360° Coverage : Obama's Politically Smart Move To Waive Health Rules On...

2 Updates

Obama's Politically Smart Move To Waive Health Rules On Small Business Comes At Cost

Mar 4 2014, 6:43pm CST | by

The Obama Administration’s imminent decision to give small businesses at least another year (and maybe longer) to conform their health insurance plans to new federal rules is a predictable political...

Filed under: news

 
 
 

33 weeks ago

Obama's Politically Smart Move To Waive Health Rules On Small Business Comes At Cost

Mar 4 2014, 6:43pm CST | by

The Obama Administration’s imminent decision to give small businesses at least another year (and maybe longer) to conform their health insurance plans to new federal rules is a predictable political gesture, but doesn’t come without costs.

At issue are provisions in Obamacare that force every health plan sold in America to conform to a litany of new Federal mandates and regulations. Even many quality health plans didn’t meet all the new criteria, which require insurers to cover a long menu of medical services that many consumers neither want coverage for, nor need.

Accommodating all of the new mandates is a pricey affair. It forces insurers to push up premiums, or make up for the costs in other ways – mostly by cheapening the networks of doctors they offer, or the drugs they will cover. In response, many insurers are simply cancelling old plans that don’t meet the new rules, and rolling consumers onto new but costlier policies. Or they’re steering people to the Obamacare exchanges.

Health plans sold directly to consumers went through this transition last spring, prompting millions of consumers to loose their existing coverage. But small businesses (with fewer than 50 employees) exploited a loophole they found in the Obamacare text. If these businesses renewed their policies early, before the end of 2013, then those plans would not be subject to Obamacare’s costly mandates for a full year. In many cases, that meant until December 31, 2014. As a result, these small businesses wouldn’t need to start canceling their existing health plans until this fall.

Most businesses took advantage of this provision. But that puts the scheduled cancellations on track to collide right into the midterm election. To avoid the specter of millions (and probably tens of millions) of small businesses canceling their health policies four weeks before the November election, the Obama Administration is going to give these businesses another year (or maybe longer, according to some reports) to continue offering these “non compliant” health plans.

The move is predictable. It will spark more criticism that the Obama team is willfully flouting the plain language of its own law. But few will seriously challenge an effort to ease some of the worst aspects of health law’s byzantine provisions. How can Obamacare’s critics seriously decry an effort obviate a provision they detest?

But that doesn’t mean that the new gambit comes free. It has some serious costs. Insurers were dependent on forcing these small group policies into the Obamacare exchanges (along with the individual market policies) as a way to buff the pool of people served by that burgeoning market. The small group policyholders tend to be younger, healthier, and wealthier beneficiaries. Precisely the kind of customers that insurers need inside Obamacare to make the exchange risk pools work.

Insurers are now in the throws of pricing out their premiums for 2015 – deciding how much they’ll charge for their 2015 Obamacare plans. They now know they wont be able to count on the small group policyholders transitioning into Obamacare. They can also bet that the Obama Administration will similarly take the politically smart step of rescinding the individual mandate “tax” for this year. The only thing the Administration is waiting for is the March 31st window to close on open enrollment. They don’t want to jump the gun on that announcement. They reason: The threat of the tax could still compel some additional people to sign up for Obamacare in the closing days of the enrollment period.

Without the coercion of that tax, or the forced migration of the small group policyholders into Obamacare, the risk pool for next year is likely to be as bad, if not worse than it was this year. Insurers are going to have to price premiums accordingly. While the various reinsurance and risk sharing mechanisms embedded in the law will blunt about two-thirds of these effects, it wont offset all of the costs.

Nobody ever priced in these delays and waivers on some of the health law’s key features. Once premiums rise, the demise of the exchanges becomes self winding. Higher premiums chase away more health beneficiaries, causing premiums to rise still further. That’s the essence of an insurance death spiral. The end game is a benefit that erodes into something that closely resembles Medicaid.

Obamacare will still be a good deal for lower income beneficiaries who can buy it for virtually free, owing to premium and cost-sharing subsidies (people between 150% to 250% of the federal poverty level). That income range is the law’s economic “sweet spot”. But many other consumers will find that they are better off buying “non compliant” coverage off the exchange, even if it means paying higher prices than they are paying today, and forking over the tax penalty.

Obamacare was a triumph of technocrats. Each incentive, each coercion, each mandate, and every new promise, is inextricably tied to a myriad of other features. As the architects peel away their own provisions, the ripples extend widely.

When Obamacare premiums are announced late this spring, just as the election cycle heats up, the architects of the Obamacare law — and of the subsequent delays — will get one whiff of a political reckoning that they were trying to forestall.

You can follow Dr. Scott Gottlieb on Twitter @ScottGottliebMD

Source: Forbes Business

 
Update
2

8 weeks ago

Khazanah throws MAS RM6b lifeline

Aug 29 2014 5:01pm CDT | Source: Business Times Singapore

August 30, 2014 1:15 AMKHAZANAH Nasional will inject RM6 billion (SS$2.4 billion) over three years to resuscitate loss-making Malaysia Airlines (MAS) under a recovery plan that includes even an Act of Parliament. Other key moves are migrating its operations, assets and liabilities to a new company (NewCo) and slashing the workforce of 20,000 by 3 ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 
Update
1

8 weeks ago

MAS posts loss of RM307m for Q2

Aug 28 2014 5:00pm CDT | Source: Business Times Singapore

August 29, 2014 1:13 AMMALAYSIA Airlines (MAS) registered a loss of RM307 million (S$122 million) for the second quarter to end-June, but warned of worse to come in the second half when the "full financial impact of the double tragedies of MH3 ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 

Don't miss ...

 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

Kenya to remove ghost workers from payroll
Nairobi, Oct 25 (IANS) The Kenyan government Friday said it will remove all ghost workers from its payroll in November.
 
 
Mexico joins efforts to combat Ebola outbreak in West Africa
Mexico City, Oct 25 (IANS) Mexico is joining the international efforts to combat an outbreak of the deadly Ebola virus in West Africa, the foreign affairs ministry said Friday.
 
 
Both US nurses recover from Ebola: hospitals
Washington, Oct 25 (IANS) Both US nurses who contracted Ebola while caring for a patient from Liberia have recovered from the potentially deadly disease, the hospitals that treated them said Friday.
 
 
UN gives Rwanda $7.2 mn for policy planning
Kigali, Oct 25 (IANS) The government of Rwanda and One UN Rwanda Friday signed 7.2 million dollars financing deal to build capacity in data generation and enhance evidence based on policy planning.
 
 
 

Latest from the Network

Second MERS case reported in Qatar
Doha, Oct 23 (IANS) A 43-year-old man in Qatar has tested positive for Middle East Respiratory Syndrome (MERS) in the second confirmed case of the deadly virus in 10 days, media reported Thursday. The patient had...
Read more on Business Balla
 
Two people die in Pakistan bomb blast
Islamabad, Oct 23 (IANS) At least two people were killed and 12 others injured in an explosion that took place in Pakistan's Balochistan province Thursday, media reported. The bomb was planted on a motorcycle, Dawn...
Read more on Politics Balla
 
Trott extends contract with Warwickshire till 2017
London, Oct 23 (IANS) England batsman Jonathan Trott, whose mental issues led to his abrupt departure from last winter's Ashes tour, has confirmed his successful comeback to competitive cricket by signing a new three-...
Read more on Sport Balla
 
Srikanth, Kashyap big movers in BWF rankings
Kuala Lumpur, Oct 23 (IANS) Indian men shuttlers Kidambi Srikanth and Parupalli Kashyap jumped seven places each in the latest Badminton World Federation (BWF) rankings released Thursday while Olympic bronze medallist...
Read more on Sport Balla
 
Alvin Stardust dead
London, Oct 23 (IANS) English singer Alvin Stardust died after a short illness. He was 72. Stardust's manager confirmed the news about his demise Thursday, reports mirror.co.uk. He was recently diagnosed with...
Read more on Celebrity Balla
 
Indian man reunited with family after 40 years
Dubai, Oct 23 (IANS) An Indian man, who had disappeared from his hometown in Kerala nearly 40 years ago, has been found by his family at a hospital in Dubai in the UAE, a newspaper report said. Now in his 60s, Abdulla...
Read more on Politics Balla
 
Srikanth, Kashyap, Saina rise in world rankings
Kala Lumpur, Oct 23 (IANS) Indian men shuttlers Kidambi Srikanth and Parupalli Kashyap jumped seven places each in the latest released Badminton World Federation (BWF) rankings Thursday while Olympic bronze medallist...
Read more on Sport Balla
 
Flintoff signs for Big Bash side Brisbane Heat
Brisbane, Oct 23 (IANS) Former England captain and all-rounder Andrew Flintoff, who retired from international cricket in 2009, Wednesday confirmed that he will play for Brisbane Heat in the Big Bash League (BBL) this...
Read more on Sport Balla
 
OPEC daily basket price falls again
Vienna, Oct 23 (IANS/WAM) The basket of 12 crude oils of the Organization of Petroleum Exporting Countries (OPEC) closed at $81.94 a barrel Wednesday compared to $82.09 Tuesday, the OPEC Secretariat said. The new OPEC...
Read more on Business Balla
 
Lopez to sign multi-million dollar deal?
Los Angeles, Oct 23 (IANS) Singer-actress Jennifer Lopez is reportedly in the final stages of securing a multi-million dollar deal to perform in Las Vegas. The 45-year-old is being offered $350,000 per show at The...
Read more on Celebrity Balla