Freedom Line Blog

Megan McArdle posits three reasons why the Obama administration extended the enrollment deadline for purchasing insurance through Healthcare.gov, the federal ObamaCare exchange.

The most interesting, and to my mind most plausible, is that pushing the deadline into mid-April will make it more difficult for insurers to calculate next year’s premiums.

“Extending open enrollment, which is essentially what they’re doing, would then be a desperate play to get more young, healthy customers into the exchanges, and perhaps to make it a bit harder for insurers to raise rates,” writes McArdle. “In some states, insurers have to file preliminary rate increases in May. And thanks to this latest extension, they won’t have final data to back up any requests for a premium hike.”

Originally, the Obama administration estimated it needed 40 percent of enrollments to be from young and healthy people to avoid rate spikes the following year. With the current mix stuck at only 25 percent, insurers are signaling that prices will go up next year to cover the likely costs of insuring an older and sicker population than anticipated.

But with this extension the Obama administration is putting insurers in a bind. Do they assume the 25 percent number will hold and justify rate increases to state regulators using that assumption? Or do they wait and see if a last-ditch push to inflate the number of young and healthy enrollees reaches the magic 40 percent threshold?

The dilemma for the insurance companies is just the most recent example of how bending the law for one group punishes another. True, many people won’t mind that insurance carriers are the ones holding the bag this time, but that just underscores the growing lack of resistance to arbitrary regulation. Today, it’s unpopular insurance companies. Tomorrow, it’s you.