After President Obama on Thursday joined both Republican and Democrat lawmakers in rolling out a plan to “fix” the problem of Americans seeing their insurance policies canceled, the most accurate summary came from staunch Obamacare supporter Jonathan Chait.
“Everybody,” he wrote, “is bullsh*tting.”
Chait’s point was that Obama’s plan to allow Americans receiving cancellation notices to remain on their policies for one more year will do “very little” for very few people—if anyone. He argues the same for a similar House Republican proposal and a somewhat stronger Senate Democrat proposal that would require insurers to keep operating health plans that are set for cancellation next year.
And yet, President Obama maintained that his plan would “help a lot of people.”
“Now, this fix won’t solve every problem for every person, but it’s going to help a lot of people,” Obama said during his Thursday press conference at the White House, according to this transcript.
That just isn’t true. Health insurance is regulated at the state level. State regulators would have to, somehow, convince health insurers writ large to file rates for plans they were already phasing out. That might require actuarial analyses that haven’t been done, and, in states like Indiana, a back-and-forth with regulators to justify the rates.
The likelihood of insurers bothering with all that just to help the president make his latest promise come true is about nil.
“Will many insurers go along with it? Probably not, but experts aren’t exactly sure,” Chait wrote. “If not, then all the keep-your-plan promises floating around — Obama’s, the Democratic plans, the Republican plans — are closing the barn doors after the horses have fled.”
I’m afraid this latest promise has the same problem as the one that got Obama into this mess in the first place. Obama said repeatedly, starting in his 2008 presidential campaign and continuing until this year, “If you like your plan, you can keep it.”
Now I, for one, think the uproar over the wave of cancelled policies has been a bit unfair to President Obama. I never understood him to be saying that every American would be able to have exactly the same terms of insurance in 2014 as they did in 2009.
Anyone who has the slightest familiarity with health insurance should have known that that was an absurd idea.
Employers change the terms of their health insurance plans almost every year. And health insurers altered the terms of their individual policies annually as well, often in an attempt to shuffle healthy consumers over to cheaper plans, which let premiums rise on the sick folks stuck in their existing plans.
For those reasons, I always understood Obama to be saying something like this: “If you have employer coverage, I’m not going to force you off of it. If you have individual coverage, I’m not going to force you on to a public option plan.”
So, while I considered Obama’s “If you like your plan” statements to be political spin, I didn’t—and I don’t—consider them to be a pants-on-fire lie.
That said, those statements were a kind of fib—so common in politics—that obscures what is really going on.
One of the fundamental purposes of the Affordable Care Act was to completely restructure the individual insurance market. The law is, by design, nothing less than an attempt to turn what was really one giant bit of false advertising into a real insurance risk pool.
Instead of health insurers selling policies where finding out the coverage terms before purchase was nearly impossible and keeping a policy after having a medical claim was also unlikely, Obamacare will actually bring the basic insurance concepts of spreading risk to individual health insurance customers.
It will also bring some of the benefits of spreading risk, which Americans in employer plans already enjoy, such as guaranteed issue for people with existing medical conditions, the elimination of lifetime caps on claims and richer levels of benefits.
Obama knows this and he gave a good defense of these changes in his Thursday press conference.
The problem is that, for the past five years, he’s been selling what is in fact an invasive re-engineering of the individual insurance marketplace as if it wouldn’t force anyone to change anything if they didn’t want to.
And that just wasn’t so. As anyone in an employer-sponsored plan knows, you don’t always get exactly the health insurance plan you’d prefer, because your employer chooses it (or a select few options) for you.
Now, in attempt to fix this fiasco, Obama is promising, again, that neither he nor the Affordable Care Act, will force them off their health insurance policies.
“What we’re essentially saying is the Affordable Care Act is not going to be the factor in what happens with folks in the individual market,” Obama said at his press conference Thursday. He added, “I, the president of the United States, and the insurance model of the Affordable Care Act is not going to be getting in the way of you shopping in the individual market that you used to have.”
Again, this just isn’t so.
Why not? Because you can’t change what really wasn’t an insurance market into a real insurance market without greatly changing the products offered in that market.
Say what you will about the dastardly health insurers, but they are simply following the new rules of the game. I mean, if my bosses came to me and gave me a completely new set of job duties and then said, “But, if you want to, you can also keep doing your old job in addition to this new one,” do you think I’d voluntarily do both my old and new jobs? Of course not.
Obama said he expected the grandfathering provisions in the Affordable Care Act to preserve the best plans in the individual market, but that those provisions just didn’t work.
That explanation doesn’t hold water because, as NBC News reported in the story that launched this cancellation scandal, Obama’s Department of Health and Human Services noted way back in 2010 that more than 40 to 67 percent of individual policies would fail the grandfathering test every single year.
The plain truth is that President Obama’s Affordable Care Act is the main reason that old policies are being cancelled in the individual insurance market. It’s time the president forcefully made the case for why the new protections his law brings to the 14 million Americans in the individual insurance market are worth the pain to the relatively small number of Americans that are actually being hurt by the policy cancellations.
Anything less sets up President Obama for another hit to his credibility, in addition to the one he’s already suffered.