[T]he very cancellation notices that spurred Obama to delay enforcing the demise of individual insurance plans will erect five big obstacles to implementing the latest ObamaCare fix.

Tweet

President Barack Obama’s latest "fix" to his signature health reform law is being greeted with none of the approval of his previous uses of so-called enforcement discretion.

This past July, Obama announced that he would not enforce the employer mandate in 2014, the first year of ObamaCare’s implementation. The decision was met with muted applause from the business community because it spared them – for a year – from the dilemma of paying more for health insurance or paying a less costly fine to shift employees onto a health insurance exchange.

Also in July the Obama administration said it would not enforce income verification requirements during ObamaCare’s initial enrollment period. Prior to this, verifying a person’s income was the only way to ensure that people applying for insurance subsidies actually qualify for them.

Looking back, this move was one of the first indications that the IT part of ObamaCare would be unable to perform a critically important task by its October 1, 2013 start date. But rather than delay the website’s launch, President Obama decided to set aside the law – and with it, the clearest, simplest protection against massive fraud.

Yet even in this case, Obama had defenders. Since the Internal Revenue Service allows tax filers to claim exemptions and credits on the honor system, why not extend that logic to subsidies for health insurance?

But the latest ‘fix’ goes even farther. In a widely panned press conference, Obama declared that he has the legal authority not to enforce ObamaCare’s coverage requirements for plans bought through the individual insurance market. Public opinion polls show Obama’s approval rating sinking with every new round of cancellation notices. But while similar in kind to his other refusals to obey the text of his own law, the problems associated with this delay will be drastically different.

The reason is timing. When Obama delayed the employer mandate, the timing of his announcement gave businesses and insurance companies advance notice that they needn’t worry about complying with ObamaCare for another year, and they planned accordingly.

Now, however, the very cancellation notices that spurred Obama to delay enforcing the demise of individual insurance plans will erect five big obstacles to implementing the latest ObamaCare fix.

5. Complying with the President’s Request Means Breaking the Law

Any compliance officer worth her salary will remind insurance executives that Obama’s promise not to prosecute does not change the fact that reissuing cancelled insurance policies will violate federal law. No one disputes this; notwithstanding an attempt by the federal health bureaucracy to brand the coming refusal to enforce the law as a “transitional policy” that will terminate next year. The fact remains that for an insurance company to comply with Obama’s request, it must rely on a known liar’s promise not to enforce a law that he is constitutionally bound to faithfully execute. 

4. Not All State Insurance Commissioners Are Going Along

Even if insurance companies decide to gamble on Obama keeping his word, they have to worry about whether their local regulator will go along. State insurance commissioners are free to follow Obama’s non-enforcement lead, or stick to the law as written. Already, commissioners in Maryland, Massachusetts, Minnesota, Rhode Island, Vermont and Washington have said they will not allow companies to reissue noncompliant plans. Other key states like California, Colorado, Indiana and Oregon are still deciding. Patchwork compliance with Obama’s fix means that insurance companies could face lawsuits from state regulators for failing to follow the law. 

3. The Insurance Industry Can’t Afford to Comply

Along with likely litigation costs, insurance companies adopting Obama’s fix would also have to recalculate their entire financial plan for 2014. For three years insurance companies have been designing insurance plans that conform to ObamaCare’s heightened benefits requirements. The costs associated with offering a higher benefits floor has been factored into the premium prices and passed on to consumers. To go back now and offer cheaper plans than they budgeted for could expose insurance companies to an unanticipated financial hit that might very well wreck their bottom line.

2. Exchanges Will Go into a Death Spiral

Another concern for insurance companies is that continuing to offer pre-ObamaCare plans will endanger the financial viability of the ObamaCare exchanges. In order for the exchanges to function, they need lots of young and healthy people to sign-up for more expensive insurance that was available before ObamaCare. Part of the increased price goes to pay for the cost of treating older and sicker consumers who participate in an ObamaCare risk pool. Allowing younger and healthier people to stay out of the exchanges allows them to stay out of its risk pool. Thus, the only people enrolling in the exchange are high-cost consumers. Repeated enough times, this scenario causes a death spiral that eventually forces insurance companies out of the exchange. That’s a nightmare for firms who have positioned themselves to compete on the exchanges since that is what ObamaCare incents them to do.

1. The Whole Scheme is Unconstitutional

As important as the cost/benefit calculations are, the most fundamental problem with President Obama’s newest fix is that it is blatantly unconstitutional. Under the Constitution, there are three separate, co-equal branches of government. Congress makes the law, the president enforces it and the judiciary interprets the work of both in light of the Constitution. This is known as the separation-of-powers. By prescribing distinct responsibilities, the Constitution tries to prevent tyranny. Yet, each time President Obama decides not to enforce a part of ObamaCare, he effectively rewrites the law into something Congress did not pass. By claiming the authority to make, enforce and interpret the law as he sees fit, this president is resurrecting the kind of tyrannical policymaking the American colonists revolted against.

The events of the last few weeks have obliterated any credibility President Obama could claim. With his authority now resting on nothing more than a promise to violate his oath of office, perhaps this is the moment when a majority of Americans finally choose to say enough is enough.