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Wednesday
Mar262014

Guaranteed Issue For All Of 2014--Death Spiral Comin' Faster

You’d better sit down, because this is a shocker:  The Obama Administration has extended the deadline to sign up for insurance on the exchanges!

Once you are done catching your breath, here are the details from the Washington Post:

Federal officials confirmed Tuesday evening that all consumers who have begun to apply for coverage on HealthCare.gov, but who do not finish by Monday, will have until about mid-April to ask for an extension.

Under the new rules, people will be able to qualify for an extension by checking a blue box on HealthCare.gov to indicate that they tried to enroll before the deadline. This method will rely on an honor system; the government will not try to determine whether the person is telling the truth….

Starting in about mid-April, people will no longer be able to get extensions through HealthCare.gov. After that, consumers will be able to request one through one of the federally sponsored call centers nationwide. At that point, the grounds for an extension will become narrower, matching rules for special enrollment periods that have existed for the past few months. Those include people who have a new baby, are getting a divorce, lose a job with health insurance or had a technical problem signing up for coverage through HealthCare.gov.

While the rules appear to get tougher in mid-April (and who knows, that deadline may be extended too) how strict will the Administration be in requiring people to prove that they had a “technical problem signing up for coverage”?  The safe money is it won’t be all that stringent.

In that case, guaranteed issue—the requirement that insurers must sell a policy to any person—is now in effect for all of 2014, not just during the open enrollment period as it was supposed to be under the law.

As I wrote last year:

In a market without guaranteed issue, consumers run the risk of insurers not selling them policies when they get seriously ill. But that risk is largely gone under the exchanges. For instance, a young person who gets a serious illness in June only has to wait until October to sign up for insurance and then wait until January 1 of the next year to receive coverage. Combined, community rating and guaranteed issue give the young and healthy big incentives to forgo insurance until they are sick.

At least there was some risk of getting stuck with big medical costs if one didn’t sign up for insurance during the open enrollment period.  That would have probably reduced the number of young people who decided to forego insurance.

Now, however, young people will probably be able to get insurance all year long through the exchange.  If so, it means that more uninsured people who get sick, say, in July, will sign up in that same month and insurers will be responsible for their costs.

That will only make the death sprial arrive a bit quicker.

Oh, and for your pleasure, here is Secretary Kathleen Sebelius two weeks ago on the March 31 deadline:

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