There is an Obamacare time bomb set to go off just before the 2014 midterm elections — and President Obama’s purported “fix” for the millions of Americans losing their health insurance doesn’t defuse it. If anything, it could make the blast worse.
In truth, Democrats are damned if Obama’s fix works and damned if it doesn’t.
For three years, at Obama’s direction, insurers and state regulators have been planning to cancel millions of individual market plans and move those people into the Obamacare exchanges at the end of this year. That process cannot be easily reversed six weeks before the transfer was to take place. Insurers did not negotiate prices with doctors and hospitals, or put plans through the state regulatory process. There is no magic wand the president can wave to suddenly reinstate canceled plans.
If Obama’s fix fails, a humanitarian disaster will ensue. Come Jan. 1, millions of Americans could find themselves without the health coverage Obama promised they could keep. Suddenly, the horror stories we are hearing today of people getting cancellation letters will be replaced by horror stories of cancer patients having their treatment disrupted and sick children being cut off from their doctors and hospitals. The outrage Americans are expressing today will pale by comparison to the outrage that will ensue when people who had insurance before Obamacare can’t get medical care they are accustomed to because they lost their plans.
But let’s say, by some miracle, Obama’s plan does work, and many in the individual market now losing their plans get to keep them for a year. That just means they will start getting cancellation letters 90 days before the end of the year. In October 2014. One month before the midterm elections.
That is a political disaster for the Democrats.
It gets worse. As the American Enterprise Institute’s Dr. Scott Gottlieb has pointed out, there is already a second wave of cancellations set to come right before the 2014 mid-term elections. It turns out that many small businesses with fewer than 50 employees, who buy in the small-group market, were able to exploit a loophole in Obamacare and avoid for one year the mandates being placed on plans in the individual market. Those businesses get to keep offering coverage that does not meet Obamacare requirements until the end of 2014. But, Gottlieb writes, that means that “starting in October 2014, many employees of small businesses will start getting the same notices that are now being mailed to individuals, informing that their existing health plans are also being cancelled.”
In other words, right before Election Day 2014, people in the small-group market are scheduled to lose their plans. If the fix Obama announced last week succeeds, then many more in the individual market will also lose their plans at the very same time — and Democrats could lose control of the Senate.
Obamacare supporters argue that a year from now the Healthcare.gov Web site will be working (fingers crossed), in which case all those people losing plans will have somewhere to go. One problem with that. Most of the people in the individual market are young and healthy and don’t use a lot of services. It was Obama’s plan all along to forcibly move millions of those younger, healthier people into the exchanges next year to subsidize care for the old and the sick. But if those younger, healthier people don’t join the exchanges next year, as planned, then the risk pool in 2014 will be older and sicker than expected. That will cause premiums to skyrocket for 2015 — because insurers base their 2015 premiums on their 2014 experience.
So even if the Web site does work a year from now, it won’t matter because Obamacare will be unaffordable. Those losing their plans right before Election Day will be in the same bind they are in today. Except there will be potentially millions more of them than there are today.
There is little Obama can do to repair this mess. If his “fix” fails, then millions in the individual market will lose their insurance coverage on Jan. 1, causing a health-care catastrophe in a few weeks. If his “fix” works, then millions of people in the individual market will see their plans canceled a year from now (along with millions in the small-group market) — causing a health-care catastrophe right before Americans go to the polls.
As Obama and the Democrats are learning, there’s no magic reset button when government screws up one-sixth of the economy. Obamacare isn’t just a health-care disaster for the American people — it’s a political disaster for the Democratic Party.