Freedom Line Blog

With the Obama administration fearing a surge of users trying to enroll in an Obamacare exchange insurance plan ahead of the midnight deadline today, government officials and IT contractors extended the cutoff over the weekend without bothering to issue a public notice.

The new deadline is midnight of Christmas Eve.

For those trying to lock-in coverage by January 1st – and thus avoid an IRS penalty – the extension is good news. But for the insurance industry, it’s another unwelcome, unaccountable administrative fiat.

“The extension, said the sources, cannot be overridden by insurance companies if they object to it,” reports National Review Online. “It is the latest of several last-minute, ad hoc rule changes issued by the administration, including last week’s announcement that individuals whose insurance plans were [canceled] may receive an exemption from the Affordable Care Act’s individual mandate.”

Until Obamacare is repealed and the federal government is divested of its power to dictate – and change – so many important terms at its whim, volatility in the health insurance market looks like it’s here to stay.

Late yesterday, the Department of Health and Human Services (HHS) announced that anyone whose individual insurance policy was cancelled due to Obamacare and now has to pay for a more expensive plan is exempt from the individual mandate until 2015.

You read that right. The individual mandate – the keystone of Obamacare’s coverage and funding structure – no longer applies to an estimated 5 million Americans.

This is HUGE. By granting this carve-out, the Obama administration has voluntarily weakened the mechanism that is supposed to guarantee insurance companies selling plans through an Obamacare exchange sufficient numbers of people to fill out their risk pools.

Now, suddenly, these companies are facing the very real possibility that millions of people will choose to hold off buying insurance until they get sick. The new exemption changes a consumer’s calculation. Prior to yesterday, all the emphasis was on signing up by the December 23rd deadline to avoid a 2014 tax penalty.

Now, for up to 5 million people, the decision point to buy insurance occurs when they get sick. Thus, insurance companies won’t get to spread the risk of illness by banking premium payments from healthy people. Many more people buying insurance going forward will need costly care the moment they sign up.

In other words, this move destroys the nature of insurance.

It’s also indefensible as a matter of justice to require the uninsured to comply with the mandate.

“Put more simply, Republicans will immediately begin calling for the uninsured to get this same exemption. What will the Obama administration say in response? Why are people whose plans were cancelled more deserving of help than people who couldn’t afford a plan in the first place?” asks Ezra Klein.

As I said in my column this week, Obamacare’s failures are completely that fault of its supporters. Republicans shouldn’t help fix something that is so broken. 2014 should be the year the GOP unites around a viable alternative to replace this monstrosity after it is repealed.

The arrival of Obamacare’s ‘Pajama Boy’ ad campaign coincides with an awful truth the supporters of Big Government don’t want the young and trendy to hear.

If you haven’t yet seen the ad yet Rich Lowry has a picture and an explanation of where it fits in the Obama universe: “But it’s hard not to see Pajama Boy as an expression of the Obama vision, just like his forbear Julia, the Internet cartoon from the 2012 campaign. Pajama Boy is Julia’s little brother. She progressed through life without any significant family or community connections. He is the picture of perpetual adolescence. Neither is a symbol of self-reliant, responsible adulthood.

“And so both are ideal consumers of government. Julia needed the help of Obama-supported programs at every juncture of her life, and Pajama Boy is going to get his health insurance through Obamacare.”

They are also the cohort most likely to pay the bills for all this consumption.

“The current $17 trillion aggregate debt is largely a result of out-of-control entitlement obligations that skyrocketed over the last 20 years and largely were paid out to those over the age of 30,” writes Victor Davis Hanson.

Too bad Julia and Pajama Boy never mention that those under 30 will be the ones paying the bills for decades to come.

New regulations by the Department of Health and Human Services (HHS) say that the price of not complying with government demands to lose money will result in being kicked off Obamacare exchanges next year, reports Avik Roy.

“We are considering factoring into the [qualified health plan] renewal process, as part of the determination regarding whether making a health plan available… how [insurers] ensure continuity of care during transitions,” HHS warns.

‘Continuity of care’ refers directly to the massive disruptions in health insurance coverage meted out by Obamacare. With only a fraction of enrollees likely to have paid their premium in time to be covered by January 1, many people who think they are covered won’t be.

But that’s if ordinary rules of insurance coverage apply. In order to avoid another PR disaster, HHS is demanding that insurance companies pay for services even if the claimant hasn’t paid her premium. Refusal to do so would disrupt continuity of care, and thus give HHS – according to its self-serving rule – reason to expel the insurance company from selling plans on an Obamacare exchange.

Roy says this latest move by HHS is lawless and unconstitutional. I agree. But the worst thing about it is that the insurance companies most vulnerable to this type of abuse probably won’t challenge the Obama administration in court, since doing so would likely get them kicked off the exchanges they have spent three years reorganizing their business model around.

This is gangster government.

Q: What does $300 million in federal grant money to build one of the nation’s most expensive Obamacare exchanges get you?

A: If you’re Oregon, 44 enrollees.

So far, federal taxpayers have spent about $6.8 million per Oregon enrollee. And that doesn’t include the federal subsidies any of these Oregonians might qualify for, nor does it contain the remaining premium amount each enrollee will pay to have health insurance.

Maybe the Obama administration will reverse course and start claiming that Oregon’s exchange is really a job creator since someone got paid with all that money because at this point, it’s certainly not a financially viable health insurance portal.

H/T: Philip Klein

It looks like the crass ad campaign aimed at getting keg-standing frat boys and promiscuous coeds to sign up for health insurance on Colorado’s Obamacare exchange is failing badly.

“The White House has set a goal of ensuring that roughly 40% of all enrollees on the federal exchange are young and healthy,” reports CNN’s Political Ticker.

“As of November 30, just 11% of total enrollees in Colorado’s exchange fall into the targeted 18 to 34 age bracket. The majority of new enrollees – more than 60% – are between 45 and 65.”

If this trend holds, it means that the funding ratios for Colorado’s insurance pools won’t work because there won’t be enough ‘young invincibles’ in the system. As I explained in a post about a similar problem in Kentucky, too few young and healthy people translates into an insufficient wealth transfer to older and sicker people.

Right now, Obamacare’s supporters are telling themselves that young people always wait till the last minute to comply, so all will be well when the enrollment period ends in March. That might be true. But if enough young invincibles pay a fine instead of enroll, Colorado, Kentucky and any other state with too few net payers will see next year’s premiums surge through the roof.

Just in time for the 2014 elections.

A consensus is forming in the public relations world about what went wrong with Obamacare’s horrendous Healthcare.gov rollout.

In what Politico calls “a case study for crisis management consultants and their clients of what not to do,” three problems are clear.

First, the Obama administration wasn’t truthful. By downplaying the website’s crashes and error messages as “glitches” due to heavier-than-expected traffic, the White House misled the public on how bad the system actually was.

Second, updates lacked success stories. That’s probably because only 6 people successfully enrolled via the website on its first day.

Finally, despite more than three years to get ready Obamacare still lacks an effective spokesperson.

But that’s not quite right.

Until recently, President Barack Obama was a very effective spokesman when he told anyone who would listen that his signature bill would expand coverage, reduce costs and improve quality – all without requiring anyone to forfeit their current plans, doctors and hospitals.

Though the criticisms from PR consultants of the Obama administration’s handling of its latest fiasco are well-deserved, the problem with Obamacare runs much deeper than a textbook failure of crisis management. The problem with Obamacare is that it was designed by ideologues, implemented by amateurs and sold on a lie.

No amount of spin or surrogacy can fix that.

Gallup released a new poll this week showing that a sizeable portion of an important cohort for Obamacare’s success is planning to pay fine rather than foot the bill for most costly insurance.

The so-called young invincibles – defined by Gallup as Americans under 30 years old – is the group whose purchase of health insurance on Obamacare exchanges is most coveted because they are projected to pay for more services than they use. The money made off their premiums will cover the cost of care for older and sicker people in the risk pool.

But the financial coercion desired by Obamacare’s operators could likely hit a snag this year because the penalty for not buying insurance is only $95, or less than any monthly premium available on an exchange.

Unfortunately for Obamacare’s supporters, Gallup says that 26 percent of young invincibles are planning to pay the fine instead of buy insurance. If enough do so, Obamacare’s cost structure gets up-ended, putting the feds on the hook to cover the overruns. Private insurers will then spike premiums in future years to compensate.

The big question is, “What number is ‘enough’?” No one knows the answer.

That’s because the key number for making the Obamacare exchanges financially workable is a ratio. For Healthcare.gov – the federal exchange – the Congressional Budget Office estimates that 38 percent of the risk pool needs to be young invincibles in order for the system to operate.

That means that the critical number for Healthcare.gov isn’t whether it actually enrolls the 7 million people it originally projected; it’s whether 38 percent of whatever population enrolls is made up of young invincibles, says Ezra Klein.

Early returns aren’t boding well, reports Breitbart News. The Obama administration so far has refused to release a breakdown of federal enrollees by age bracket, but the State of Kentucky has. The Bluegrass State runs its own exchange and only 19 percent of its enrollees are between the ages of 18-34 – a span that includes more years than Gallup’s. If that trend holds throughout the enrollment period that runs through March, Kentucky – and any other exchange with less than 38 percent of young invincibles – could face the dreaded ‘death spiral’ where premium costs soar to cover a sicker population that anticipated.

For now, we’ll have to wait and see whether the Obamacare-affiliated exchanges hit the magic number by the enrollment deadline. My guess is that the lack of transparency is directly related to the failure to meet the goal.

Obamacare’s “original vision of seamless Medicaid enrollment for all consumers will remain elusive indefinitely because of varying levels of readiness among states and the continued inability of the feds to transfer accounts directly to individual Medicaid agencies,” reports Governing.

That’s more bad news for Healthcare.gov, the federal health insurance exchange serving 36 states.

The problem is simple but not easy to fix. Because there is such a wide disparity among states in their ability to connect their Medicaid databases to the federal server, many of those who qualify for Medicaid can’t sign up for the program online. To compensate, federal workers send digital copies of an applicant’s qualifying information to state counterparts who then must verify eligibility.

Bottom line: All this checking and rechecking loses the efficiency gains assumed by Obamacare’s drafters. Among others, these cost savings were counted toward the health law’s now dubious claim of deficit neutrality.

Now the bad news for states.

Since every state participates in Medicaid, problems with the program created by Obamacare will impact state budgets regardless of whether they run their own health insurance exchange or let the feds do it. That’s because the exchanges are designed to serve those who don’t qualify for Medicaid. If seamless Medicaid enrollment proves impossible, then the resulting expenditures to meet the uptick in demand will be yet another unfunded mandate passed on to state taxpayers.

The Obama administration’s former chief of Medicare and Medicaid is running for Governor of Massachusetts, and hints that his goal is to turn Romneycare into a single-payer system.

“It is time to seriously explore the possibility of a single payer system in Massachusetts,” declares Donald Berwick’s campaign website. (Emphasis in the original) “I will work with the Legislature [to] assemble a multi-stakeholder Single Payer Advisory Panel to investigate and report back within one year on whether and how Massachusetts should consider a single payer option.”

Along with achieving this goal, Berwick makes a series of other promises that seem breathtaking when one considers the amount of information, oversight and control necessary to fulfill them. Again, all bolded words appear the same way on the site.

·    I will personally lead a statewide initiative to make Massachusetts the healthiest state in the nation, through smoking cessation, obesity prevention and reduction, and specific programs to curb domestic and physical violence.
·    We will stop the obesity epidemic in Massachusetts.
·    We will reduce substance abuse and suicide rates by 50% in Massachusetts in the next decade.
·    Massachusetts will be the national leader in patient safety.

I do not dispute that Americans in general – and apparently Massachusetts in particular – are suffering from very serious problems like obesity, substance abuse and suicide, along with all the ancillary problems that follow in their wake. But how is it sensible to assume, as Berwick’s manifesto does, that politicians can solve these deeply personal problems – abetted by a nihilistic culture – through bureaucratic fiat?

Moreover, who is going to pay for all this? Nowhere does Berwick mention the massive increases in state spending his plan implicitly calls for, since Massachusetts will now need an army of public employees to collect data, push ad campaigns and fine or penalize those who don’t change their behavior.

Joshua Archambault outlines other problems with Berwick’s platform, among them the myriad technical difficulties facing a state trying to operate a stand-alone single-payer system.

Berwick is no shoe-in to win the Democratic nomination for governor, but his ideas about single-payer are gaining ground in Massachusetts politics. As Archambault notes, 20% of the state’s heavily Democratic state senate are on record as supporting a single-payer system. That’s not surprising since the Bay State was the first to impose a health insurance mandate on individuals in 2006. As costs have grown, so have calls for more government control.

It bears remembering that President Barack Obama has said repeatedly that Romneycare was a model for Obamacare. If Berwick’s ideas manage to transform the former into a single-payer system, national health care policy may soon have a new maxim: As goes Massachusetts, so goes the nation.

Federal subsidies are the lynchpin holding Obamacare together. Without them, insurance plans bought on state-run exchanges would be too expensive for most people to buy.

Which means there’s a huge gaping problem if you live in one of the 36 states that chose to let the feds run the exchange: You don’t qualify for federal subsidies.

“Congress was exceedingly clear that tax credits and subsidies are available to people whose plans ‘were enrolled in through an exchange established by the State under section 1311 of the Patient Protection and Affordable Care Act,’” argues Scott Pruitt, Oklahoma’s Attorney General, in the Wall Street Journal.

“Congress specified that credits and subsidies are only to be available in states that set up their own health-insurance exchange for a reason: It could not force states to set up exchanges. Instead, it had to entice them to do so.”

But if the enticement fails, then citizens are exposed to the full brunt of Obamacare’s increased cost structure for health insurance. That’s the risk the health law’s drafters took. Now the plain meaning of the text should result in a massively unpopular program.

The Obama administration is spooked. If the vast majority of Americans are forced to choose between paying the real price of Obamacare-related insurance or a hefty fine, there will be an electoral tsunami in 2014.

Here’s hoping Oklahoma’s lawsuit gets a favorable ruling from the Supreme Court sooner rather than later.

Byron York has a characteristically subtle and devastating critique of the Obama administration’s recent attempt to ruin Thanksgiving.

The kerfuffle began when Obama’s still operating campaign arm, Organizing for Action, released talking points to convince relatives and friends to enroll in Obamacare over Thanksgiving dinner. Reluctantly, conservative blogger Ben Domenech responded with counterpoints.

Watching from afar, York was reminded of an exhibit in Berlin explaining how the communists who ran East Germany for the USSR tried to make every personal event into a celebration of socialism.

The memory prompted York to make this heretofore unnecessary declaration: “Now is the time to state definitively: The United States is not communist East Germany. It’s not in any way close to being communist East Germany. So why is the Obama administration seeking to politicize Thanksgiving? And Hanukkah, too? At the very least, why invite the ridicule and derision that inevitably follow?”

It’s crazy to think we’re in an era where the President of the United States is green-lighting not only massive increases in government-run health care, but also beseeching everyday Americans to make support for such interventions the topic of completely private, non-political family gatherings.

York can be excused for sensing some totalitarian tendencies in the present administration. The parallels seem obvious.

“Since the Oct. 1 rollout of the Affordable Care Act in New York, nearly half of New Yorkers who signed up for insurance on the state-run exchange qualified for Medicaid,” reports the New York Post.

Apparently, the media attention surrounding Obamacare enticed many lower-income Empire State residents to apply for insurance, only to find out they qualified for taxpayer subsidized Medicaid instead. If every New Yorker that qualifies for Obamacare’s expanded version of Medicaid actually signs up, the state’s total Medicaid population could hit 6 million in a few years. That would be nearly 1/3rd of the state’s population.

The implications for federal spending levels are ominous. Currently, Medicaid spending is split between states and the feds. But once 2014 arrives, “the feds will pick up 75 percent of the tab and eventually 90 percent for childless Medicaid adults, instead of the current 50 percent.”

As the Post’s article indicates, Obamacare’s failure to lure enough buyers onto its public-private insurance exchanges is only half the story. The real win for those who want to impose a government-run, single-payer system onto the American health care system may be in the massive expansion of Medicaid consumers paid for out of the federal treasury. Thus, even if the public-private part of Obamacare fails, the number of citizens depending on Washington for health care will increase dramatically. In the long run, that may be just what Obamacare’s staunchest supporters desire.

The launch of the Obamacare website for small businesses will be delayed until November 2014 – a full year from when it is required by law to go online.

Along with the Obama administration’s inability to create functioning health insurance portals, today’s announcement is yet another craven attempt by Washington liberals to shield themselves from the political consequences of their failures.

By pushing back the federally-run small business exchange (called SHOP) until after the 2014 midterm elections, President Barack Obama and Democrats in Congress want to avoid a fresh round of voter anger when the newest website inevitably implodes.

But doing so means that three federal elections will have taken place between the time Obamacare passed into law in 2010 and its full implementation in 2014. That time period will cover half of the Obama presidency. If performance predicts the future, all we have to look forward to in 2014 is more failure.

Republicans should spare Americans the experience and put forward a slate of candidates that run and win on a promise to repeal Obamacare, without delay.

In celebration of Thanksgiving, the Taxpayers Protection Alliance named its annual “Turkeys of the Year.” The awards are presented in recognition of federal programs and agencies that have proven to be real turkeys for taxpayers, gobbling up tax dollars and giving hard working Americans the bird.

Among this year’s “Turkeys of the Year” are the IRS, Obamacare and the Export-Import Bank. Check out the Taxpayers Protection Alliance’s short video to see just why these three boondoggles were so deserving of the shameful award.

A few weeks ago, I wrote a column here entitled “America’s Fascist Moment.” I generally try to avoid such loaded terms in print, but the reason I used that other F-word was precisely because we’ve allowed its common connotation to obscure its actual meaning.

People usually associate ‘fascism ‘with the worst kinds of authoritarians, especially Adolf Hitler. And, true enough, Hitler was an extreme example of a fascist at work. Generally, however, fascism is a bit more subtle than that (really, though, what isn’t more subtle than the Third Reich?).

What the term actually means is erasing the lines between the state and civil society; ensuring that everything we do is tied to the government. In the famous formulation of Benito Mussolini, it’s “All within the state, nothing outside the state, nothing against the state.” Needless to say, that’s about as far away as you can get from the traditional American notion of limited government, where the state is only valuable insofar as it serves the people, not the other way around (for the single best volume on this, I recommend Jonah Goldberg’s truly fantastic Liberal Fascism).

When history renders its ultimate judgment on the Obama Administration, any fair reading will note the deep fascist tendencies that pervade this Administration. If you need any proof, you need only look at the headlines of the past few days.

First, you’ve got the President exhorting his disciples to use Thanksgiving dinner to harangue family members about Obamacare, even going so far as to provide pages worth of printable talking points to his minions (I recently took this up at Ricochet).

Then you’ve got the Administration’s continued efforts to force employers to violate their consciences and provide birth control for their employees even if it violates the teachings of their faith, a fight that it was announced today will head to the Supreme Court in the spring.

Finally, there’s the news that Obama’s Treasury Department is proposing cracking down on tax-exempt status for non-profit groups that engage in what the Administration believes to be too much political activity. Liberals and conservatives alike should understand the grave danger that would come with giving the Executive Branch that kind of power to regulate political activity. There’s no such thing as a free polity where those in power get to punish those who aren’t simply for voicing their opinions.

Having a free society, however, doesn’t seem to be a priority for the Obama Administration. This is an Administration that would rather beat its enemies while violating the noblest traditions of American government than lose because they stood on principle. You’d be hard-pressed to think of another White House that ever threatened liberty so directly and so consistently.

After decades of kicking the financial can down the road, some of America’s biggest cities now want to try throwing it up the ladder.

Starting January 1, Detroit will move its retirees to Michigan’s federally-run Obamacare exchange. Instead of the previous full coverage paid for by taxpayers, each retiree will get a $125 monthly stipend. The move is projected to save the city roughly $120 million.

Chicago and other cash-strapped cities are considering similar options.

But the move to offload state and local obligations onto federal taxpayers is just getting started. Writing for City Journal, Steven Malanga explains that municipal debt related to unfunded pensions far outweighs the amount owed to retiree health benefits.

To big city mayors the solutions, of course, are identical – Ask Uncle Sam for a bailout.

At some point, America’s entitlement culture – up and down the socio-economic ladder – has to take a back seat to fiscal reality. We’ll see if enough people are ready to have such a debate when the 2016 presidential election rolls around.

It’s becoming clear that the Obama Administration is beginning to lose hope that they can salvage Obamacare and are now just trying to contain the political fallout. From CBS:

After the slow start to enrollment in the Obamacare marketplaces for 2014, the Obama administration is set to delay enrollment for 2015 by a month.

The move will give insurers more time to evaluate the 2014 market and set 2015 premiums accordingly — it also moves the enrollment period past the 2014 midterm elections. It’s the latest Obamacare adjustment that, whatever its aims, is clouded by the continued political controversy over the health law. At least one Republican, Sen. Charles Grassley, R-Iowa, called the decision “a cynical political move.”

The Health and Human Services Department confirms to CBS News that it plans to reschedule the 2015 open enrollment period for Nov. 15, 2014 – Jan. 15, 2015. Previously, the enrollment period was slated to run from Oct. 15 – Dec. 7, 2014. Insurers also now have until May 2014, rather than April 2014, to submit applications to offer health plans in the marketplace. The changes don’t impact the Obamacare marketplace for next year.

Make no mistake, “Set premiums accordingly” means raise prices based on the internal logic of Obamacare. The Administration knows that Democrats will take a drubbing at the ballot box if yet another round of bad news and increased premiums coincides with the final days of next year’s midterm elections. This is nothing more than a face-saving measure, and one so laughably transparent that it’s not liable to do Democrats much good (especially if Republicans make the Administration’s intentional attempt to conceal health care rates a campaign issue).

It’s a shame the Obama Administration has gotten on the wrong side of so many doctors. They could use some triage right about now.

California’s Obamacare-aligned health insurance exchange will not bail out President Barack Obama.

Data released by Covered California, the state’s exchange, explains why.

“People between the ages of 45 and 64 have enrolled in California’s health exchange at a much higher rate than their overall portion of the state’s total population, while younger adults’ enrollment levels essentially track their overall population,” reports CNBC.

“If the trend holds up, it could mean that insurance plans are overweighted with older customers, and underweighted with younger, presumably healthier people. Since their premiums are much needed to offset the cost of benefits paid out to sicker individuals, that could lead to higher premium prices in 2015.”

In other words, Covered California – like any other Obamacare exchange – can’t afford President Obama’s costly ‘fix’ that would allow young and healthy people to keep their pre-Obamacare insurance plans and stay out of the post-Obamacare risk pools. As I explain in my column this week, doing so would lead to the dreaded ‘death spiral’ that will doom the Obamacare exchanges.

There’s no other way to say it. California’s refusal to go along with Obamacare’s latest ‘fix’ is a huge blow to President Obama. So far, the Golden State is home to the most Obamacare-related enrollments, so if it’s afraid that adopting Obama’s enforcement delay will put its fiscal sustainability in jeopardy, it’s hard to see how any other state that’s serious about the issue will disagree.

All four of the cyber security experts that testified before a House committee yesterday agreed that Americans should not use Healthcare.gov until its security features are enhanced, or in some cases, built.

Three of the four said the website should be shut down until the security problems are fixed; preferably by rebuilding the site from scratch.

While that may sound drastic, an Obama administration official responsible for developing Healthcare.gov says that up to 40 percent of the site isn’t finished yet – including the parts that deliver subsidies to insurance companies on behalf of qualified Obamacare enrollees.

And it’s not like the roughly 60 percent of the website that is completed is running smoothly, as HHS Secretary Kathleen Sebelius discovered when it crashed while she was demonstrating its (in)effectiveness to the public.

Bombarded as we are with the epic ineptitude of this fiasco, it’s hard to improve on Charles Krauthammer’s sentiments: “…this is a level of incompetence that is indescribable. And it stands to reason. We have a president who never ran anything. He was never a governor. He never ran a hot dog stand in his life and he presumed that his team could remake one-sixth of the American [economy] and this is what happens.”

Brace yourself. There is much more to come.