Patterico's Pontifications

11/7/2013

ObamaCare: Let the Demonization of Insurance Companies Begin!

Filed under: General — Patterico @ 7:30 am



As I noted on October 28:

I have long said this: the plan is to demonize the insurance companies. When the companies raise rates, as they inevitably will and have already started to do, the natural Democrat response is: damn companies raising rates! Why, we need government to do something about it!

Yup. It’s starting:

The approach hasn’t sat well with some Democratic allies, who are publicly and privately urging the White House to ramp up its attacks on insurers, arguing that the the tactic shored up support as they struggled to push the bill through Congress. A group of Democratic strategists pressed senior administration officials during a conference call last week.

They’d like a repeat of 2009-10, when then-House Speaker Nancy Pelosi (D-Calif.) called insurers “the villains,” Obama blasted their willingness to “bend the truth or break it,” and Health and Human Services Secretary Kathleen Sebelius accused them of banking excessive profits.

“When Obamacare got into trouble, we juxtaposed our message against the insurance companies, which are very unpopular,” said Celinda Lake, a Democratic pollster who has advised her 2014 clients, including Alaska Sen. Mark Begich, to go after insurers. “We should be messaging against the insurance companies this time as well. This is not good faith. If there is a snowstorm, the insurance companies are blaming it on Obamacare.”

The thing is, there is a way in which the companies are potentially at fault too, in part — but the insurance companies’ actions were completely enabled by the law, and were foreseeable by the people who wrote the law. I’ve been meaning to write about this for days. It’s a subtle point, and the Internet doesn’t do “subtle” very well, but it’s important to understand it, given the PR spin that is just around the corner. So let’s try discussing it, with an example using that classic favorite of economists: the widget. I’ll throw in doohickies for good measure.

Say a company sells widgets to one customer base, and doohickies to another. The government comes along and says everyone must have both. But, if you were buying only widgets in the past, or only doohickies in the past, the government will allow the company to continue to sell you only that product — under certain very limited conditions.

Mostly, the company will be happy about that. They get to sell more stuff! So the company might interpret the very limited conditions in such a way that “forces” them to sell unwanted products to people forced to buy them. While the company has an incentive to keep long-time loyal customers happy, it also has an arguably greater incentive to sell more stuff. (Especially if they’re being forced to sell loss leaders to more and more people, eating into their profits in other areas.)

So: is it possible that some of the companies cancelling policies these days are not necessarily legally forced to do so? I think it is. Does that mean it is all their fault and not the fault of people who wrote the ObamaCare law? Not hardly! ObamaCare is giving the companies a chance to make more money by forcing people to buy products. It’s in the companies’ nature to do that, and the authors of the law should have known that. Blaming the companies exclusively is like throwing a tasty antelope into the lion’s cage and then saying it’s not your fault if the lion eats it.

Nevertheless, you are going to start seeing a stream of media stories examining situations where policies were cancelled, showing how the regulations would have allowed the policy to continue, but the insurance company made the choice to cancel it. The fact that the insurance company was incentivized to do so will be utterly whitewashed. I can see it all like it’s happening in a crystal ball right in front of me. When it happens, I’ll come back and quote this paragraph, to show you how I predicted this utterly predictable turn of events.

The demonization of insurance companies is utterly predictable and it’s starting now. Watch for it to ramp up as ObamaCare inevitably continues to be a disaster over the next month and beyond. For example: there have been four, count ’em, four people enrolled in Delaware in the past month. This is a disaster of epic proportions in the making, and Obama will need one hell of a scapegoat. Get ready, insurers. It’s going to get very, very ugly for you.

64 Responses to “ObamaCare: Let the Demonization of Insurance Companies Begin!”

  1. in a market like los angeles we’re gonna see a flood of foodstampers clamoring for their free free free foodstampcares

    even if you’re insured through work it makes no sense to stay in any plan that accepts foodstampers cause you’ll be paying more for less access to overwhelmed doctors with dirtier crowded offices crawling with mrsa and tb and hepatitis

    ick

    happyfeet (8ce051)

  2. Alien vs. Predator.

    nk (dbc370)

  3. I think you are right, Patrick. People are so wrong when they say Obama is stupid or incompetent. He and Michelle both say they are playing the long game, and in this case they are playing the long game of getting to single payer very well. We won’t voluntarily do it, so they are forcing a crisis.

    The insurers will soon find that a scorpion in the WH is still a scorpion.

    Patricia (be0117)

  4. All going according to plan.

    glenn (647d76)

  5. They are stupid and incompetent. They would not get away with this obnoxious nonsense if we had a real news media reporting what is actually going on.

    This vapid class warfare stuff was obsolete when McGovern lost.

    SPQR (768505)

  6. Greetings:

    I know the days are getting shorter but it’s about time somebody wakes up the kulaks. The benighted Republicans are playing politics but the Democrats are playing revolution.

    11B40 (ab92d7)

  7. Like most statists you seem to make your decisions only in the present. Most businesses try desperately to foresee future expenses. If you advise them that a future expense is just around the corner, they will charge now to offset that future expense. If ObozoCare tells the insurance firms, that in the future they are going to have cover pre-existing conditions at regular costs, they will – most assuredly – start offsetting those future expense immediately – today, not tomorrow. Businesses that don’t set some funds aside to cover foreseeable expenses, go broke.

    Mike Giles (760480)

  8. We know in 3 States, they were forced to cancel, by the States. Has anyone seen an example where policies were cancelled just willy nilly, or are they being cancelled because of the mandates and ridiculous grandfather regulations insisted on by Obama and Sebelius?

    Oh, and unions are about to get yet another exemption.

    JD (5c1832)

  9. The wave of cancellations that number in the millions already, will seem like a trickle in comparison to the coming tsunami when this same set of standards whacks the businesses in the head next year. This is nothing. Those same draconian regulations will hit the employer market next year. No surprise they amended their own legislation without going to Congress to issue yet another waiver.

    JD (5c1832)

  10. What about the pending legislation to Keep Your Existing Plan? Who here believes insurance companies will rescind their cancellations and offer up those earlier plans for re-purchase? I don’t, so I don’t know what good the legislation is, or even why it’s being discussed.

    Chris (0ba377)

  11. One of the reasons that some plans are being cancelled at company direction is that those plans now have fewer members and those pools will continue to erode since they cannot gain members.

    There is also a cap on administrative expenses, it makes sense to cut them where possible, and it costs more to administer a small group than a large one, so they are getting rid of the orphan plans now. All the pain at once.

    That it may also make the administration look bad worse is probably a feature.

    Kevin M (bf8ad7)

  12. The pending legislation will never go anywhere, will never do anything. It is nothing other than a smokescreen so Pryor, Landrieu, Hagan, Begich, etal can try to claim that they tried to do something to fix the problems they knowingly caused.

    JD (5c1832)

  13. John Roberts is an effing Rock God

    love ya boo

    happyfeet (8ce051)

  14. So, what do we do next July when all these folks lose their policies and haven’t replaced them? Repealing Obamacare won’t help them soon enough, even if we did it now. The health market place is already broken. Who will be the first to propose single-payer?

    Kevin M (bf8ad7)

  15. He who thinks of tomorrow can never be brave. Or as a first grader put it: http://imgur.com/gallery/QucXTV5

    nk (dbc370)

  16. i can only pray that first grader gets the helps he needs, and soon

    happyfeet (c60db2)

  17. Politics is always about assigning blame to your opponent. That’s why negative ads usually work, and that’s why the media is such a huge part of any election strategy. It’s the reason elections are so expensive.

    Amalgamated Cliff Divers, Local 157 (f7d5ba)

  18. “John Roberts is an effing Rock God”

    Mr. Feets – Right up there wif Abortion Barbie an the pink sneakers who is getting her own line of clothes at KMart for her Goob run!

    daleyrocks (bf33e9)

  19. Lenin is supposed to have said that capitalists would sell the commies the rope when it came time to hang the capitalists.

    Mitch (341ca0)

  20. In her first campaign speech for Texas Governor, Wendy Davis says she’s “pro-life”—outside the womb.
    The state of Texas will reply that they’re “pro-Greg Abbott”inside the voting booth.

    Elephant Stone (6a6f37)

  21. The Left does not understand how business works, nor do they hold themselves accountable for any actions having negative results/consequences. Never have… never will.

    Colonel Haiku (8cb0f3)

  22. in fetopia

    where the suburbs meet utopia

    happyfeet (c60db2)

  23. 11. Comment by Chris (0ba377) — 11/7/2013 @ 9:17 am

    11.What about the pending legislation to Keep Your Existing Plan? Who here believes insurance companies will rescind their cancellations and offer up those earlier plans for re-purchase? I don’t, so I don’t know what good the legislation is, or even why it’s being discussed.

    Because that’s all, it seems, any Republicans know what to do.

    Sammy Finkelman (9e0380)

  24. Has President Ostrich asked Eric Holder to investigate these evil, bad apple, insurance companies yet for what seems to be a prima facie RICO case of collusion. Surely there is no way they could independently decide of their own free will to simultaneously cancel so many insurance policies.

    Something far more sinister must be going on. I think everybody should write to their Representatives and Senators and demand an investigation!

    daleyrocks (bf33e9)

  25. The assumption by people who demonize insurance companies is that insurance companies act in their own self-interest.

    So why are they surprised?

    And doesn’t the wave of cancellations have a lot to do with changing the incentives?

    Sammy Finkelman (9e0380)

  26. 25.Has President Ostrich asked Eric Holder to investigate these evil, bad apple, insurance companies yet for what seems to be a prima facie RICO case of collusion.

    You mean like they do to oil execs when they feel gas prices are too high(even though they want them high to discourage its use). Yet, liberals will somehow try to explain their dichotomy.

    Amalgamated Cliff Divers, Local 157 (f7d5ba)

  27. And doesn’t the wave of cancellations have a lot to do with changing the incentives?

    Yes, that’s why social engineering is a bust. Idealism is great until it intersects with reality. That’s why I advocate for a smaller, less intrusive government. Individuals like tlaloc believe that government can be an unbiased arbiter.

    Amalgamated Cliff Divers, Local 157 (f7d5ba)

  28. I thought the new health care law was supposed to force insurance companies to offer more coverage for less money. Or whatever.
    Now these Democrat persons are telling us that’s not actually happening ?

    Then why did we need this law ? Or something.

    Elephant Stone (6a6f37)

  29. “You mean like they do to oil execs when they feel gas prices are too high(even though they want them high to discourage its use).”

    ACDL157 – They claimed there was nothing in Unaffordable 404Care which caused this simultaneous wave of policy cancellations, so what is a person supposed to believe is going on except blatantly illegal collusion among evil, bad apple, insurers?

    Amirite?

    daleyrocks (bf33e9)

  30. According to former New York Governor Pataki (in yesterday’s New York Post) there’s a movement by Democrats, for state level legislation, being directed by the White House, to limit self-insurance. (or close the “self-insurance loophole” as they term it)

    Self-insurance is when an employer pays its own medical costs , using an insurance company only to process claims, and buying maybe some reinsurance for unlikely events.

    60% of workers in large corporations, 80% of unions, and even 15% of those in “small business” have it. About 100 million workers are in such plans, he says, and they are exempt from many of the regilations and mandates of Obamacare.

    California now just passed a law tghat greatly increases the cost to self-insure. New York already has (long had?) a law that basically prevents companies with fewer than 50 employees from self-insuring.

    Sammy Finkelman (9e0380)

  31. Companies that are offering early renewal (for one year) of individual policies legal till December 31, 2013, are finding that about 15 of 16 people take the renewal.

    That creates a new deadline at the end of 2014, unless Congress changes the law..

    Sammy Finkelman (9e0380)

  32. “According to former New York Governor Pataki (in yesterday’s New York Post) there’s a movement by Democrats, for state level legislation, being directed by the White House, to limit self-insurance.”

    Sammy – Why do they want to do that?

    daleyrocks (bf33e9)

  33. What about the pending legislation to Keep Your Existing Plan? Who here believes insurance companies will rescind their cancellations and offer up those earlier plans for re-purchase? I don’t, so I don’t know what good the legislation is, or even why it’s being discussed.

    Well the whole point is that the reason the premiums are rising is because the government is mandating one-size-fits-all coverage, and the reason the government is mandating one-size-fits-all coverage is because they need the healthy to purchase too much insurance in order to cover the unhealthy who will be consuming it. Ergo, allowing consumers to go back to their pre-ObamaCare plans blows a huge hole in the whole financing scheme of the legislation.

    The first crisis of ObamaCare was the failure of the website rollout. The second is the cancellation of existing policies, regardless of the promises that Dear Leader made. The third will be the sticker shock come the enrollment deadline when practically everyone discovers they are paying more than expected. The fourth will be the completely predictable — except to the administration and it’s fan club — announcement that instead of reducing the deficit by the $250 billion over 10 years that they promised, ObamaCare is now forecasted to increase the deficit due to the expanded need for subsidies and the drag on economic growth. And the fifth crisis will be the full implementation of the cost control panels, which will impose British-style rationing of health care.

    And thus the pathway to single payer will be greased.

    JVW (709bc7)

  34. Among the interest groups/cash cows Dems are beholden to are Trial Lawyers… who have fought all of the common sense changes in how healthcare coverage could be offered/sold… e.g., across state lines. Follow the money… including individuals and entities that have/will benefit from the destruction of the current system and re creation into an untenable morass.

    Colonel Haiku (fb49f6)

  35. When I heard Sebelius last week condescendingly correct a Republican Congressman (natch) in the hearing last week that “No, increasing a premium by $1 per month would not disqualify a plan from being grandfathered. The law requires a plan to be cancelled if a $5 per month premium increase is planned” that is all I needed to hear to know that the deck was stacked. SO, to save you from a $60/year increase in cost, Obama will toss you to the wolves and make you pay up to thousands more a year for worse coverage. Pile on top of that all the new required coverages for maternity care, pediatric dental care, substance abuse, etc. which somehow could not affect the cost of a policy and you knew this was baked into the law deliberately.

    By exempting employers from the mandate in 2014, Obama is hoping to postpone until after the election the news that another 120MM policies may be canceled.

    In anticipation of us losing our employer based coverage, I went to the CoveredCalifornia web site and put in our particulars to get the estimate of what our new and improved coverage would be if we are dumped next fall. I really urge you to do the same. Assume that under Obama’s cynical 1st step on the road to a single payer system it takes 5 years to achieve critical mass of popular opposition to the ACA, then add up the incremental cost to you over those 5 years for this marvelous new opportunity. In our case we will incur a six figure incremental hit in our all-in out of pocket health care costs (premiums, co-pays and deductibles)over those 5 years. To afford that we will be stripped of an equal amount of our lifetime savings. And for what? To be dragged kicking and screaming into a one payer system we don’t want or to wait for a sensible alternative to be cobbled together? This is a wealth transfer scheme of the highest order.

    This regime will divert attention by saying (1)the web is being fixed and real soon now will be great for registering, and (2)that the insurance companies are screwing the people. All to keep citizens from focusing on what will hit them come January 1, 2015.

    in_awe (7c859a)

  36. ACDL157 – They claimed there was nothing in Unaffordable 404Care which caused this simultaneous wave of policy cancellations, so what is a person supposed to believe is going on except blatantly illegal collusion among evil, bad apple, insurers?

    They claimed a lot of things. They have to continuously move the goal posts in the hopes of falling into something that resembles a plausible truth. It’ll be amusing what Sebelius has to say tomorrow in Atlanta.

    Amalgamated Cliff Divers, Local 157 (f7d5ba)

  37. “They claimed a lot of things.”

    ACDL157 – Absolutely, which is why I am going to demand that one of my Senators, Dirty Dick Durbin, who just happens to be up for reelection next year, get to the bottom of this obvious collusion between evil, bad apple, insurers designed to thwart the magnificent success of Unaffordable 404Care.

    daleyrocks (bf33e9)

  38. I just don’t understand why the Obama people would pass a law that would allow insurance companies to do bad things like this.

    I’m starting to think the Obama people are against the American people. Or something.

    Elephant Stone (6a6f37)

  39. ES – That’s why there has to be an investigation! The Obama people were trying to help us but were sabotaged by evil, bad apple, insurance companies and Republicans at every step along the way.

    daleyrocks (bf33e9)

  40. daley,

    I follow what you’re saying.
    But I think an investigation might be too drastic a measure.
    After all, there have been investigations into Fast & Furious, Benghazi, the IRS, to name a few, but nothing was discovered.

    We did discover, however, that Mitt Romney has a car elevator for his home that sits atop a steep cliff overlooking the ocean.
    Something must be done about that.

    Elephant Stone (6a6f37)

  41. I’m beginning to think that maybe we should have read the bill before we passed it. Or whatever.
    Then again, what difference—at this point—does it make ?

    Elephant Stone (6a6f37)

  42. For what it’s worth, the WaPo’s fact checker gave Jay Carney 3 Pinocchio’s [“Significant factual error and/or obvious contradictions”] for trying to blame insurance companies for cancelling policies: “In defending President Obama’s now-discredited pledge that “if you like your health-care plan, you’ll be able to keep it,” the White House has repeatedly tried to blame insurance companies. *** The administration’s effort to pin the blame on insurance companies is a classic case of misdirection. Between 75 and 95 percent of the problem stems from the effective date, but the White House chooses to keep the focus elsewhere.”
    http://www.washingtonpost.com/blogs/fact-checker/wp/2013/11/07/the-white-house-effort-to-blame-insurance-companies-for-lost-plans/

    Walter Cronanty (d16f1a)

  43. “After all, there have been investigations into Fast & Furious, Benghazi, the IRS, to name a few, but nothing was discovered.”

    ES – Of course, because everybody knows the Obama Administration did nothing wrong. Here the focus is on the blindingly obvious villains outside government, evil, bad apple, insurance companies, who everybody hates. That’s the difference!

    daleyrocks (bf33e9)

  44. ES – If anybody believes what the administration says that there is nothing in the ACA which forces insurers to simultaneously cancel all these policies, it requires a willing suspension of disbelief in the laws of probability to think this is happening through anything other than blatant collusion among evil, bad apple insurers. Any scumbag, liberal, contingency fee, mass tort, shyster would find him/herself with a goldmine of an airtight case to pursue right here based on what the administration is saying.

    daleyrocks (bf33e9)

  45. Of course, I’m in no way giving legal advice.

    daleyrocks (bf33e9)

  46. The only problem with your theory of insurance company demonization is that the insurers are currently playing ball, right now, by not publishing the exchange data that Obama doesn’t want published. As soon as he lets rip, there is no more incentive to play ball by hiding the truth and the numbers will come out. That means that they have to get the system working before the demonization seriously starts.

    The insurers have until that point and no further to come up with a strategy to keep the government wolf at bay.

    TMLutas (0876a3)

  47. Like blaming the participants in the Hunger Games for murder.

    Rodney King's Spirit (5c6cbf)

  48. TMLutas, and that’s one example of why Obama is far from the grand strategist he is made out to be.

    One of the things about politicians is that they lie … but they are usually smart enough to make sure that they live up to their deals. Obama seems to never have learned that his word must be backed up by deeds in order to have credibility. Its why he never seems able to get his own legislative agenda adopted and has to be thrown out of negotiations like debt ceiling / shutdown for progress.

    SPQR (8c0c1c)

  49. in_awe, any chance you would have a link to the $5 / mo figure available? I’d love to cite it in another troll infested thread.

    SPQR (8c0c1c)

  50. SPQR – I think she said it in her initial testimony, or that was how the rule was being utilized in re grandfathering. If coinsurance went up at all, it was no longer grandfathered.

    JD (5c1832)

  51. Obama tricked millions of Americans into electing him.

    Elephant Stone (6a6f37)

  52. If you liked your country the way it was, you can’t keep it. Change. Or whatever.

    Elephant Stone (6a6f37)

  53. What about the damn dog on the car roof?!?! That’s so cruel, why didnt Romney just eat it?

    Colonel Haiku (017a27)

  54. “The only problem with your theory of insurance company demonization is that the insurers are currently playing ball, right now, by not publishing the exchange data that Obama doesn’t want published.”

    TMLutas – I figured out a bigger flaw in my thinking unfortunately. Since all these evil, bad apple, insurance companies were only selling substandard insurance policies and all the customers being canceled are being transitioned to better and more affordable policies, they are not actually being injured according to the Administration. How can a scumbag, liberal, contingency fee, mass tort, lawyer sue the pants off these evil, bad apple insurers if there is no injury according to the Obama people?

    I mean, they can always file suit, but what is the theory of damages if they are all getting better and more affordable coverage?

    This is all so confusing.

    daleyrocks (bf33e9)

  55. I had good health insurance, I liked it and would have kept it, but Obama, not the insurance company foreclosed that option. Now, all that’s available are plans twice as expensive which don’t provide near the same access or range of services.

    Incidentaly, my out-of-pocket costs had been declining over each of the last 3 years, reduced co-pays for GP’s and specialists, lower prices for prescription meds and lab tests, and more covered services. My old insurance was getting better each year, it met my needs, I could afford it, and I’d have renewed it for the next year but the dirty bastard in the WH ruined a good thing.

    ropelight (49c1a6)

  56. A crystal ball?

    Did you not see the footnote in the eye-care section banning the use of such instruments as detrimental to vision health?

    You will be reported to ATTACK WATCH in 5….4….3….

    askeptic (b8ab92)

  57. The goal was, is, and always will be, to drive the insurance industry into insolvency, making the government the insuror of first, and last, resort – take that Lloyd’s.

    Then, it will be easier to nationalize all of those mom&pop shops, and everything else, and we will enjoy the benefits of “scientific socialism”.

    “We pretend to work, and they pretend to pay us.”

    askeptic (b8ab92)

  58. I’m missing W.

    Kevin M (bf8ad7)

  59. When insurance companies are incentivized to do certain things, should they be responsible at all for where this long twisted road is heading?

    mg (31009b)

  60. This seems important:

    “At times it seems like the sheer magnitude of bad news about ObamaCare can redound to its own benefit. It’s easy for individual pieces of bad news to get lost in the sea of failure that has characterized the Obama administration’s signature “achievement.” That might be the case with the most important story to appear about ObamaCare this week, from Tuesday’s edition of the New York Times.

    The paper reported that the Obama administration has ruled that the federal health-care program be exempted from the category of laws considered “federal health care programs.” Now, this is obviously dishonest: the federal government is running insurance exchanges, funding health-care subsidies under the law, and employing federal workers to help manage the law–all of which are clearly “federal health care programs.” So why would the administration choose not to label them according to observable reality? Because, as the Times explained, this decision–believe it or not–exempts ObamaCare from kickback restrictions and anti-fraud protections…”

    Colonel Haiku (829453)


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