On Wednesday, Politico’s Carrie Budoff Brown reported that the administration was saying fewer than 500,000 people had actually lost insurance due to Obamacare-induced cancellations. This struck me as a strange leak: Half a million is a lot less than many people (including me) have been estimating, but it is still not a small number, and the administration has tended to sit on negative information until the last possible moment.
Yesterday, we had a more official announcement from the administration: Anyone who has had their policies cancelled will be exempt from the individual mandate next year. The administration is also allowing those people to buy catastrophic plans, even if they’re over 30.
What to make of these two statements? On the one hand, the administration is trying to minimize the number of people who have been affected by cancellations, and on the other hand, it is unveiling a fix to the problem of cancellations. And these are not minor changes.
As Seth Chandler points out, Healthcare.gov doesn’t even let you see catastrophic plans if you’re more than 30 years old. Is now the time to be making technical changes to the website?
As Avik Roy points out, catastrophic plans aren’t that much cheaper than the so-called bronze plans. They’re also not eligible for subsidies. This is unlikely to be much help to folks who lost insurance; all it does is introduce some much-unneeded complexity to Healthcare.gov.
As Aaron Carroll points out, insurers calculated their premiums for this year on the expectation that the relatively healthy folks who were already buying insurance would be buying policies on the exchange. The insurers are not happy about this latest change, and Carroll predicts that they will ask the administration to push more money to them through the “risk corridors.” I think he’s right.
As Ezra Klein points out, this seriously undermines the political viability of the individual mandate: “But this puts the administration on some very difficult-to-defend ground. Normally, the individual mandate applies to anyone who can purchase qualifying insurance for less than 8 percent of their income. Either that threshold is right or it's wrong. But it's hard to argue that it's right for the currently uninsured but wrong for people whose plans were canceled … Put more simply, Republicans will immediately begin calling for the uninsured to get this same exemption. What will the Obama administration say in response? Why are people whose plans were canceled more deserving of help than people who couldn't afford a plan in the first place?”
Arnold Kling put it more pithily: “Obama Repeals Obamacare.”
I’d ask this: What do you do for an encore? Will the administration force these folks to buy insurance next year? Or will they keep allowing special exceptions rather than take the political heat for changing health insurance that people liked?
I’m not sure the administration is thinking that far ahead. The White House is focused on winning the news cycle, day by day, not the kind of detached technocratic policymaking that they, and the law’s other supporters, hoped this law would embody. Does your fix create problems later, cause costs to spiral or people to drop out of the insurance market, or lead to political pressure to expand the fixes in ways that critically undermine the law? Well, that’s preferable to sudden death right now.
However incoherent these fixes may seem, they send two messages, loud and clear. The first is that although liberal pundits may think that the law is a done deal, impossible to repeal, the administration does not believe that. The willingness to take large risks with the program’s stability indicates that the administration thinks it has a huge amount to lose -- that the White House is in a battle for the program’s very existence, not a few marginal House and Senate seats.
And the second is that enrollment probably isn’t what the administration was hoping. I don’t know that we’ll start Jan. 1 with fewer people insured than we had a year ago, but this certainly shouldn’t make us optimistic. It’s not like people who lost their insurance due to Obamacare, and now can’t afford to replace their policy, are going to be happy that they’re exempted from the mandate; they’re still going to be pretty mad. This is at best, damage control. Which suggests that the administration is expecting a fair amount of damage.
Slipping through the fingers of central banks and regulators, Bitcoins are pouring into Americans' virtual wallets. The Fed chairman and US Senate are paying attention. So, too, are beer drinkers in New York.
When Richard Weston meets customers in a Washington, D.C. café and asks "Do you have a wallet?," he means the virtual kind. He is a "Bitcoiner" - part of a growing community of fans of the Internet currency. Bitcoin is on a steady, forward march in the US, and whoever buys Bitcoins needs an accompanying online piggy bank. Personally, Weston prefers the website Blockchain.info.
Weston also chairs the group of Bitcoiners in the American capital. Its 40 members have embraced the mathematical creation developed by the pseudonymous "Satoshi Nakamoto" in Japan in 2009. The virtual currency is based on a system whereby two parties, with the click of a mouse, can seamlessly transact funds back and forth - without fees, regulations or third-party controls.
"There's this digital signature, the cryptography - the whole idea of this decentralized peer-to-peer network," Weston told DW. "There is no central control of the Bitcoin protocol."
The Bitcoin virtual currency market is limited to 21 million coins. The network's algorithm doesn't allow for more. The number of Bitcoin enthusiasts, however, is rising.
"When the price starts to get high, I see a lot of speculators come in - people who are trying to make a quick buck," he said. Others, he says, see the virtual currency as something a savings account, while some view the coins as a collector's item akin to physical coins or postage stamps.
A booming market
The value of the currency has increased exponentially over the past years. Those who hopped on the Bitcoin bandwagon early enough have made a pretty penny, Weston says. Most coins are moving fluidly in private business transactions, with the number of businesses accepting them rising continually.
In California, Virgin Galactic is now offering earthlings a trip to space in exchange for the virtual currency. Municipal employees in Vicco, Kentucky, can opt to receive their paycheck in the form of Bitcoins; the city's police chief has already done so. In a New York bar, a beer can also be paid for virtually.
"It's very easy," says the bar's owner, Alex Likhtenstein. On his iPad, he clicks Bitcoin's "checkout" feature and tallies up his customers' tabs - all without a credit card. The virtual receipt shows the sum in dollars converted into Bitcoins. The payment arrives in dollar form in the account of the bar owner. "Send payment, and we're done," he says.
No risk, no reward
As harmless as it all sounds, the Bitcoin business is anything but, say experts such as Alexander Privitera, who directs the business and economics program at the American Institute for Contemporary German Studies at Johns Hopkins University. "The problem is that since the interest for bitcoins has increased over the past few months dramatically, the price for Bitcoins - since this is a fixed amount of Bitcoins that are in circulation - has risen dramatically," he told DW.
The currency has proven to be less stable than its fans will typically attest to. Bitcoins regularly peak and plummet. The first bubble burst in 2011, falling from $30 to $2 (22 to 1.5 euros). At the beginning of December 2013, a single Bitcoin was worth $1,200. When that bubble burst a few days later, it cut the currency's value in half.
"We're dealing with an anonymous currency on an online platform that theoretically doesn't leave any trace, and you're trying to tap into these Bitcoins," Privitera said. "But you're not calling Ben Bernanke and trying to extract from him any kind of monetary easing. There is nobody to call."
US Federal Reserve Chairman Ben Bernanke recently gave the Internet currency his restrained blessing. The Fed doesn't have the authority to get involved in the issue, he said. The fact that the chairman of the Federal Reserve even spoke on the issue was enough to give the Bitcoin business a boost, insiders say.
Others, like former US Congressman Ron Paul, warn of Bitcoins' growing influence. "When the dollar is in trouble, that will be one of the alternatives, and the more Bitcoins are used, the worse it will be for the dollar."
Those worries have been shared by other US politicians during hearings in Congress. While no one spoke of banning or regulating Bitcoins, Democratic Senator Tom Carper voiced fears that records of bitcoin transfers would be tracked and stored digitally. A second issue also bothered him: "Virtual currencies can be an effective tool for those looking to launder money, traffic illegal drugs, and even further the exploitation of children around the world," he said during a Senate hearing on the issue in late November.
Bitcoin fan Richard Weston says that similar concerns have almost always accompanied the rise of a new technologies as they disrupt established markets. "One of the first groups of bad guys to get a hold of automobiles were bankrobbers, because they could outrun the cops that were riding horses. Should we ban automobiles?" he asked.