Allyne Caan / February 16, 2017

Pull the Plug; ObamaCare Is Dying

Insurers drop out, the IRS relaxes enforcement and the GOP prepares replacement.

ObamaCare architect Jonathan Gruber — he of “stupid Americans” fame — recently let loose another poorly kept secret about ObamaCare: “This law was never supposed to help everybody.” His truth-telling was entirely unintentional, because he was actually arguing for the law and excusing its failures, but it was quite illustrative nonetheless.

Case in point: There’s further evidence that ObamaCare is on life support with a “do not resuscitate” order. Another major insurer is calling the government-run marketplace quits. On Tuesday, Humana announced it would exit the ObamaCare marketplace entirely in 2018, citing “further signs of an unbalanced risk pool.” This comes after the company scaled back marketplace operations last year from 19 states to 11, following nearly $1 billion in losses.

Humana isn’t the first to take flight. Last year, United Healthcare, the nation’s largest insurance company, also called it quits. The departures are hardly surprising. Predictions of ObamaCare’s failure — from skyrocketing premiums and canceled plans to fewer choices — have been proving true for years. Humana’s exit leaves only three of the top five major insurers still in the marketplace — Anthem, Aetna and Cigna. But that doesn’t mean those three are happy with the monster they helped create.

Indeed, Humana’s announcement came on the same day two major mergers among the top five — an Aetna-Humana marriage and Anthem’s potential acquisition of Cigna — fell apart over antitrust concerns. The collapse of the talks undoubtedly prompted Humana to take its marketplace leave. But what of the remaining three? The Wall Street Journal reports, “The ObamaCare business, which has left most insurers underwater, was never the great profit-making opportunity that some imagined in 2009-2010. The CEOs pursuing mergers were responding to ObamaCare’s regulatory logic. But that logic is less persuasive now that Congress plans to break up the ObamaCare status quo to nurture a more vibrant insurance market.”

As John Sexton writes, “There is now less incentive for the … separate companies to remain in the struggling Obamacare marketplace.” Indeed, Aetna CEO Mark Bertolini predicted “a lot more withdrawals this year of plans,” and warned that ObamaCare is in a “death spiral.” He explained, “What happens in a population that continues to get riskier and riskier is the rates chase the risk, you try to raise your rates high enough. Last year it was on average 27%. What happens is the people who are paying out of pocket for most of it leave because it is becoming too expensive.”

By refusing to keep participating in ObamaCare’s disaster, the private sector may take care of repeal before Congress gets to it!

And health insurers aren’t the only ones signaling ObamaCare’s demise. A death knell is also sounding from the unlikeliest of places: the IRS. This agency is, of course, the enforcer of the individual mandate — and the mandate is the centerpiece of ObamaCare. But in the wake of President Donald Trump’s executive order requiring federal agencies to provide relief from ObamaCare’s burdens, the IRS has decided not to enforce the mandate after all.

As Reason’s Peter Suderman reports the IRS said it “has decided to make changes that would continue to allow electronic and paper returns to be accepted for processing in instances where a taxpayer doesn’t indicate their coverage status.” In other words, those who don’t buy insurance coverage as mandated by ObamaCare may not have to pay a penalty, as the IRS plans basically to turn a blind eye to the mandate line on the tax forms.

When even the IRS won’t support a government program, you know that program isn’t long for this world. At least we hope that’s the case.

Unless, that is, Republicans keep it alive. Known for snatching defeat from the jaws of victory, some Republicans are appearing a bit skittish about a flat-out repeal. Senator John McCain (whom we’ll categorize as a Republican for the purposes of this story), reportedly supports a slower approach to repeal, saying he’s “always worried about something that took a long time in the making and we’ve got to concentrate our efforts to making sure that we do it right so that nobody’s left out.”

Thankfully, the McCains of Congress won’t get their way without a fight. Many, including members of the House Freedom Caucus, remain intent on repeal. Ohio Congressman Warren Davidson, for example, noted, “The commitment for Republicans in 2010, 2012, 2014, 2016 has been repeal and replace, not repeal and renege, and repeal means that it’s a repeal. There are no Affordable Care Act plans. There’s no ‘if you like your Obamacare you can keep your Obamacare’ in the Republican commitment.”

And on Wednesday, Sen. Rand Paul (R-KY) and Rep. Mark Sanford (R-SC), with the full support of the Freedom Caucus, introduced the Obamacare Replacement Act.

ObamaCare is already dying. Now is not the time to get out the defibrillator. Instead, Republicans must pull the plug on the disastrous health care law once and for all.

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