Friday, November 15, 2013
The New Cry: It's Not the President: It's the Insurance Companies
The ObamaCare War on Insurance Companies “When in doubt, demonize!” That is the Obama campaign strategy: “Fat cat bankers,” overpaid corporate execs, corporate execs, greedy oil companies, conventions in Las Vegas, and insurance companies have been his targets in the past. He has special animus for the Tea Party. President Obama is not cancelling insurance policies. He said you could keep your policy. The “grandfather clause” guaranteed it. He meant it. Noone forced the insurance companies to cancel policies. That is the Party Line. The public won’t understand that Kathleen Sebelius and Health and Human Services issued regulations three years ago that effectively nullified the grandfather clause. The effect of the regulationss was that the grandfather clause would be inapplicable if he insurer made any major modification since 2010. Such modifications could include increased co-pays or premiums or changes in coverage. Even a $5 increase in premiums would nullify the nullify the grandfather clause. The insurers warned the Obama Administration three years ago that they would have to cancel the policies. That was the plan of the Obama Administration. The insurance companies were implicit in the enactment of ObamaCare and the cancellation of the existing private health insurance policies. They were led to believe that ObamaCare would result in a flood of new customers that would result in higher profits. Existing policyholders would have to buy new policies at higher premiums and deductibles. That was their illusion. The Administration and insurers are truly shocked at the backlash of the 5% and their dependents now cut off of their policies, the “sub-standard,” policies they were satisfied with. The insurers now realize that their actuarial assumptions are wrong. Their costs through adverse selection will greatly exceed premiums. The good news for the largest health insurers, such as Aetna, CIGNA, and United HealthCare is that they wisely stayed out of most of the exchanges for individual policies. The insureds under the new plans will receive substantial premium increases next year at this time. A dozen insurance execs met with the President today. They could not be assuaged after the President double crossed them yesterday. He announced yesterday that he will allow the insurance companies to continue to issue existing policies even if they did not meet all the requirements of ObamaCare. He knows that the regulation and issuance of the policies is subject to the jurisdiction of state insurance regulators. An insurance company cannot unilaterally issue policies in a state. Neither the insurers nor regulators are amenable to reissue the cancelled policies, all 5 million to date. They would undoubtedly lose substantial sums of money in doing so, and then have to re-rescind them next year. They also know that the President lacks the right to ignore the mandatory provisions in the statute. Yet the President yesterday tried to shift the onus to the insurers for cancelling he existing private health insurance policies and their failure to reissue them. The President gave them permission, and they will not comply. Thus, it is the insurers’ fault – not his. The Congressional Democrats are echoing the President’s words like shrieking banshees. The President was conciliatory in requesting the insurers reopen the existing policies. It’s the insurers who will appear unreasonable. Noone likes them anyways; they will make the perfect patsies in the 2014 and 2016 elections.