Excerpt from "Obamacare: So, what could go wrong next?" By David Nather, Politico:
They’re mostly worst-case scenarios, and an Obamacare recovery in the next few months could still prevent some of the biggest ones from ever happening. But health care experts are taking all of them a lot more seriously now — because at this point, why wouldn’t they?
A complete list of possibilities could be overwhelming, but here are the main ones to watch:
This was always the worst of the worst-case scenarios: Only sick people enroll in the Obamacare health insurance plans, healthy people stay away, and everyone’s premiums rise out of control because there are no healthy people to cover the sick people’s costs.
That’s the dreaded “death spiral,” and it has been a possibility all along. But it was only a remote one — because health care experts have counted on the attraction of Obamacare’s subsidies, along with the threat of fines from the individual mandate, to lure enough healthy customers to prevent a meltdown.
The cost of the cancellations fix
There’s another problem, and it has nothing to do with the website. Insurers and actuaries say the Obama administration’s solution to the canceled policies mess could backfire — because by telling insurers they can extend people’s individual coverage, they might cause the insurance prices to rise anyway.
That’s because the mix of healthy and sick people in the new Obamacare plans would be disrupted. In the worst-case scenario, it would be the healthy people that renew their old, pre-Obamacare insurance, and only the sick people would switch to the new plans — because they’d want the new coverage that accepts anyone with pre-existing conditions.
Price hikes during election season
If the Obamacare health plans don’t get a good mix of healthy and sick people, the rate hikes wouldn’t happen right away. The prices are already locked in for 2014. The bigger political headache for Democrats is that insurance companies would raise their prices for 2015, and those new rates would be announced in the spring — bringing another round of bad news during election season.
Most likely, the insurance companies would submit their bids in April, and that would be based on only the most preliminary information about final enrollment figures for Obamacare’s first year.
The big danger of the canceled policies isn’t totally off the table. For any individual health plans that don’t get extended, customers will have to find new health insurance, either through the Obamacare websites or through workarounds, like the call center or even contacting health insurers directly. If they can’t do it by Dec. 15, they might not have a replacement health insurance plan by Jan. 1.
If health insurers — and state insurance commissioners — go along with the White House plan and extend people’s policies, that won’t be a problem. But not all of them will. Insurance commissioners in Washington state, Mississippi, Georgia and Rhode Island have already said no, and others have said they’re skeptical about it.
More cancellations close to the election
There’s another, separate issue with the cancellations. Some have actually been pushed into next year, because some insurers have offered early renewals — in which individuals or small businesses who renew their policies before the end of the year can keep them into 2014.
For example, Elaine Buccieri of Arlington, Texas, was able to get that kind of deal from Blue Cross Blue Shield of Texas. The carrier just moved everyone’s anniversary date to December, giving them more time in their old plans.
Obamacare supporters are convinced that once people with canceled policies can actually use the federal website, they’ll be able to find replacement health plans that are better and cheaper than what they have now, not just the expensive replacements their own insurers are offering up.
But Paul Ginsburg, president of the Center for Studying Health System Change, says that’s not going to be true of everyone. He says some people will go to the website and be dismayed by the prices — because they now have to include coverage of everyone with pre-existing conditions, new benefits that weren’t covered by all individual plans before, and a ban on charging older customers more than three times as much as younger people.
People who can’t prove they’re covered
When Medicare Part D began in 2006, many seniors had rude surprises when they went to their pharmacies, expecting to fill their drug prescriptions, and the pharmacists had no record that they were covered.
Given all the problems with the Obamacare website — especially since insurers are so uncertain that they’re getting accurate information on who’s signing up — there’s a chance that the same kind of thing could happen in January, as people who believe they’ve signed up for health insurance can’t prove it when they go to the doctor.
People who get wrong subsidies
This one is more of a question mark, because it’s too early to know how accurate the website calculations will be. But the reality is that any errors would backfire on the newly insured people — and so could any nasty surprises, like changes in their incomes.
If people get bigger tax credits than they’re supposed to get, Obamacare requires them to pay back the overpayments — with some limits — when they file their taxes the next year. But the calculations are so complicated that it would be hard, if not impossible, for most consumers to know if they’re getting too much. Continue reading via Politico...