Obama’s telling the same kind of fib he did before

November 15, 2013
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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.

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  • Naive
    With all due respect, I think you being too naive if you don't think Obama didn't say exactly what he meant to say back in 2009. He understood that if he told the truth that millions of Americans, both Republicans and Democrats, who were very happy with their current healthcare plans, would lose their plans under his new law, the law would never pass even a Democratically controlled Congress. It was a risk he was willing to take and it has come back to bite him in the &*%.
    • Broken trust
      I disagree with this part of the article: "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." I understood him to say whatever insurance I had in place when the law went into effect (Jan 2014), I could keep with no changes, and believe most people understood that. We shouldn't have to be lawyers or read the 2,000 pages of regulations for the asterisks and nuances - he made a simple statement and it was false so he has broken our trust like so many other politicians - just to get re-elected or pass a favorite agenda item.
    • Insurance Level
      What exactly are the plans that are being canceled--are some of these the plans that were provided by fast food companies etc that had a $10,000 max payout (which is really not 'insurance')? Yes, Obama never should have made that promise, but there should be some basic level of coverage in all insurance sold.
    • Pelosi
      I still can't believe he was re-elected let alone won his first term. When Pelosi said, "we have to pass this bill to find out what's in it" spoke volumes and should have caused everyone to run.
    • absolutely
      Patrick is 100% correct! Our Pres deliberately lied to pass the bill - PERIOD!
    • Reality
      I am self employed business man. My policy from Anthem was cancelled in September by a letter. My rate has gone from $590 to $845 and at Humana, my deductible is up from $2,000 to $3,500. Tell me which policy is better. Obama says that these policys cancelled were badI got the Silver policy to keep the privelage of seeing my own doctors. I will pay $10,140 in premiums and $3,500 in deuctibles or $13,640 before I get reimbursed for anything. How is this better
      • Punishing good employers
        Charlek asks what policies are being canceled. My spouse had very good health insurance, working part time. Her insurer had to scrap that plan, because the ACA accused it of being a "Cadillac plan." (It wasn't IMO.) In any event, she now pays higher premiums, higher co-pays, and has higher deductibles, for less coverage. There was no need for this. This company employs 200,000 workers. All of them got worse coverage. This is one of the things that's very wrong with the ACA. If a company WANTS to provide really good insurance, the ACA punishes the company. How in the world can that be "good" public policy? This is exactly what should be encouraged - employers providing the best coverage possible. We would have been better served to offer employers a 150% tax credit for all insurance they provided. Employers would be scrambling to provide insurance to employees, with a lot less regulation and the American employees win (by getting better insurance).
      • Be a journalist
        When did journalists stop investigating and start cheerleading? If reporters in 1972 would've taken the same approach as today's defenders of PPACA like Mr. Wall, they would've said, "Nixon's denial of his knowledge of the Watergate break-in is only a kind of fib. We should overlook these misreprentations because the break-in wouldn't have affected the outcome of the election. And I never understood politicians to be that honest anyway. The uproar has been a bit unfair to President Nixon. Given his ending the Vietnam War and successful foreign policy in China, this was a better outcome than had George McGovern been elected."
        • To dave Sicklestel
          I am sorry to hear you will have to pay so much more for what sounds like weaker coverage. The ACA, by design, requires that some people pay more in order to extend true insurance protection to others who are older or sicker. Are there better policies out there to fix the dysfunctional individual insurance market? I believe there are. But my point in this post is that President Obama needs to, still, level with the American people that his solution to the problem will bring pain on some (like yourself) and should tell us why that pain is worth the overall goal. His repeated attempts to say there will be little to no pain need to stop.
        • To C. Clark
          In defense of journalists generally, you wouldn't know about the cancellation scandal without the reporting of NBC News. As for me, in particular, I am hardly cheerleading for Obamacare by simply saying the president has some good things in his law, yet needs to, at long last, start fully defending them--in all their pros and cons--rather than remaining in his pitch-making mode in which (like all salesman everywhere) he plays up the positive and obscures the negative. In short, he needs to start telling us why the pros outweigh the cons in his law, rather than maintaining that there are no cons.
        • Time to Wake Up
          We've had plenty of "crooked" politicians on both sides of the aisle. But this president and his administration are willing to stand before the citizens that elected them and blatantly lie without blinking an eye. While everyone is up in arms over the computer glitches and losing their current insurance coverage, the bigger issue is the fact that this plan is unsustainable. The young and healthy individuals need to buy into the concept of paying exorbitant fees for coverage to offset the millions of older folks and the previously uninsured (less healthy & much more expensive to insure). If they don't buy into the scheme the system implodes unless further funded by the employers or the poor folks that don't qualify for the subsidy. In addition, no one is discussing how these newly insured individuals (with their subsidized premiums) are going to be able to pay the HUGE deductibles when they visit their doctor or make a trip to the hospital. Many will not have a clue that they have to pay upfront costs. And what happens when the hospitals can't collect on all of the unpaid bills... health care costs rise for those that can pay. This crazy scheme is going to bankrupt the individual as well as this country. It's time to take the Obama stickers off your car and wake up America!
        • Wrong Headline
          JK - Good article but the headline is off the mark. The substance of the article is your point about what the ACA is trying to accomplish. Unfortunately, your headline perpetuates gloom and doom about the ACA rather than trying to better educate the public about what it is trying to accomplish. One trade-off the President made to the opponents of the ACA was to try to keep the program in the insurance market with policies established and administered by the insurance companies. Now that the market is reacting opponents want to complain. Too many readers will key on your headline and miss a lot of the substance of your article, particularly when it is near the end of your article. I say this as a Hoosier that would like to see the uninsured receive useful information and coverage; it will be good for Indiana in the long run and will keep the state on more equal quality of life footing with surrounding states.
          • Canceled Plans
            I continue to read comments from people who are complaining that their insurance plans have been canceled. What I have not heard from any of them is "how well their canceled plans provided coverage" and what their out-of-pocket costs were under their canceled plans. You don't really know how good your policy is until you have an emergency or unexpected illness. Unfortunately, I have seen little data that systematically analyzes this situation. Anecdotal information gets attention but does not shed a clear light on the condition.
            • ACA
              When I first heard about the ACA, I was immediately skeptical. Why? Because it stated that you couldn't be rejected for a policy or denied continuation of coverage due to a health condition AND there would be no cap on the amount of benefits paid. There is no type of insurance (fire, auto, life, renters, etc.) that is ever written with open ended liability like that; you pay for the coverage you desire and can afford. The other problem, which has always existed, is the unfairness of how premiums are treated from a taxable point of view. Two identical policies, one provided by an employer, and one paid for by an individual, are treated very differently as far as taxes go. One is provided as basically a tax free benefit (essentially, untaxed income) while the other is paid for with after tax income, and, depending on one's situation, not always deductible.
            • Plans that are canceled are the good ones
              Jim F., I responded to this above. The BEST plans are the ones being canceled. There are lawsuits being filed by some employers, because those employers do not want to offer worse insurance to their employees (which is what the ACA insurance policies are - most of the available options are worse than the existing policies that are available to corporate America). Logically, people would not complain if junky policies providing less coverage were canceled in favor of better policies. That is NOT what's happening. We're losing our good insurance benefits in favor of junkier policies.
            • Canceled Plans - Patrick James
              Patrick James - Thanks for your reply. I did read your initial comments and was puzzled by your wife's companies actions. I believe the company could have left the "Cadillac" plan in place if it had wanted to as long as it included the 10 basic coverage requirements of the ACA (which it probably did if it was a Cadillac plan). Are you sure the company did not use the ACA as an excuse to get rid of the Cadillac plan? I am always a little skeptical that people are not getting behind the rationale for this types of cancelations, particularly when the actions involve part-time employees. Altruistic companies seem to be few and far between even before the economy went south.
            • Canceled Plans
              I am not on the Board of Directors or anything. But, this is not the first company going through this. The Criterion newspaper recently ran a story about a Catholic businessman fighting the ACA because he will be punished for providing insurance that is "too good." This isn't isolated, unfortunately. Lots of people are losing good insurance. (Yeah, they're the "lucky ones" who have good insurance. But, this is bad public policy to take away benefits that companies willingly pay. Unfortunately, that's partly what the government is doing.)
            • Sell the truth
              Like other commenters, I disagree with your pants on fire point (while by in large this is a great article and sound argument). Where I differ is that what the president said (by english standards) is that you can keep your existing policy. For many, that was not true. Whether fire on pants is required or not, it was an un-truth which is also known as a lie. I'll make a two part point: (1) Universal healthcare (which we don't yet have) has been effective, with it's fair share of negatives, in all other industrialized countries. (2) Increasing the requirements of insurance coverage requires that insurance companies capture income from those that are healthier, so MANY policies WILL be cancelled. Those things were always true, and not a hidden fact from anyone investing significant time in shaping the insurance industry or public policies. What the president should have done is sell the truth instead of sell a lie.
            • To Jim F.
              Thanks a lot for the active participation in the comments today. I noticed that I failed to respond to a question you asked me on Monday's post. If you're still interested, I just posted a response here: http://www.ibj.com/the-dose-2013-10-31-the-bill-for-hoosiers-excess-health-care-spending-5-billion-a-year/PARAMS/post/44396#commentform.
              • This oozes of partisanship
                The title and teaser are wrong, and the entire post is dismissive of the aims of what universal healthcare represents. If you're against, it you'll find fault with every characteristic and falsely-generated meme. The bias here reeks. What happened to the original issue-- that insurance companies in cahoots with providers have made costs unaffordable, and bankrupted SO MANY HARD WORKING AMERICANS? Did the Libertarian and Tea Party screeds succeed?
              • storgr clear
                FIB From Merriam-Webster Online Synonyms: fable, fabrication, fairy tale, falsehood, falsity, lie, mendacity, prevarication, story, tale, taradiddle (or tarradiddle), untruth, whopper... Antonyms: Truth Bob, you might look up some of these words you use and find out what they mean first!
              • Thanks JK
                Thanks JK - I did link to the previous article and read your response. I consider myself reasonably well read on most issues, such as the ACA, but I continue to better appreciate the complexity and multi-faceted aspects of the health care system as I read new articles and readers' comments.
              • Brilliant Response
                The President's "fix" is a brilliant response to the weeping and gnashing of teeth -- mostly by political-posturing Republicans -- over the cancellations. The individual (non-group) market represents 5% of all insured people. Because those policies are only good for one year and have to be renewed annually, insurers have been increasing rates and changing benefits structures at renewal for decades. This year, they decided they didn't want to conform the policies to the ACA requirements, so they cancelled the policies and blamed it on the ACA. The President threw it right back at them and, in effect, took away their excuse for cancelling the policies. Republicans who have been using the cancellations as yet another tired old anti-ACA battle cry also lost their cause celebre and are scrambling for a reasonable response and making fools of themselves in the process. The folks complaining here about losing plans and rates increasing are amusing. They act like their rates haven't increased EVERY year since they've had their policies. What's very likely is the size of the group that cannot find a better deal on the Exchange has to be very small, when considering subsidies and the Catastrophic plans eligible to young people. Buck up, people. This will get implemented and fix what has been a very broken system. If you need a list of all the problems we need the Affordable Care Act, just ask someone who has worked with insurance consumers over the years. They will help you figure it out.
              • Brilliant Response?
                It is truly a sad statement of affairs when a former Indiana Insurance Commissioner finds "the folks complaining here about losing plans and rates increasing are amusing." Yes, rates have increased annually for as long as one can remember, but not by the increases reported by the "folks complaining" above. Yes, policies were replaced or benefits tweaked in the past, but the "folks complaining" above could buy what they could afford. And employers have reduced coverage in the past, but not at the dictate of the federal government as reported by the "folks complaining" above. Not every criticism of Obamacare is "political posturing" by Republicans, except perhaps in the eyes of folks like Ms. McCarthy, our former Democratic-appointed Insurance Commissioner and protector of insurance consumers like the "folks complaining" above.

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