Remember “If you like your health plan, you can keep it”? The Obama administration may try to breathe new life into that broken promise.
In particular, the Associated Press’ Tom Murphy reported last week that the administration is mulling whether to let insurers continue offering policies that do not meet the minimum standards set by the 2010 Affordable Care Act, better known as Obamacare. After insurers canceled a huge number of individual policies, President Obama announced in November that those policies could be resurrected for 2014. The administration is now considering whether to give insurers up to three more years before terminating noncomplaint policies.
That would be a mistake for at least two reasons, one procedural and one substantive. There’s a better way to help people who want lower-cost coverage, and the administration should work with Congress to implement it. But more on that later.
Most plans in the individual insurance market ran afoul of the new standards because they lacked an “essential benefit,” such as maternity or substance-abuse coverage, or they did not cover enough of the total cost of medical care. The law exempted policies that people had kept in place since before the ACA was enacted, but this “grandfather clause” protected surprisingly few policyholders.
The cancellation letters -- coming amid the spectacularly botched rollout of the HealthCare.gov website -- triggered a wave of outrage by consumers who felt the president had lied to them repeatedly about Obamacare. The president’s approval ratings plummeted, and they haven’t recovered.
Because the reversal Obama announced in November was temporary, insurers are expected to send out another round of cancellation letters in the fall -- at the height of the 2014 campaign. Obamacare is already an albatross for many Democratic candidates; having to deal with the cancellation issue again just before voters go to the polls would only make matters worse. Hence the administration’s interest in pushing the problem back another few years.
But as The Times’ editorial board argued last year, canceling noncompliant policies is a necessary byproduct of a crucial reform in the ACA. In the individual market, insurers have used narrowly drawn policies to keep costs down for the healthy (and themselves) while driving those with preexisting conditions out of the market or into expensive high-risk insurance gulags. One point of the ACA was to end that practice, joining individuals into a single, broad risk pool in each state. That way, costs and risks would be shared as broadly as they are in the market for large group plans, which have been less costly and volatile for consumers.
Transforming the individual insurance market is no mean feat, however, and the change produces winners and losers. Many older and sicklier individuals have seen their premiums drop, while many younger, healthier ones have seen their premiums go up -- in some cases, scarily so.
Obama’s response has been to put off dealing with those issues. It’s hard to see where the administration gets the authority to waive the law’s minimum standards, which were supposed to have taken effect Jan. 1. Delaying the effective date for multiple years seems even more legally dubious. Such changes should be done through Congress, even if Republicans there are far less interested in fixing the law than in nuking it.
A better approach would be to address the factors causing such a sharp increase for some in premiums. First and foremost is the elimination of high-deductible comprehensive-only plans for those over age 30. If people want to assume more of the risk of their healthcare costs, they ought to be able to do so while still contributing to the cost of the total risk pool. A second factor is the “essential benefits” mandate, which seems to have been imposed without regard to the cost of such broad coverage. That’s an issue worth revisiting, to see whether some of the mandated benefits aren’t truly essential.
Such changes would have to be enacted by a Congress that’s bitterly divided on healthcare reform. So maybe it’s a fool’s errand. Nevertheless, the individual market badly needs to be reshaped into one that shares risks and costs more broadly. The administration should be keeping its eyes on that prize rather than simply trying to limit the fallout from the changes.