Faced with a growing public backlash to the 2010 healthcare law's insurance reforms, the Obama administration decreed Thursday that consumers should be allowed to keep their current policies for another year, even if the coverage falls short of the law's requirements. The move is a desperate attempt to fulfill a promise President Obama never should have made, and the legal authority for it is sketchy. What's more, it may not be possible at this point for insurers to revive policies they've already canceled. Worst of all, Obama merely punted to next year the fight over the law's insurance reforms, which he has done a remarkably poor job of explaining and selling. The only good thing about the delay is that it might stop Congress from making a more damaging change to the law.
Insurers have been sending cancellation notices to millions of customers because most of the policies they've been selling to individuals — that is, those people not covered by large group plans at work — don't meet the new standards for affordability and coverage. The goal of the standards is a good one: to stop insurers from excluding or segregating people with preexisting conditions and potentially costly medical needs into more expensive risk pools. But many have struggled to find replacement coverage because of the nightmarish technical problems at HealthCare.gov, the website serving the 36 state exchanges operated by the federal government. And others have complained that a new policy would cost far more than their old one.
The administration responded Thursday with a letter to state insurance commissioners, advising them that any policy for individuals or small businesses could be renewed for next year regardless of whether it met the standards that go into effect Jan. 1. Insurers could not sign up new customers for noncompliant policies, however, and would have to tell renewing customers about their policy's shortcomings.
Some states, including California, have legal and regulatory barriers that will have to be cleared before insurers can revive noncompliant policies — assuming they want to. And even if they do, another round of cancellation notices would go out next year, leading to another outcry against the law's insurance reforms in the weeks before voters go to the polls. But at least Obama didn't go as far as House Republicans have proposed; the bill they're advancing would allow insurers to keep offering their current noncompliant health plans to whoever might buy them. The concern about lost coverage is valid. But rather than delaying or giving up on badly needed changes to the individual insurance market, the administration and lawmakers should be putting more effort into helping people enroll in comprehensive new plans they can afford.