ObamaCare: the myth and the reality
Perhaps I should say the building myth and the reality.
What is the building myth? That the worst is behind it. Megan McArdle fills you in:
Many of the commentators I’ve read seem to think that the worst is over, as far as unpopular surprises.
But she then takes a chain saw to that particular notion:
In fact, the worst is yet to come.
· 2014: Small-business policy cancellations. This year, the small-business market is going to get hit with the policy cancellations that roiled the individual market last year. Some firms will get better deals, but others will find that their coverage is being canceled in favor of more expensive policies that don’t cover as many of the doctors or procedures that they want. This is going to be a rolling problem throughout the year.
· Summer 2014: Insurers get a sizable chunk of money from the government to cover any excess losses. When the costs are published, this is going to be wildly unpopular: The administration has spent three years saying that Obamacare was the antidote to abuses by Big, Bad Insurance Companies, and suddenly it’s a mechanism to funnel taxpayer money to them?
· Fall 2014: New premiums are announced.
· 2014 and onward: Medicare reimbursement cuts eat into hospital margins, triggering a lot of lobbying and sad ads about how Beloved Local Hospital may have to close.
· Spring 2015: The Internal Revenue Service starts collecting individual mandate penalties: 1 percent of income in the first year. That’s going to be a nasty shock to folks who thought the penalty was just $95. I, like many other analysts, expect the administration to announce a temporary delay sometime after April 1, 2014.
· Spring 2015: The IRS demands that people whose income was higher than they projected pay back their excess subsidies. This could be thousands of dollars.
· Spring 2015: Cuts to Medicare Advantage, which the administration punted on in 2013, are scheduled to go into effect. This will reduce benefits currently enjoyed by millions of seniors, which is why they didn’t let them go into effect this year.
· Fall 2015: This is when expert Bob Laszewski says insurers will begin exiting the market if the exchange policies aren’t profitable.
· Fall 2017: Companies and unions start learning whether their plans will get hit by the “Cadillac tax,” a stiff excise tax on expensive policies that will hit plans with generous benefits or an older and sicker employee base. Expect a lot of companies and unions to radically decrease benefits and increase cost-sharing as a result.
· January 2018: The temporary risk-adjustment plans, which the administration is relying on to keep insurers in the marketplaces even if their customer pool is older and sicker than projected, run out. Now if insurers take losses, they just lose the money.
· Fall 2018: Buyers find out that subsidy growth is capped for next year’s premiums; instead of simply being pegged to the price of the second-cheapest silver plan, whatever that cost is, their growth is fixed. This will show up in higher premiums for families — and, potentially, in an adverse-selection death spiral.
In fact, she is exactly right. Note how many of these surprises happen before 2016. And, as they come true, perhaps … just perhaps … when voters are told that the rest of this nonsense is likely to come true too (it is the law, you see), they might believe it.
Perhaps. The “Cadillac tax” was inartfully delayed until after the election. However, the snowball will already be rolling down hill by then and you’d think the public would be open to believing that the rest of this abomination, that which was delayed, will indeed happen. And you’d also believe they’d want to do something about that (that, of course assumes Obama doesn’t wave the magic executive pen and waive all of this until after the election).
But then, doing something would depend on what? Well, getting elected officials that want to actually get rid of most of this monstrosity and are willing to say that and then do it. Uh, that won’t be Democrats (well except perhaps blue dog Democrats, if they’re not extinct by then).
What it all boils down too is that voters will have to depend on Republicans to do the heavy lifting. The question is will they do that if elected? In other words, will Republicans be up to the job?
If I had to base it on the current crop – yeah, not so much.