ObamaCare -- The Death Spiral Begins

Updates

December 22, 2013: "we need to pass this bill to see what's in it" -- well, now we know. If you make $100,000  or more annually you won't qualify for a subsidy. If you make $94,000 or less, you could qualify for as much as 50% in subsidies. Talk about a law that was put together without much thoughts. What folks don't understand is this: the IRS isn't going to audit what you say your annual income is. When asked how much you make, simply say $90,000. It's a nice round number. And it qualifies for a huge subsidy. What a great country.

December 20, 2013: individual mandate is now going by the wayside.

Another exemption to Obamacare.

The Obama administration has opened a small, but potentially important, hole in a key requirement of the new healthcare law, letting some people who have had insurance policies cancelled avoid the requirement to buy coverage next year. The change, announced Thursday night in a letter that Health and Human Services Secretary Kathleen Sebelius sent to a group of senators, marks the first exception the administration has allowed to the law's so-called individual mandate.

Under the new policy, people who have received notices that their health plans are being canceled would qualify for hardship exemptions allowed by the law. Under those exemptions, they could buy low-cost catastrophic health plans or skip buying health coverage altogether.

December 17, 2013: how bad are things going for the president? Things are so bad with regard to NSA spying he is starting to talk about how good things are going with regard to his Obamacare website. Everything is relative.

December 14, 2013: This does not bode well. ObamaCare accounts debiting bank accounts incorrectly. Link is at KGW.com (Washington State).

December 14, 2013: following the NPR article in which it was announced that the "2014 Lie of the Year" award goes to President's Obama's "you can keep your insurance" promise, I wrote this to a reader:

Yes, I think it becomes more and more difficult for Obama supporters to rationalize their support for him.  I still get a kick out of folks who say, "Well, I still support him, but everything he's done has screwed up my life."

Talk about cognitive dissonance.

December 11, 2013: the numbers, by state:

• North Dakota, at 265, signed up the lowest number.
• South Dakota, at 372 , signed up the second lowest.
• Florida, at 17,908, led the nation (Florida, with all its senior citizens, is certainly not known for young, healthy males)
• Illinois, at 7,043, certainly is not particularly noteworthy.
• Delaware, at 7,650, was said to be "tiny."
• Hawaii signed up 574, for $350,000 apiece.
• California signed up 107,087.
• Oregon, 44. 

Reminder: the ten (10) states most critical and the numbers needed to enroll:

• California: 1.3 million
• Texas: 629,000
• Florida: 477,000
• Washington State: 340,000
• Oregon: 237,0000
• New York: 218,000
• Pennsylvania: 206,000
• Georgia: 204,000
• North Carolina: 191,000
• Ohio: 190,000

November 23, 2013: this is getting confusing. I thought the "2014" deadline was March 31, 2014 (after being delayed from March 15, 2014) but now this:

People needing health insurance by January 1, 2014 will have eight extra days to sign up, officials said. The original deadline for year-end coverage was December 15, but now will be moved to December 23.

With the first enrollment period barely off the ground, the Obama administration also has decided to delay enrollment for the second year of the program to give insurance companies more time to calculate rates, White House spokesman Jay Carney told reporters.

The delay will mean consumers will start shopping for insurance for Year Two of Obamacare on November 15, 2014 - more than a week after voters go to the polls for midterm elections, when congressional Democrats are expected to face tough questions about the policy they supported. [This means the official rates won't be available until after the election. The rates are predicted to soar. In fact, the rates will be "leaked" well before the election.]

November 22, 2013: Senator Al Franken joins a growing number of senators who are open to delaying ObamaCare. The employer-mandate has been delayed a week; the individual mandate has been delayed for two weeks.

November 22, 2013: days before launch, the ObamaCare website unable to handle even 500 users. Wow, talk about amateur hour. Reuters is reporting:

In the last days before the botched October 1 launch of President Barack Obama's healthcare website, the team in charge was seeing alarming results from performance tests, according to internal emails released by Republican lawmakers investigating the rollout.

HealthCare.gov was unable to consistently handle 500 users at once in the testing, and tests failed with 2,000 users over a three-day period, according to a series of emails between members of the information technology team at the Centers for Medicare and Medicaid Services, or CMS.

"I do not want a repeat of what happened near the end of December 2005 where Medicare.Gov had a meltdown," Henry Chao, the website's project manager at CMS, wrote in capital letters in an urgent message on September 26 to his team and contractors.

November 16, 2013: Apple, Google, and Drudge all report that 20% of internet users are unable to access their sites due to technology glitches inherent in their sites. Just joking; not true. But that's exactly what the developers of the ObamaCare on-line web site exchange are telling Americans. They expect that on December 1, 2013, when the website is working "smoothly," twenty percent (20%) of Americans will not be able to access the site. From a legitimate mainstream media outlet. I can't make this stuff up.

November 11, 2013: the president's tally will include those who have enrolled, but not purchased a plan. Call it his ObamaCare Mulligan. 

November 10, 2013: this is the best article to date that explains why ObamaCare will fail. It's not the website.

Since it is, stories about people like Dianne Barrette suddenly losing health insurance plans that cost $54/month in return for plans that cost $591/month were inevitable. There’s once again no such thing as a free good, and unless federally mandated insurance plans offering everything – including maternity benefits for men – were going to be given away by insurance companies hurdling toward bankruptcy, it was inevitable that what Obama promised was going to be accompanied by a much larger price tag for individuals.

Notice: these two words in the same sentence -- "bankruptcy" and "insurers."

November 10, 2013: folks familiar with how the White House functions suggest that the website will not be working smoothly by November 30, 2013.

November 10, 2013: according to a WSJ op-ed, these "dirty dozen" are at risk of losing their Senate seat. These democrats running for re-election in 2014 cast the decisive vote for ObamaCare: Mark Begich, AK; Dick Durbin, IL; Al Franken, MN; Kay Hagan, NC; Mary Landrieu, LA, Jeff Merkley, OR; Mark Pryor, AR; Jack Reed, RI: Jenanne Shaheen, NH; Mark Udall, CO; Tom Udall, NM; Mark Warner, VA. My hunch: 11 of 12 will win re-election. All politics is local.

November 7, 2013: the president says he is sorry to hear that millions have lost their insurance policies, and to hear that folks can't keep the doctor they have and/or like.

November 7, 2013: The ObamaCare website will be taken down daily, from 1:00 a.m. to 5:00 a.m. indefinitely for "routine maintenance." The administration official says it could be down more than that, but that's a starting point.

November 3, 2013: The Washington Post gives four Pinocchios to Mr Obama regarding his comments after the disastrous roll out.

November 3, 2013: the president should be pissed. His own people screwed him. They knew the website was not ready for prime time.

In May 2010, two months after the Affordable Care Act squeaked through Congress, President Obama’s top economic aides were getting worried. Larry Summers, director of the White House’s National Economic Council, and Peter Orszag, head of the Office of Management and Budget, had just received a pointed four-page memo from a trusted outside health adviser. It warned that no one in the administration was “up to the task” of overseeing the construction of an insurance exchange and other intricacies of translating the 2,000-page statute into reality.

Summers, Orszag and their staffs agreed. For weeks that spring, a tug of war played out inside the White House, according to five people familiar with the episode. On one side, members of the economic team and Obama health-care adviser Zeke Emanuel lobbied for the president to appoint an outside health reform “czar” with expertise in business, insurance and technology. On the other, the president’s top health aides — who had shepherded the legislation through its tortuous path on Capitol Hill and knew its every detail — argued that they could handle the job.

November 1, 2013: commentary on the trainwreck -- why the health insurers demanded that the employer mandate for ObamaCare be delayed for one year. 

October 27, 2013: Middle-class Californians are getting their ObamaCare health bills. Good for them. The Los Angeles Times is reporting:

Thousands of Californians are discovering what Obamacare will cost them — and many don't like what they see.

These middle-class consumers are staring at hefty increases on their insurance bills as the overhaul remakes the healthcare market. Their rates are rising in large part to help offset the higher costs of covering sicker, poorer people who have been shut out of the system for years.

Although recent criticism of the healthcare law has focused on website glitches and early enrollment snags, experts say sharp price increases for individual policies have the greatest potential to erode public support for President Obama's signature legislation.

October 25, 2013:  Rush Limbaugh talked about it first, and now the mainstream media has it figured out. Rush is right. If you don't get a refund from the government, you can avoid the ObamaCare penalty. If the IRS assesses you the $95 / 1% family income penalty for lacking health insurance, they can only take if from your refund. If you have no refund, you won't get sent a bill. The ObamaCare bill was not well thought out. To say the least. Yahoo!Finance is reporting:

How exactly will the penalty be assessed? If you don’t have sufficient health coverage by the deadline, the “IRS will hold back the amount of the fee from any future tax refunds,” according to HealthCare.gov, the government’s marketplace website.

But what if you don’t get a tax refund? Conservative radio talk show host Rush Limbaugh picked up on this subject on his show this week, telling listeners: “The only way that they can collect the penalty or the fine is by taking money from your refund. If you are not owed a refund, they cannot get money from you.”

We asked Mark Luscombe, principal analyst at CCH Tax & Accounting North America, about that. Turns out Limbaugh is essentially right. If you don't get a refund next year, the “IRS could carry over the sum due and apply it against any refunds in future years. On a joint return, the penalty of one joint filer could be applied against the refund due to the other joint filer,” Luscombe says. 

I've maintained from the start that "this" is going to be the biggest "act of civil disobedience" in this country -- people finding ways to NOT enroll in ObamaCare. And I doubt the IRS is going to take folks to court of $95. 

October 25, 2013: increasing number of Senate dems want ObamaCare delayed.

October 25, 2013: in the "Situation Room with Wolf Blitzer," on CNN, three folks tried unsuccessfully for 90 minutes to enroll into ObamaCare. At the end of the 90-minute special, they were still trying to enroll. One would think this would be a FOX stunt, but no, this was on CNN, President Obama's #2 television station. MSNBC, of course, is #1 at the White House.

October 24, 2013: for archival purposes -- even the website developer could not log on. 

October 24, 2013: wow, I love these time-date stamps on the blog. You will note that I posted the original post last evening, noting that the "death spiral" for ObamaCare had begun. Now I see today, the mainstream media is referring to this as the "death spiral." Yahoo!News is reporting:

The politics editor at Business Insider, tells The Daily Ticker, "The government needs to get the website up and running as soon as possible." If it doesn't and only the sickest Americans sign up--because younger and healthier individuals don't--there could be an "insurance death spiral," says Barro.

He explains: "If only people who are especially sick buy health insurance, then you end up with a pool of people who are really expensive to cover, so insurers have to respond to that by raising premiums. Then more people drop out of insurance because it gets more expensive and you have a death spiral where only extremely sick people paying extremely higher premiums are in the insurance market."

The politics editor is talking about the "death spiral" for the health insurers, whereas my "death spiral" is a bit broader, encompassing the entire scam / debacle / trainwreck. 

Original Post 

For newbies, there are three components of ObamaCare:

• the employer mandate
• the individual mandate
• taxes on medical devices

The employer mandate has been delayed on year.

The Tea Party lost the battle -- at least it was widely reported that the Tea Party lost the battle -- to defund ObamaCare, and lost the battle to delay the individual mandate. It is now being reported that:

• the president may delay the individual ObamaCare
• every Democratic senator up for re-election may, in fact, support a decision to delay ObamaCare

The issue of delaying the individual mandate is now moot.

It is well known that it is impossible to enroll via the webpage. There are other ways to enroll -- such as telephoning and in person. However, the "navigator" will most likely use the webpage to help folks enroll by telephone or in person.

If folks cannot enroll by the deadline date due to technological reasons, they certainly cannot be penalized by the IRS for failing to enroll. Of course, the IRS will attempt to go after them, but Congress will be forced to call off the IRS if folks complain that they tried to enroll but were unable to do so.

So, regardless of whether the individual mandate is delayed or not, anyone who is not enrolled by the deadline date, and is penalized by the IRS, an appeal will be made, arguing that they tried without success to enroll. No one can be fined for not enrolling until the system is working flawlessly.