’t make sense in a humane world where every human matters.
          They do make sense in a world where only people with enough money to buy legislators matter.

  13. Matt

    The insurance companies have really gamed this. As previously pointed out, the only reason they canceled insurance policies is because they changed them from 2010 so they could cancel them for 2013.
    They would have had the the carryover demand for 2013 at least.

    The entire medical industry has gamed this as increasing their rent extraction to increase from 18 percent of GDP to even more absurd levels.

    What happens when a 3 person family is already paying 20,000 a year for health care for two and their
    dependent child is a student whose Obama care plan will be cancelled once he leaves the county for 90 days? and is of no benefit in any regard due to the high deducible? County by county insurance is a feudal nightmare of transit passes.

  14. Alan

    Where are the liberals who supported this man and populated this site a year ago, now? Are they the same people writing comments or new followers? It’s just a huge change.
    And why is anyone surprised at what’s going on here now?

    1. Alexa

      Check the polls.

      He and the Democratic Party’s numbers are “dropping like lead.”

      I’m guessing that most Americans of all political persuasions have finally “caught on.”

      But there are still a few of his supporters at DKos–if you’d really like to find some of them.

      ;-)

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