Vulnerable Democrats: No, Seriously, Who's Up For an Obamacare Delay?

Posted: Oct 25, 2013 10:32 AM

And they're not talking about the White House's two-bit non-delay delay either. West Virginia Sen. Joe Manchin's working on a bill that would delay Obamacare's individual mandate tax for a full year (bipartisanship!), while North Carolina Sen. Kay Hagan wants the law's enrollment period extended by a few months. It's easy to understand the political instincts at play here: Obamacare is unpopular, the individual mandate tax is extremely unpopular, and the idea that the government might end up fining people for failing to enroll through the government's broken website is outright toxic. We've got to do something to at least buy ourselves some time, these Democrats are muttering to themselves, shell-shocked as the law for which they've taken major political risks implodes. Alas, as I've noted previously, these "solutions" are untenable. They're worse than that, actually; they're counter-productive. Do these Democrats -- who've voted to pass and protect this law repeatedly -- even understand how it works? It seems not. An education:

2) Delay the individual mandate. On top of the incredible political embarrassment that would come from delaying a provision the Obama administration spent years defending in federal court, policy-wise, this would only exacerbate the problem mentioned above. If Americans aren't penalized for failing to purchase insurance, the young and healthy ones will have even less incentive to buy it. Insurers, who agreed to take on individuals with pre-existing conditions in concert with an individual mandate, would no doubt have something to say about this. If Obama bypasses Congress to impose this delay, perhaps injured insurers could craft a legal challenge. Heck, they could even borrow the Obama administration’s own briefs about how inextricably linked the individual mandate is to the greater regulatory scheme of the law.

4) Extend open enrollment. Though the White House has emphasized that the enrollment period extends until March 31, the penalty for not purchasing insurance would hit people after Feb. 15 — including those who purchase insurance after that date. So even if the enrollment period is extended past March 31, it may not pull in that many more customers because those who haven't purchased by that point would have to choose to pay premiums on top of the penalty. It's also important to keep in mind why the time to enroll is limited. It seems counterintuitive at first. Wouldn't insurers want individuals to be able to buy their product all year round? The problem is that if there were no such limitation, then healthy people — knowing insurers could never legally deny them coverage — could simply pay the fine and only purchase insurance if they became sick or injured. How do you think the car insurance business would work if people could sign up for coverage after they were involved in an accident? Obviously, there’s a difference when extending open enrollment in the first year of the program’s operation, but for this scheme to work, it’s also important to instill in younger Americans a sense of urgency to buying insurance by setting a hard deadline and sticking with it.

If Washington delays the mandate tax and/or extends open enrollment without passing parallel delays of other elements of the law like guaranteed issue and community rating, the so-called "insurance death spiral" threat only becomes more acute. And lest you think the term "death spiral" is a theoretical phenomenon, or some dystopic piece of right-wing fear-mongering, here's Reason's Peter Suderman recapping two real-life instances of the effect actually taking place:

New York state’s guaranteed issue and community rating rules—the two regulations that limit how insurers can charge based on health history and require them to sell policies to all comers—took effect in 1994. At the time, there were about 752,000 policyholders in the state’s individual market, or about 4.7 percent of the non-Medicare population. But by 2009, according to a Manhattan Institute report by Stephen Parente and Tarren Bragdon, the state’s individual market had practically disappeared, leaving just 34,000 participants, or about 0.2 percent of the non-elderly population. Individual insurance premiums, meanwhile, were among the highest in the nation—about $388 on average in 2007, compared with just $151 in California, another big Democratic-leaning state. In New York City, the annualized premium cost for individuals was more than $9,300 and more than $26,400 for a family. The result, in other words, was a combination of sky-high premiums and far fewer insured individuals. Around the same time that New York was overhauling its insurance market, Washington state was implementing a similar set of health plan rules. Insurers faced new regulations regarding plans sold to individuals with preexisting conditions, and the requirement that they sell to everyone. For a brief period, there was a coverage mandate, but that never went into effect. The state’s individual market deteriorated. One insurer raised premiums by 78 percent in a three year period. As premiums rose, relatively healthier people left the market, and insurers were left covering a lot of very sick, very expensive individuals. In the end, many insurers simply dropped out of the market rather than lose money. According to a report on the reforms commissioned by the insurance industry, there were 19 carriers in the individual market in 1993. By 1999, there were just two—and they weren’t taking new applicants. The individual market was effectively killed off by the reforms.

"Reforms" are not always successful. These ones resulted in fewer options, limited access, skyrocketing costs, and fewer insured people. A quadruple-whammy. And unlike at the state level -- where insurance companies can pack up their tent and escape regulatory climates that would bankrupt them -- a national death spiral would be catastrophic to the entire nation's healthcare system. The best way (the only way?) to ensure that Obamacare's glaring malfunctions don't crash the whole system is to delay all or most of the law -- whether for a full year (Manchin's timetable) or until the exchanges prove themselves to have been functional for several consecutive months (Rubio's idea). In light of Democrats' growing skittishness over Obamacare and the dim prospects for even a relatively quick fix, and up-or-down vote on delay legislation might attract a majority even in the Democrat-held Senate. Delay is a popular idea among the American people, according to a new Rasmussen* poll. With negative headlines swirling, would Democrats really link arms and vote to keep a failing, unready law in place? During the recent shutdown fight, Democrats used the Twitter hashtag #LetThemVote to pressure House Speaker John Boehner to allow an up-or-down vote on President Obama's preferred "clean" temporary budget. When all the dust settled, that's what Boehner basically ended up doing. Democrats, meanwhile, rejected various (clearly needed) Obamacare delays, leading to and sustaining the shutdown. Well, the trainwreck is here. It could get worse. The window of opportunity to mitigate the harm is closing rapidly. How 'bout it, Harry? #LetThemVote

- Reid is going through the motions:

"No excuse" means absolutely nothing if he's not prepared to do something to address the problem. I say again, #LetThemVote.

*Rasmussen Reports, since the departure of Scott Rasmussen, has changed their methodology. They've gone from generating reliably pro-Republican results to the exact opposite. I'd love to see this question polled by another firm that isn't a newly-minted liberal outlier. Support for a delay might be even stronger.

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