Just When You Thought…

Just when you thought that the trials and tribulations of the PPACA could not become more absurd, they do. Is panic too strong a word to describe the Administration’s decision to allow individuals whose policies have been cancelled as a consequence of the requirements of the PPACA and who believe that the insurance available to them on the exchanges is unaffordable to eschew having healthcare insurance?

The Obama administration on Thursday night significantly relaxed the rules of the federal health-care law for millions of consumers whose individual insurance policies have been canceled, saying they can buy bare-bones plans or entirely avoid a requirement that most Americans have health coverage.

The surprise announcement, days before the Dec. 23 deadline for people to choose plans that will begin Jan. 1, triggered an immediate backlash from the health insurance industry and raised fairness questions about a law intended to promote affordable and comprehensive coverage on a widespread basis.

The industry organization of healthcare insurers is clearly in a panic over the situation. I haven’t been able to locate an official statement from the American Health Insurance Plans but the unofficial statement certainly reflects that:

“This latest rule change could cause significant instability in the marketplace and lead to further confusion and disruption for consumers,” said Karen Ignagni, president of America’s Health Insurance Plans, the industry’s main trade group.

Characterizing the move as a “commonsense clarification”, as the Department of Health and Human Services has done, is beyond absurd and flies in the face of precedent. In Kendall v. United States (1838), the court said:

To contend that the obligation imposed on the president to see the laws faithfully executed implies a power to forbid their execution is a novel construction of the Constitution, and is entirely inadmissible.

There are limits to executive discretion, the Obama Administration is stretching them, and the likelihood that the Administration’s seat-of-the-pants approach to governance will be tested in the courts seems to grow with every passing day.

34 comments… add one
  • michael reynolds Link

    California is now signing up 15,000 people a day. Kentucky 3,000 day. New York 4500 a day. The pace is accelerating in all the states where the state exchanges work. Connecticut 1400 a day. So just on the best of the state exchanges that 25,000 a day, give or take.

    This despite the awful roll-out and despite obstructionism and despite endless scare tactics. I think it’s you and the Republicans starting to panic, Dave.

  • Michael, I would be happy if the rollout of the law went smoothly and ahead of schedule. That would provide the opportunity to get to the reform that’s absolutely needed: reducing costs. Without cost reduction state and local governments will be in really serious trouble long before 2018.

    BTW, over a period of 90 days the total number of individuals enrolled at the rate of 25,000 per day is under 2.5 million. That’s far, far below the CBO’s 7 million estimate. 7 million is itself just a fraction of those who don’t have healthcare insurance. And that’s assuming that all of those are complete, accurate, and legitimate enrollments which has not been the case to date.

  • ... Link

    First, if, as according to Reynolds, things are going great, why is the Administration doing this now?

    Second, how easy is it going to be for people to determine if they can skip the requirements of the law? I presume from what I’m reading above the exemption does not apply to everyone. If it doesn’t, what kind of hoops will people have to jump through to prove they are exempt? And what if the IRS decides they disagree with someone’s interpretation of the exemption to the regulations which are now being re-written and the bureaucratic rules that cannot have been put in place yet to determine who can and cannot exempt themselves from the requirements of the law, which keeps changing every week or so as the Administration flails about?

    Third, can someone explain to me how it was that Ted Cruz proposing something much more simple and practical a couple of months ago was a sign that he was PURE EVIL, when Obama proposing a half-assed version now is a commonsense clarification?

  • ... Link

    BTW, over a period of 90 days the total number of individuals enrolled at the rate of 25,000 per day is under 2.5 million. That’s far, far below the CBO’s 7 million estimate. 7 million is itself just a fraction of those who don’t have healthcare insurance.

    Not to mention the people who have had their insurance cancelled, which I presume is what the latest half-assery is supposed to address. I understand that no one bothered to read the law before they passed it. Has anyone in the Administration bothered to read it in the 3.5+ years SINCE it was passed?

    Embrace the suck.

  • PD Shaw Link

    Just another beautiful morning, whistling through the graveyard, picking lilies with Reynolds.

  • PD Shaw Link

    I guess the good news is that my upper income friends that liked to use a catastrophic plan, coupled with an HSA as an additional tax shelter should be happy.

    Also, some people might be happy that I was wrong in predicting that the Administration would hold firm on the individual mandate, though I ask for partial credit.

  • steve Link

    Far as I can tell, this move, unlike the prior two, is clearly legal. Whether or not it is good policy is another question. They should have had broader use of catastrophic plans and HSAs to begin with. They probably come out to about the same cast as a bronze plan anyway.


  • PD Shaw Link

    What is the difference here btw/ a bronze plan and a catastrophic plan? From what I can tell, a catastrophic plan sold on the exchanges, still has to have the free preventive services that would have been out-of-pockets under traditional catastrophic plans. It would appear the difference is that a catastrophic plan sold on the exchanges was priced for under 30 yr olds, and thus is a steal for those over 30.(*) But not eligible for subsidies, so only a steal for those with the Benjamins.

    (*) Or can the insurers charge a higher premium for those who are older?

  • PD Shaw Link

    The Hardship Exemption Form would suggest one could get just a hardship exemption from the individual mandate or one could get a hardship exemption to purchase catastrophic policy. But there are some cross currents here.

  • TastyBits Link

    @PD Shaw

    I guess the good news is that my upper income friends that liked to use a catastrophic plan, coupled with an HSA as an additional tax shelter should be happy.

    Rich white liberals are tired of having to spend a lot of money on their health insurance. It was never about health care.

    Also, some people might be happy that I was wrong in predicting that the Administration would hold firm on the individual mandate, though I ask for partial credit.

    Obamacare is a political issue. President Obama and the Democrats will do anything to win elections. Also, the insurance companies, hospitals, and pharmaceuticals are all-in. When they jump ship, you will know the turd is sinking.

  • When they jump ship, you will know the turd is sinking.

    At this point that’s an “if” rather than a “when”. If the insurance companies decide the PPACA is a losing proposition for them, they would certainly have standing to oppose the administration in the courts and there’s no practical way to force them to stay in any given market.

    As Yves Smith pointed out a few days ago, the entire insurance paradigm for healthcare is unworkable. Contrary to what the authors of the PPACA apparently thought, the insurers’ incentives are the opposite of what we should want.

  • TastyBits Link

    @Dave Schuler

    … Contrary to what the authors of the PPACA apparently thought …

    This was not a bill hastily thrown together. It was well thought out over many years. 2,000+ pages do not get written overnight. The entire thing is well reasoned, but the purported premises are debatable.

    This was never about health care. Lowering premiums for existing policyholders and ensuring profits for the healthcare industry were the goals. The Democrats intended to sop up the political gravy.

  • The Democrats intended to sop up the political gravy.

    On that we’re in agreement. I think, however, that the mechanics of the PPACA consisted of policy boilerplate the Congressional Democrats had effectively had around for years and which they took would be effective as an article of faith. It’s the premises I’m questioning. And you’d be amazed at how much output staff monkeys with computers can produce in a relatively short time.

    At this point it certainly looks as though they miscalculated. As I’ve been saying for some time, time will tell.

  • ... Link

    It was well thought out over many years.

    I do believe you are giving them far too much credit. I think Schuler’s 1:35pm comment comes much closer to the truth of the matter.

  • ... Link

    I must say, though, that it is somewhat … alarming? … to see such naked cynicism from PD though. I’m not sure I remember detecting as much bitterness in any of his previous comments.

  • TastyBits Link

    @Dave Schuler

    The actual authors are from progressive think tanks and universities. They took the Hillarycare plan, and reworked it to co-opt the healthcare industry. Hence, there were no “Harry and Louise” ads.

    The insurance industry did not get in bed with the devil. It is the other way around. The Democrats got into bed with the devil, and they did miscalculate. If this turd goes south, they will learn that this devil is merciless.

    After biting the man who saved him, the snake said, “you knew I was a snake when you saved me.” Hubris can be a bitch.

  • TastyBits Link


    If you look at the logic and listen to the authors, it makes sense. This does not mean that it will work. If the premises are faulty, the logic is of little matter.

    The reason for forcing all plans to include a basic set of coverage is that a’ la carte is always more expensive. Airline tickets now only include the basics, and they are now cheaper. People now only pay for what they use, but the overall price is now higher. If you only paid for the cable channels you used, the price would be higher.

    The individual mandate would provide the exchanges with large risk pools, and subsidies would provide insurance for the working class folks. The individual market would be forced into the exchanges through various mechanisms, and if the small and big businesses pushed their employees into the exchanges, it would be all the better.

    There may have been some extras thrown by the politicians, but the core was not written by them.

    Also, high deductibles ensure health care usage will be lowered, but because the healthcare industry customers are legally bound to them, they will never lose money.

  • The reason for forcing all plans to include a basic set of coverage

    That’s one of the problems with the law as the regulations have been written. It doesn’t include “a basic set of coverage”. It goes well beyond the basic and each of those steps beyond basic coverage adds to the cost. Some a little, some a lot.

    Guaranteed issue increases cost. Community rating increases cost. Each of the buzzwords that they’ve insisted on increases cost.

    The bad assumptions were a) that the insurers would eat some of the cost increases and b) the insurers actually have any interest in reducing costs.

    The insurers have no interest in reducing costs, especially given the loss ratio requirements. 15% of $2 trillion is larger than 15% of $1.5 trillion.

  • Red Barchetta Link

    The house is burning down and Obama and his minions are in front mowing the lawn. Perhaps they could hire Reynolds as a gardener.

  • PD Shaw Link

    I found that Yves Smith piece that Dave referenced, and I must say that I’m shocked that any insurance policy on the exchange would be allowed to exempt HIV drugs. This, and similar exclusions, create a pretty big hole for people with pre-existing condition.

    (I think YS could have been a more clear on the insurance problem here. I don’t think pre-existing conditions pose so much of problem for insurance as planned expenses. There is a difference btw/ the issue of knowing someone will spend $4,000 /yr on HIV drugs, versus knowing someone is at higher risk for cancer or various immune system problems. I think the first is not truly an insurable risk, but a subsidy issue, while the second is an insurable risk, but poses problems stemming from the ability or inability to price the increased risk)

  • PD Shaw Link

    Back to the law thing, the ACA does have specific statutory authority for hardship exemptions, and the HHS has passed rules and guidance for how that works. I think this is a traditional framework in which there is a broad rule of law applicable to all, that is mitigated by a safety valve, amounting to case-by-case temporary exemptions for when the rule is too rigid.

    As a practical matter, it seems to me that all that a petitioner needs to do is complete a simple application and attach a copy of a cancellation notice.

    The more theoretical question is whether others similarly situated who did not have insurance last year can now bootstrap this same reasoning to get their own hardship exemption. The proposition that the government will give a hardship exemption in situation A, does not preclude such an exemption in situation B and if situation A and B are analogues, it might be required.

  • Andy Link

    It’s amazing how far this administration has come since late October:


    This whole thing is depressing – the ideologues on either side are using the people affected by problems with the ACA for political goals. I don’t think they really care.

  • ... Link

    I don’t think they really care.

    That’s been abundantly clear since the last few months of 2008, even for the naive.

  • I don’t think they really care.

    I don’t think it’s quite that simple. I think it’s a hierarchy of values kind of thing. Caring is somewhere on the hierarchy of values but it’s below things like being re-elected, raising money, preparing for the next rung on the ladder, etc. Ultimately, officeholders complete conflate the country’s welfare with their own.

    The net effect is the same, however.

  • Ben Wolf Link

    The Washington Post writes that “According to HHS, the exemption covers people who ‘experienced financial or domestic circumstances, including an unexpected natural or human-caused event, such that he or she had a significant, unexpected increase in essential expenses that prevented him or her from obtaining coverage under a qualified health plan.'”

    Correct me if I’m wrong but in this case the “human-caused event” preventing these people from buying into Obamacare is the cost of Obamacare.

  • Correct me if I’m wrong but in this case the “human-caused event” preventing these people from buying into Obamacare is the cost of Obamacare.

    Yep. I think the irony of the Administration’s most recent move in PPACA damage control is lost on most people.

  • PD Shaw Link

    @Ben, I puzzled over that language you quoted, which as far as I can tell is traced to Ezra Klein’s interpretation of what HHS did.(*) Some have taken the “unexpected” language to mean that the people who lost their insurance had a special impediment since they were not expecting it. This would not be true of people already without insurance. But when I look at the recent HHS Statement and the letter from the Democratic Senators that inspired it, the “unexpected” language cannot be found.

    The hardship here is (a) people w/ cancelled insurance plans (b) who have difficulty finding an affordable bronze plan. Its not clear at all why the first condition is relevant.

    (*) The “unexpected” language originates from June 2013 guidance.

  • Ben Wolf Link

    Thanks, PD.

  • jan Link

    Reynolds is a prime example of a partisan seeing what he wants to see. I’ve often wondered what it would take for someone like him to admit that someone’s leadership, in his own party, could be such a dud.

  • TastyBits Link


    I am not attacking or defending him, but my observation is that there are at least two @michael reynolds.

    When he is in a partisan fight, he is a close in knife fighter. In this instance, he does not consider there to be many rules, and he is not going to budge unless he can gain an advantage. Even if he sees something wrong with his guy, he is not going to change the subject.

    When he is not in a partisan fight, he will fight from the outside, and he will follow some rules. You can see this on the OTB threads where the liberals are dominating the discussions. In this instance, he is usually the sane one. He will admit to his guy not being perfect.

  • jan Link


    Most of the time I don’t know what to make of someone like Michael. I’m seeing him more as a template of a typical social progressive intellectual partisan. In this way he is so imbued in his ideology and what he thinks is the right way to perceive and deal with life and humanity, that there is no reasonable way to discuss any different POV. A Reynolds mold, on the left, is actually a mirror image of those on the hard right, as both “types” are impermeable to any discourse which doesn’t adhere to their party line. They will literally go down with the sinking ship mouthing, “It will turn out ok. Trust me on that. And, damn those of you on the opposite side of the political spectrum!”

  • TastyBits Link


    On the OTB Obamacare discussions, it is mostly the kool-aid drinkers who are left. The others are worried about this Obamacare fiasco. Mostly the left is trying to convince themselves that it is going to get better. They will get more shrill and insane if it gets worse.

    This could be the unraveling of the progressive, and the smarter ones sense it.

    Smashing liberal arguments is relatively easy, but you need to have patience. Most liberals have a grossly over-inflated opinion of their intellectual capacity. Using the Socratic method, you can destroy most of their arguments, and it is usually easier to attack the logic.

    Another technique is to use your opponent to address a different audience. You may never be able to convince @michael reynolds, but he is not the only reading your comments.

    Finally, embrace the hubris, and build it up. “Obamacare: it is not just for health insurance, but it also slices and dices. It is just the thing for flat tires, and it will leave the toilet bowl sparkling clean.”

  • This could be the unraveling of the progressive, and the smarter ones sense it.

    I sincerely doubt it. Whiggism, the belief that history is an arrow that moves in one direction and it points in the direction you prefer rather than, say, a circle or a tide that ebbs and flows is not something that people are willing to relinquish. It can’t be refuted with logic or evidence.

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