When the White House unveiled its employer mandate delay in a news dump just before the Independence Day long weekend, many conservatives jumped to the conclusion that the postponement was driven by rank electoral politics. While such considerations almost certainly factored into the administration's calculus, I posited at the time that the move might cause, not alleviate, political headaches for the president. In short, pushing back the employer mandate for a year might give a temporary boost to the jobs picture -- but it could also keep a haze of uncertainty hanging over employers, cause large businesses to dump employees off existing coverage, and apply more pressure to the already strained (and behind schedule) government exchanges. Several delays later, we've been greeted with another "never mind" moment, which Katie laid out earlier:
Now comes word that another costly provision of the health law—its caps on out-of-pocket insurance costs—will be delayed for one more year. According to the Congressional Research Service, as of November 2011, the Obama administration had missed as many as one-third of the deadlines, specified by law, under the Affordable Care Act. Here are the details on the latest one. Obamacare contains a blizzard of mandates and regulations that will make health insurance more costly. One of the most significant is its caps on out-of-pocket insurance costs, such as co-pays and deductibles. Section 2707(b) of the Public Health Service Act, as added by Obamacare, requires that “a group health plan and a health insurance issuer offering group or individual health insurance coverage may not establish lifetime limits on the dollar value of benefits for the any participant or beneficiary.” Annual limits on cost-sharing are specified by Section 1302(c) of the Affordable Care Act; in addition, starting in 2014, deductibles are limited to $2,000 per year for individual plans, and $4,000 per year for family plans.
Here's the relevant part of the statute. Again, this is the law -- not some nebulous set of guidelines:
The reason for the delay? “Federal officials said that many insurers and employers needed more time to comply because they used separate companies to help administer major medical coverage and drug benefits, with separate limits on out-of-pocket costs. In many cases, the companies have separate computer systems that cannot communicate with one another.” The best part in Pear’s story is when a “senior administration official” said that “we had to balance the interests of consumers with the concerns of health plan sponsors and carriers…They asked for more time to comply.” Exactly how is it in consumers’ interests to pay far more for health insurance than they do already?
Incompatible computer systems. Therein lies the crux of the exchanges' logistical problems, as well -- which is why the eligibility verification delay became inevitable. The new move will ease premium increases because, like many of Obamacare's mandates, annual out-of-pocket caps drive up the cost of doing business for insurers. Those costs are passed down to consumers. Now that pain won't be felt quite as acutely anymore...at least until 2015, which just so happens to be after the midterm elections. The political motive is obvious. That being said, there are also substantial inherent risks in this decision: (1) It feeds the burgeoning narrative that Obamacare's implementation is an shambolic trainwreck -- or "a joke." This reflects poorly on the party responsible for passing and defending the law. (2) As Roy starts to get at, this is another gambit that benefits a major industry. So far, Obamacare loopholes and postponements have been bestowed upon big business, the insurance industry, and Congress. Small businesses and families -- you know, the little people -- are out of luck. Democrats and the White House have vowed to obstruct Republican efforts to delay the individual mandate tax, as well as funding for subsidies, due to fraud and security worries. The GOP occupies the populist high ground here, while President Obama finds himself in the awkward position of putting off one of the 'consumer protections' he's touted far and wide. (3) Along those lines, Phil Klein sounds another problematic timing note:
This revelation couldn’t come at a worse time for the law. Right now, administration officials right up to Obama are engaging in a furious effort to convince Americans — especially young Americans — to purchase insurance. But one of the major selling points to younger Americans is that even if they’d be paying more for insurance under the health care law, their financial exposure would be more limited in the event of unexpected medical costs due to the law’s consumer protections. Yet if their potential out-of-pocket exposure remains high, what reason will young and healthy Americans who don’t qualify for generous enough subsidies have to purchase costly health insurance?
Indeed, this calculation for younger, healthier Americans becomes even more lop-sided against seeking coverage through Obamacare than before -- and no amount of cajoling from the likes of Oprah will convince the masses to act against their clear financial interests.
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