A Presidential Decree is Sanctified by What Part of the Constitution?

Article Two, Section One, Clause Eight of the United States Constitution provides the Oath of Office of the President of the United States as follows:

“I do solemnly swear (or affirm) that I will faithfully execute the Office of President of the United States, and will to the best of my Ability, preserve, protect and defend the Constitution of the United States.”

Article One, Section one of the Constitutions specifically states that “All legislative powers herein granted shall be vested in a Congress of the United States.”  There is nothing in the Constitution that gives the President the power to legislate.

On November 14 President Obama issued another of his many Presidential Decrees.  He announced that he was authorizing insurance commissioners of all the states across our nation to ignore the provisions of the Affordable Care Act banning non-compliant medical insurance plans.  Each insurance commissioner was empowered to require the insurance companies in their state to revoke cancellations and allow non-compliant plans to continue through 2014.

I suppose one has to give some credit to Mr. Obama for trying to rectify at least one of the many problems endemic to the Affordable Care Act which are devastating Americans.  At the same time, though, we must ask: “Where did he get the power to allow plans specifically banned by his signature health care act to continue in force, even though such plans are specifically forbidden by law?”

Even the courts agree!  On August 13 of this year the District of Columbia Court of Appeals ruled against President Obama for failing to obey a 2002 statute requiring the executive branch to take final action on the certification of Yucca Mountain in Nevada as a nuclear waste site.  Judge Brett Kavanaugh ruled that “Under Article Two of the Constitution and relevant Supreme Court precedents, the president must follow statutory mandates.”

Is advocating the breaking of a law passed by Congress and signed into law by the President himself considered to be “upholding and defending the Constitution?” I think not.

White House officials said that Mr. Obama does have the power to issue this decree, citing the President’s decision to defer removal of immigrants who came to the US as children.  Let me get this straight:  Because he issued an illegal and constitutionally unjustified decree earlier, that gives him the power to issue another illegal and constitutionally unjustified decree now?


Cancelling the Old “Bad” Plans

While Mr. Obama says that the reason many of the old “pre-ACA plans” are being cancelled is because they were bad plans, plans that didn’t provide the kind of coverage that people need.  That is a topic for an entire article, so we won’t address that claim here, though many would strongly disagree with his contention, as pointed out here, here, and here.

The reason so many people are so very angry that their “old” plans are being cancelled is because the people like their old plans.  If they like them, who is Mr. Obama to tell them that their plans are bad.

Isn’t this supposed to be a free country where life, liberty and the pursuit of happiness matters?  If you’re happy with your medical plan, isn’t it absolutely wrong for the government to in essence tell you, “Sorry, you don’t know what you’re doing. You’re apparently not smart enough to realize that your old plan is really a bad plan, so we’re going to make that decision for you.” (Even though the President repeatedly promised you could keep them).

The arrogance is despicable.

So Obama has supposedly issued his decree to “correct” the problem.  But…not really.  What he did was pass the blame along to the insurance commissioners so that now he can say, “It’s not my fault – it’s their fault.”


Industry and Insurance Commissioner Responses

Response to Mr. Obama’s “fix” has been less than positive.

“I’m sure he has all sorts of reasons he made the decision he made,” said Monica Lindeen, vice president of the National Association of Insurance Commissioners (NAIC).”But from a practical standpoint, for commissioners all across this country, it really did turn our lives upside down.”

“Changing the rules after health plans have already met the requirements of the law could destabilize the market and result in higher premiums for consumers,” said Karen Ignagni, the president of America’s Health Insurance Plans, a trade group in Washington.

In a statement concerning Obama’s announcement regarding policy cancellations and the role of state insurance regulators, South Dakota State Insurance Director Merle Scheiber may have summed up the feelings of most state insurance commissioners when he said:

“The Division of Insurance is sorting through the logistics of how this announcement will impact insureds and carriers. The President’s new direction requires a detailed analysis in order to identify the best options for consumers and businesses. We will do what is best for [our citizens] and are demanding more details regarding this policy change.”

Arkansas’ Insurance Commissioner Jay Bradford and Washington state Insurance Commissioner Mike Kreidler, both Democrats, have said that they’ll decline to implement the President’s fix, while Oregon has left it up to the insurers, neatly sidestepping accepting the responsibility for making a clearly controversial decision.

In their official statement, the NAIC warned that changing the rules this late in the game creates uncertainty, threatens to undermine the market and may lead to higher premiums and greater market disruption in the future.

The NAIC concluded, “This decision continues different rules for different policies and threatens to undermine the new market… In addition, it is unclear how, as a practical matter, the changes proposed by the President can be put into effect.”


Fiscal Impact on Administrative Costs

Soon after the passage of Obamacare insurers began working on ways to bring their plans into compliance with the new law.  No one knows how much that compliance effort has cost, but you must include the cost of:

  • closing down all the old non-compliant plans
  • designing and implementing a new array of Metal Level plans
  • hiring & training new employees to administer the new plans
  • supporting the old plans through January 1, 2014

The numbers surely run into the multiple billions.

Furthermore, keep in mind that just like all business operations, insurers have a target market.  They design a portfolio of plans to fit the needs of that target market.  Just like an auto maker makes a line of cars to sell to its target market, and a computer manufacturer makes a line of computer to fit its target market.

Neither the automobile nor computer nor insurance industry – or probably any other! – creates a second line of products to compete with themselves.  Now President Obama, with less than 45 days notice, expects the insurers to revamp their entire systems and maintain two separate and distinct product lines.  That will leave the old non-ACA compliant plan portfolio which aren’t based on the Metal Levels, and the new ACA plans which are based on the Metal Levels in direct competition against one another for the same target market.

Insurers also expressed concern about the cost of reinstating policies that had already been purged from their computers and that had not been included in negotiations with doctors and hospitals.  Carl McDonald, an analyst with Citigroup, said the president’s plan created an “enormous administrative burden” for insurers and predicted many would choose not to extend coverage.

“The complexity of trying to uncancel millions of canceled individual policies with only six weeks left in the year is staggering,” he wrote.


Crushing the Risk Pool

Insurance is a moderately complex but eminently logical means of sharing a risk. Here’s the concept:

  • Take a group of people (the insurance term is “a pool”) all of whom share a common concern, such as a car accident, a fire, or a medical claim
  • That group of people sharing the same risk comprises a “Risk Pool”
  • The number crunchers calculate the expected number of claims in the risk pool, how many people will have claims and how much those will be
  • Based on those expected claims payments, you determine how much each member of the pool needs to contribute into the pool to pay all expected claims. That amount is the insurance premium
  • If you have fewer claims than expected, the premium goes down
  • If you have more claims than expected, the premium goes up
  • If you remove a large number of people who have very low claims from the risk pool the average cost of claims in the risk pool inevitably goes up, which in turn pushes the premium up

When the number crunchers calculated the premiums for the new Obamacare exchange plans they knew that they would have a large number of people who had not previously had insurance.  After all, that has always been one of the huge benefits to Americans touted by Mr. Obama.  Millions without insurance, people who either couldn’t afford it or couldn’t get it due to poor health – will now get coverage.

Let me pose a question. If you hadn’t had insurance for years, and hence hadn’t been able to see a doctor for either checkups or for treatment of existing problems, what would you do as soon as you got coverage under the new federally subsidized Obamacare plan?

You’d go to the doctor, wouldn’t you?  That seems obvious.  Which means that those millions who are newly insured will have higher claims than the average American, right?  That’s the goal of Obamacare, to get coverage for those who haven’t been able to get it before, so they can go to the doctor!

For the past two to three years, the actuaries have been figuring out what the premiums have to be for this new risk pool being sold in the exchanges.  The new Obamacare Exchange Risk Pool which was expected to have two groups of people in the risk pool:

(1) those relatively few who haven’t had insurance in the past and can be expected to have higher than average claims and,

(2) those who comprise the vast majority and who’ve been insured under their own plans for years, who’ve been seeing their doctors year in, year out, and can be expected to have fairly average claims.

When you pull the second group out of the above equation as Obama’s decree did, catastrophic claims and ensuing skyrocketing premium rates loom.


This Outrage is Widespread

The New York Times pointed out that insurance carriers who are new to the market could be particularly hurt by the proposal, with many people choosing to stay with their existing plans because they are less expensive rather than what’s available on the exchange.

The larger and potentially devastating overall impact of how removing the healthy from the risk pool could affect everyone in the country was addressed in a November 19 Wall Street Journal Op-ed by Marco Rubio.  Senator Rubio pointed out a memo from HHS that including the following comments on this concern:

“Risk corridors are…used to mitigate an insurer’s pricing risk. Under ObamaCare, risk corridors were established for…three years as a safety-net. While risk corridors can protect taxpayers when they are budget-neutral, the president’s action now exposes taxpayers to a [financial] bailout of the health-insurance industry if and when the law fails.”

On Nov. 14, the American Academy of Actuaries issued a press release saying that President Obama’s plan to reverse health-insurance cancellations “could lead to negative consequences for consumers, health insurers, and the federal government.” More specifically, the academy said, “Costs to the federal government could increase as higher-than-expected average medical claims are more likely to trigger risk corridor payments.”

Point after point, problem after problem, from a law that a November 20, 2013 CBS News poll says 93% of Americans believe should be either repealed or changed, including 72% of Democrats!

Seriously, isn’t it time we got rid of this monstrosity?  Meaning the law – not the President.

Obamacare questions