Obamacare: How Do We Know If It's In A Socialist Death Spiral?

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There's every reason to think that Obamacare is in the early stages of a socialist death spiral.  After all, all you really need to know to predict a socialist death spiral is that people aren't stupid.  As soon as the government puts you on the "from" side of "from each according to his abilities, to each according to his needs," you start to spend your waking hours figuring out how to minimize or otherwise get out from under the confiscation.  

Still, the government and its press enablers are doing everything in their power to keep up the image that all is just fine.  Mainstream press organs like the New York Times have gone virtually silent on the issue.  The Census Bureau changed its methodology in 2013 to make its figures as to percent uninsured no longer comparable to figures prior to that year.  Numbers for government expenditures on Obamacare are well-hidden and difficult to segregate.

But then every once in a while along comes an article that gets into the weeds on how people push back to avoid getting caught in Obamacare's snares.  Such an article appears on page B-1 of today's Wall Street Journal, titled "Health Law Spurs Hunt For Cheaper Policies."   (In the online version, the title is "Sales of Short-Term Health Policies Surge.")

Now, you may have thought that a key element of Obamacare was to make all health insurance have all the coverages that were now to be mandatory.  But smart people got to work figuring out a way around that, and they have come up with one, known as "short term insurance."  Believe it or not, it seems that if you have a health insurance product that covers less than one year, then all the ACA coverage mandates that make things so expensive (e.g., can't exclude pre-existing conditions, can't have coverage limits, prescription drugs must be covered, plus long list of things that must be covered without deductible such as birth control for women) don't apply.  Can that really be true?  The WSJ checked with a spokesman for HHS, and got the following:

A spokesman for the Department of Health and Human Services said that under federal law, short-term plans aren’t considered individual health insurance, and thus aren’t subject to the ACA’s rules.

But:

Some short-term plans can last nearly a year, after which a policyholder must reapply.

So let's try to understand this.  Obamacare supposedly did away with the ability of an insurer to refuse to sell to someone with a pre-existing condition.  But with so-called "short-term insurance" outside the restrictions, what's to keep people from gaming this system and waiting until they are sick before buying an ACA-compliant policy?  The main control they supposedly have over that is restricting signing up for Obamacare to so-called "open enrollment" periods of only a few months a year, basically November 1 to January 31.  Thus, go without insurance, and you risk having up to a nine-month uncovered period when you are on your own.  Or at least, that's how it was supposed to work.

Ah, but now you can buy an 11-month policy to take you year by year from one open enrollment period to the next.  And, if you don't have a pre-existing condition, there are lots of advantages to these short-term plans over the ACA options:

  • They are lots cheaper.  The WSJ article gives an example of a woman for whom coverage under a short-term plan costs "roughly one-quarter" of what ACA-compliant coverage would cost.
  • They are "offered year-round" as opposed to just during the ACA open-enrollment period.
  • Many of them offer "broad access to doctors" as opposed to the very narrow networks that many ACA-compliant plans have used to keep costs down.
  • And, best of all, "if consumers develop health problems they can move to ACA plans that cover pre-existing conditions."

Really, could it be this easy to game Obamacare?  Just get a short-term policy to take you from one open enrollment period to the next for as long as you are healthy; and then when you get sick, jump over and get your pre-existing condition covered.  Voila!  Perhaps you had been wondering why last March CBO was predicting there would be 21 million people enrolled on the Obamacare exchanges in 2016, and now they are saying 13 million (a number which, by the way, will decline further as the year progresses and people drop out).  Now you know.  Really, as people figure this out, why will any sane person buy an Obamacare exchange policy before they are actually sick?  Oh, and the WSJ reports that sales of the short-term policies are "surging."

Of course, socialist death spirals move slowly.  And the government will do everything in its power to hide this one, at least until the change of administration next year.  But it's hard to see how Obamacare can survive such an obvious avoidance strategy for the long pull.