I didn’t think it was possible for Team Obama to make their problems with the individual insurance market any worse.
I was wrong.
In an interview with Chuck Todd yesterday, President Obama spoke about the 8-10 million Americans whose insurance policies are being canceled:
THE PRESIDENT: So — the majority of folks will end up being better off, of course, because the website’s not workin’ right. They don’t necessarily know it right. But it — even though it’s a small percentage of folks who may be disadvantaged, you know, it means a lot to them. And it’s scary to them. And I am sorry that they — you know, are finding themselves in this situation, based on assurances they got from me. We’ve got to work hard to make sure that — they know — we hear ‘em and that we’re gonna do everything we can — to deal with folks who find themselves — in a tough position as a consequence of this.
… But obviously, we didn’t do a good enough job in terms of how we crafted the law. And, you know, that’s somethin’ that I regret. That’s somethin’ that we’re gonna do everything we can to get fixed. In the meantime –
MR. TODD: By the way, that sounds like you’re supportive of this legislation.
THE PRESIDENT: Well, you — you know — Various things that are out there.
We’re — we’re looking at — a range of options.
On Air Force One today, Deputy Press Secretary Josh Earnest followed up by answering a reporter’s question:
Q Josh, the President last night mentioned, when he apologized for problems with the cancellations of policies, that he was going to instruct his administration to go back with some sort of a loop. Can you flesh that out? What are you guys looking at in terms of canceled policies?
MR. EARNEST: I’m not in a position to add a whole lot of additional detail to what the President said last night. The President did acknowledge that there are some gaps in the law that need to be repaired. He has directed his team to consider some administrative solutions to those problems, some steps that his administration could take unilaterally that would address some of those gaps.
Sounds good, right? There’s a problem, that “a small percentage of folks” (8-10 million people) are facing canceled individual market health insurance plans, and some of them are “disadvantaged” by the new options, or will be once they can see them on a functioning healthcare.gov. The President has directed his team to consider some administrative solutions to fix the problem, to “address some of those gaps.”
The problem with the President’s public statement is that he has now frozen the individual insurance market in place until he announces his new solutions. If you are one of the 8-10 million Americans with a canceled insurance policy, President Obama just created an enormous incentive for you to hold off on buying a new policy, to wait for the Administration to offer you a new solution.
Had they announced a new solution today, they would not have created this problem. The disincentive to buy a new plan comes from offering hope of a better outcome with no specificity or timeframe.
This new disincentive to buy insurance applies nationwide and is independent of the broken federal exchange website. I expect states running their own exchanges like California and Colorado, Minnesota and Maryland, DC, New York, and Connecticut, will see their new enrollments now drop as those with canceled policies wait for the President’s next move. States participating in the federal exchange won’t see any drop because the broken website is already preventing signups. Still, even in those states the President has created a new reason not to buy insurance on the exchange when it eventually does work, at least until he announces his new policy.
Because the story is so hot, and because the President’s allies in Congress are desperate to offer their angry constituents some hope, we can be assured that the President’s ambiguous offer of future hope, and the purchasing disincentive it creates, will get a lot of attention.
The optimistic interpretation for this new policy signal is that President Obama and his team understood this balance when the President spoke yesterday, that they weighed the cost of further discouraging new signups against the benefit of partially relieving growing pressure to help angry citizens who liked their canceled policies.
The pessimistic interpretation is that this is yet another unforced error, another self-inflicted wound.