The Biden administration just announced a set of new proposals aimed at expanding access to coverage through Obamacare’s health insurance exchanges.
The actual effects of these reforms will be inconsequential at best — and at worst, harmful.
The main problem with the online marketplaces is that the plans on offer are too expensive, their deductibles too high, and the choices available to shoppers are too meager.
Instead of addressing these flaws, the administration’s new proposals obscure them.
The headline changes concern open enrollment.
For the past four years, it’s been a 45-day period between November 1 and December 15 during which Americans can enroll in an exchange plan that takes effect at the beginning of the new year.
The Biden administration proposes to extend open enrollment by an additional 30 days, to January 15. It’s not clear that this will have any effect on enrollment.
Especially since the president green-lit more generous subsidies for exchange coverage as part of the American Rescue Plan, the barriers to purchasing insurance have never been lower.
Yet people are still reluctant to sign-up.
Moreover, a Kaiser Family Foundation report from last year found that 4.5 million uninsured Americans are currently eligible for zero-premium exchange coverage and have chosen not to sign up.
It’s hard to see how a 30-day extension of the enrollment window will change their minds.
More consequential is the administration’s plan to create a year-round Special Enrollment Period for Americans earning 150 percent of the federal poverty level and below.
Why the Centers for Medicare and Medicaid Services see this as an improvement — and not an act of recklessness — is difficult to understand.
After all, the enrollment period exists for a reason — to incentivize patients to sign up for coverage whether or not they currently need care.
Insurers need a pool of healthy customers paying into the system each month in order to cover the cost of care for patients making claims.
Without a never-ending enrollment period, Americans could simply wait until they get sick and then purchase insurance to cover their expenses, a dynamic known as adverse selection.
Under this scenario, insurance risk pools would have far fewer healthy patients. Costs for plan providers would soar. And premiums would shoot up across the country.
The Biden administration knows full well that year-round enrollment will lead to rate increases.
An analysis by CMS projects that premiums will rise between 0.5% and 2% as a result of adverse selection, should this proposal take effect.
Many beneficiaries won’t feel the impact of those premium increases, given that even well-off Americans now qualify for exchange subsidies.
But in the end, taxpayers are still footing the bill for these cost-inflating reforms.
In many ways, Biden’s attempt to weaken open enrollment is of a piece with Obamacare’s larger project.
This health reform has already deprived insurers of the most reliable strategies for managing risk and keeping costs down.
With its guaranteed issue rule, for instance, Obamacare forced insurers to sell their plans to any and all who wanted one, regardless of their health status or age.
Community rating capped how much a health plan could charge an older, sicker patient at three times what it could charge a younger, healthier one.
Open enrollment is one of the few cost-containment strategies still available to insurers. Perhaps it was only a matter of time before Democrats came for it as well — and sent premiums through the roof.
What’s most frustrating about these changes is that they have little to do with the interests of actual patients.
Americans desperately need a competitive insurance marketplace where they can choose from a diverse array of quality, affordable plans.
The Trump administration made some progress toward that goal by, for example, making it easier for patients to use low-cost, short-term plans as their main source of coverage.
But the Biden administration has targeted these plans for elimination as yet another way to force people into Obamacare’s exchanges. Several states have effectively banned them.
It’s clear that the administration has no intention of promoting a functioning health insurance market.
Instead, it’s attempting to entrench the worst parts of Obamacare and hide the consequences of its actions with increasingly generous government subsidies.