Is Obamacare Unraveling?

February 16th, 2014

Bob Laszewski weighs in on the recent changes to Obamacare, and asks if it is “unraveling”. First, he poses a number of questions lingering about the law’s vitality.

When the President last October called on health plans and insurance commissioners to defer the cancellations for one more year, was it the beginning of the unraveling of all of the stringent individual health insurance market requirements in Obamacare? Would this new change to defer these cancellations for another three years just be step number two in that process?

Is Obamacare, with its clearly liberal versus free market view of what an insurance market should look like, on its way to unraveling?

In a follow-up post, he offers some thoughts:

What will the administration back off on next? Given the very small exchange enrollment so far coming from the ranks of the uninsured, will they next postpone or eliminate the individual mandate?

No one has been more critical of the various requirements in Obamacare that I have.

But to make an insurance system work you have to have a set of consistent and consistently applied rules. You can’t have some people choosing to be out today and in tomorrow. You can’t have a system where insurers price products based upon one set of conditions and then you keep backing off on the conditions consumers and employers have to follow.

The administration really has three options:

  1. Full speed ahead––enforce all of the original rules. Just take the political heat believing you have crafted a system that will work. This is what they have been telling us for almost four years now!
  2. Do a comprehensive and rational fix that provides for a modified system for everyone learning from the mistakes that were made.
  3. Let it unravel one step at a time caving in to every constituency that threatens a vulnerable Democratic Senator and end up with a worse mess.

Looks to me like they are on track for number three. Ironically, I don’t think these delays will do the Democrats one bit of good for their vulnerable Senators. These aren’t permanent fixes and these concessions will just reinvigorate the people complaining that their cause is justified.

Even if the law doesn’t doesn’t unravel in the traditional sense of the world, eliminating one component at a time will weaken the law, requiring more fixes, yielding more instability in the market.

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