While the administration has been touting the Potemkin-like success of Obamacare, fluffing numbers with churned enrollees and cooking the books so it is impossible to accurately evaluate what the program has accomplished, it has been quietly declaring war on anything that could be seen as providing a way for people to opt-out of Obamacare.
The latest target is the fixed indemnity insurance market.
Briefly, fixed indemnity insurance works much like your homeowners policy. You file a claim with your insurance company for a procedure. They pay you at a pre-determined rate. You decide how to spend the money. So, with a health insurance policy you are paid up front, there are no deductibles, and you get to shop for the best deal on a cash basis (samples here | here).
These policies may not be for everyone but they are relatively inexpensive and they are exempt for Obamacare mandates. What this means is that I no longer have to carry a policy that covers PAP smears and birth control pills. My wife no longer gets coverage from prostate exams. Obviously, this could not be allowed to stand as it smack of free will and free choice on the part of Americans:
With these policies achieving more attention and growing in popularity as individuals sought a way out of Obamacare, the scrutiny rose. Many liberals attacked these plans as a loophole within Obamacare, arguing that they were being marketed deceptively so that individuals would buy them thinking they were covered just as with regular insurance. But the plans are exempted from Obamacare's annual limit caps and because they only pay out a fixed amount, they can leave policyholders with an expensive stack of bills in the event of major medical losses.
From National Review, HHS Wants to Sink an Obamacare Lifeboat:
However, to judge from the proposed regulations that HHS dropped last Friday evening, the captain and crew intend to sink that particular lifeboat lest passengers flee the ship. They’ve added a clause stating that “hospital indemnity or other fixed indemnity insurance,” as the policies are termed in HIPAA, qualifies as an excepted benefit only if it is “provided only to individuals who have other health coverage that is minimum essential coverage within the meaning of section 5000A(f) of the Internal Revenue Code.
In effect, HHS is now proposing to regulate the same indemnity health-insurance policy differently depending on whether or not the policyholder has separate Obamacare-compliant coverage. So, if you buy an indemnity policy to plug the gaps left by the high deductibles in your expensive Obamacare coverage, then HHS will treat your indemnity policy as an “excepted benefits” plan exempt from all federal regulation. However, if you do not already have Obamacare-compliant coverage and try to purchase an indemnity policy, then HHS will treat that indemnity policy as not being an excepted-benefits plan and instead subject it (and the insurer selling it) to all federal rules, regulations, and mandates imposed on Obamacare-compliant plans. Of course, that would make the indemnity policy just as expensive (and morally objectionable) as any other Obamacare-compliant plan, so you wouldn’t buy it — and the insurer probably wouldn’t sell you it anyway. The clear message: “Don’t even think of trying to get into that lifeboat!”
The strangest part of this story though, is in the history. Back in January, HHS was prepared to issue regulations that made fixed indemnity plans more attractive. This would be logical if the federal policy were to actually encourage people to have health insurance rather than engaging in a wholesale scheme of income redistribution:
Officials at the Center for Consumer Information & Insurance Oversight (CCIIO), an arm of Centers for Medicare & Medicaid Services (CMS), say HHS will write regulations that will get many of the products out of having to comply with the new Patient Protection and Affordable Care Act (PPACA) major medical insurance rules.
The new regulations will help individual indemnity products that pay a fixed amount of cash to a consumer who has a heart attack, suffers from a stroke, enters the hospital, or experiences some other event.
But somewhere along the way, the decision was made to kill rather than encourage these plans. This change of direction, in addition to the policy itself, needs to be investigated by Congress to find who benefited from it.
This change is significant in several ways.
- It represents a huge intrusion of the federal government into what has historically been a state regulated insurance product.
- At first blush, this seems to be yet another case of the Obama Administration assuming legal authority it simply does not have in order to prevent the logical and foreseeable consequences of Obamacare from coming to fruition during an election year
- The market that had previously been interested in this product is more likely to simply pay the fine and opt out.
Oh the whole, though, it shows that one-sixth of the nation’s economy is now managed by people who don’t understand health care, business, insurance, or economics.