White House announces massive changes in bid to head off ObamaCare disaster

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Published by: Dan Calabrese on Tuesday August 30th, 2016

Including: Making insurers help pay the costs of other insurers' high-cost policyholders.

ObamaCare is a huge and glorious success, and it's the shining jewel in Barack Obama's legacy. That's what the Democrats have been telling us for several years, and for the most part the media have dutifully parrotted this talking point. But in recent months, it's gotten harder for Obama's media protectors to keep pretending everything is OK. Exchanges are in dire fiscal straits. Insurers are dropping out. Premiums are soaring. Provider networks are narrowing.

The left keep reaching back for what it thinks is the one saving grace of ObamaCare - that more people are "covered" than before. And that's true, but the vast majority of these are just sopping off Medicaid, which is exploding both state and federal budgets, while just about everyone is spending more for the glorious privilege of being "covered," not to mention paying higher taxes to pay for all the subsidies ObamaCare promises.

So no, this is not working out at all. And now that the media's cone of silence is starting to break down and they're admitting the problems, the Obama Administration has come up with a series of new regulatory changes they hope will stave off disaster. Especially check out Rule 3 below:

  1. Beginning with the 2017 benefit year, the rule proposes a modification to risk adjustment regarding the cost of enrollees who do not stay with an issuer for the full plan year.
  2. In order to help reflect enrollees with serious conditions like Hepatitis C, HIV, or others, the rule proposes to use prescription drug utilization data as a source of information about enrollee’s health and the severity of their conditions beginning with the 2018 benefit year.
  3. The rule also proposes to modify risk adjustment as to costs associated with the most expensive enrollees. Under this proposal, a portion of costs exceeding $2 million for an individual would be shared among issuers. This type of risk sharing would reduce uncertainty for issuers who are not yet able to reliably predict the prevalence and nature of high-cost cases.
  4. The proposed rule also asks for comment on a number of approaches for addressing the costs of healthier enrollees. Our goal is to update risk adjustment for all types of enrollees, to ensure that issuers can have confidence in the program as they design products to attract all types of consumers.
  5. Lastly, separate from the risk adjustment program, we are seeking comment on whether and how to further support the successful transition of former Pre-Existing Condition Insurance Plan (PCIP) Program enrollees into the Marketplace to ensure that they do not experience a lapse in coverage.

These proposals would bring more certainty into the Marketplace, as they would enable issuers to account for the risk of all enrollees in their bottom line, while continuing to ensure that all Americans have access to the care they need.

Basically, Rule 3 requires that when the cost of a policyholder's health care exceeds $2 million, issues who didn't even issue that person a policy must nonetheless share in the cost of caring for them. So you're socializing the costs in the hope you can stem the tide of the losses for those with the most disastrous cases. The problem with that, of course, is that all insurers have an overabundance of too-old and too-sick policyholders, because the incentives in ObamaCare guarantee it will work that way.

Taken together, the entire set of new rules serves as a tacit acknowledgement by the White House that ObamaCare has major structural and operational problems. That being the case, why not go to Congress and seek changes in the law that would solve the problems? Oh. Right. Because Congress is controlled by Republicans, and that would mean Obama would have to accept meaningful changes that would make the law less effective in propping up the political agenda he seeks to serve through it.

So instead, the administration will try in vain to save this turkey by tinkering around the edges through the administrative and regulatory state. It's not going to work. Obama is fundamentally flawed and needs to be tossed out entirely, replaced with a market-based system that gets out of the way of the doctor/patient financial relationship as much as possible. Health care finance was messed up in this country well before ObamaCare because tax law incentivized too much reliance on third-party payers. ObamaCare doubled down on that problem and added a set of completely illogical requirements that made it that much harder for insurers and providers to control the cost and the quality of what they were doing.

You see the result. ObamaCare is a total disaster. If it was not, these changes would not be happening. Even the White House now acknowleges that with its actions, if not with its words.

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