Insurance industry expert Bob Laszewski says this is a do or die moment for Obamacare. He believes there is a way to save the policy but only if the President acts before insurers announce their rate increases in May.
Laszewski, who has been one of the law’s toughest critics, notes reports that many insurers are discussing double-digit rate increases in order to adjust for low enrollment and a risk pool with far fewer young invincibles than anticipated. Laszewski offers this blunt of assessment of what that will mean “If the health plans do issue double digit rate increases for 2015, Obamacare is finished.” That gives the White House a narrow window:
The health insurance companies have to submit their new health insurance
plans and rates between May 27 and June 27 for the 2015 Obamacare
open-enrollment period beginning on November 15th. Any major
modifications to the current Obamacare regulations need to be issued in
the next month to give the carriers time to adjust and develop new
If the administration goes into the next open enrollment with the same
unattractive plan offerings costing a lot more than they do today, they
will not be able to reboot Obamacare.
Rescuing the President from this self-inflicted disaster isn’t necessarily on the insurer’s agenda. If they need to issue double-digit rate hikes to make this work, they’ll do that. Laszewski’s suggestion is to offer them an incentive, something that will make them willing to take a small hit now (in the form of lower rate hikes) for a longer term payout. Specifically, Laszewski suggests loosening the mandated benefits to allow insurers more space to compete:
Give carriers the ability to swap current benefit mandates (that were
set by regulation not statute) for lower premiums and deductibles and be
completely transparent in what those trade-offs are while still
complying with the underlying statutory requirement that the plans must
be worth at least 60% of total health care costs.
Laszewski is downplaying the scope of this a bit. Scrapping mandated benefits would be a truly massive change to the structure of the policy. Politically it would certainly reinforce the sense that the administration is making this up as they go which will only further degrade public opinion of the law. It’s a loser in the short term but, as Laszewski suggests, it can’t be worse for Democrats than heading into the 2014 elections with double-digit rate increases to explain.