N.Y. TIMES
President Obama, trying to quell a growing furor over the rollout of his health care law, bowed to bipartisan pressure on Thursday and announced a policy reversal that would allow insurance companies to temporarily keep people on health plans that were to be canceled under the new law because they did not meet minimum standards.
The decision to allow the policies to remain in effect for a year without penalties represented the Obama administration’s hurriedly developed effort to address one of the major complaints about the beleaguered health care law. It seemed for the moment to calm rising anger and fear of a political backlash among congressional Democrats who had been threatening to support various legislative solutions opposed by the White House because of their potential to undermine the law.
Senate Democratic leaders said they did not see the need for an immediate legislative fix — a victory for White House officials worried that momentum was building toward consideration of a measure to force the change.
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It remained unclear, however, just how much impact the fix delivered by an apologetic Mr. Obama would actually have. Though his proposal grants discretion to insurers to allow people to stay on their existing plans, there is no guarantee that insurers will do so, or that the states will allow such renewals.
Also unclear are what prices will be charged by insurers for existing policies that are continued in force through 2014. Insurers generally did not have rates approved for the renewal of such coverage because the policies were supposed to be terminated at the end of this year.
Some state insurance commissioners caught off-guard by the announcement said they did not intend to allow insurers to reinstate the policies. And insurance companies denounced the president’s action.
“This fix won’t solve every problem for every person, but it’s going to help a lot of people,” said Mr. Obama, who repeatedly took personal responsibility for misrepresenting the law and saying Americans who like their coverage would be able to keep it.
“I completely get how upsetting this can be for a lot of Americans, particularly after assurances they heard from me that if they had a plan that they liked they could keep it,” Mr. Obama said. “And to those Americans, I hear you loud and clear. I said that I would do everything we can to fix this problem. And today I’m offering an idea that will help do it.”
The president’s plan would apply only to people who have policies that are being canceled. Those currently without insurance would not be able to buy the old plans.
The president’s “transition policy” was set forth in a letter to state insurance commissioners from Gary M. Cohen, the director of the federal Center for Consumer Information and Insurance Oversight.
Under the policy, Mr. Cohen said, “health insurance issuers may choose to continue coverage that would otherwise be terminated or canceled, and affected individuals and small businesses may choose to re-enroll in such coverage.”
People who keep the policies will be unable to obtain financial assistance available for new coverage purchased through insurance exchanges. If an insurer chooses to reinstate coverage that has been canceled, it must notify policyholders that they have a right to obtain coverage that complies with the law and provides additional benefits.
The administration said it would consider the impact of the transition policy in deciding whether to extend it beyond 2014.
The shorthand explanation for what’s going on here is that everybody — the insurance companies, members of Congress, and Obama — is bullshitting. The longhand explanation is a lot more complicated.
Insurance companies cancel their individual plans all the time. The Affordable Care Act grandfathered in current plans, but that grandfathering mostly depended on insurance companies deciding to keep those plans going, and few of them did: They decided instead to phase out their old plans and create new ones in the Obamacare exchanges. That’s why, even though Obama knew that his health-care law would disrupt the individual market, he didn’t expect the wave of cancellation notices that people have received. In his press conference today, Obama said that he expected that the provisions in Obamacare to grandfather in existing individual policy holders would work, and they didn’t.
Obama’s plan is to let people reup their individual market plans, if the insurers go along with it. Will many insurers go along with it? Probably not, but experts aren’t exactly sure. 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.
To the extent any of these proposals actually would work, their effect would be harmful. Most people who have individual insurance now get that insurance because they’re really healthy. Draining them out of the exchanges would leave the exchanges with a sicker pool of customers, eventually driving up rates.
Now, that wouldn’t be a disaster in the short run. Obamacare creates protections for insurance companies that get stuck with sicker customers over the first few years. (A good, short explainer for how this works can be found here.) That would protect the system from the dreaded actuarial “death spiral," but would also cost the government money.
Does Obama’s plan solve the policy problem of people losing their plans? Probably not — the main mechanism is to let Obama throw the blame to insurance companies (many of whom, as noted, originally threw the blame at Obama.) Does it solve the political problem of angry individual market customers? Again, probably not — many and perhaps most people won’t be able to keep their individual plans. Democrats also want the chance to take an affirmative vote to “fix” Obamacare, and an administrative ruling doesn’t let them do that. Obama’s announcement mainly leaves the law in the same place it’s been for a month and a half: waiting to see if the administration can fix the website.
GREG SARGENT WASHINGTON POST
But here’s the thing: No matter what Dems continue to say — and no matter how hard Republicans try to foment disarray among them — it’s far from clear that any legislative fix can pass and go to the president. As one senior Senate Democratic leadership aide put it candidly to me: ” House Republicans won’t support the Landrieu bill. Upton wouldn’t pass here. So nothing will pass both Houses and get to the president.”
All of which is to say that all of the chips have been placed on Obama’s administrative fix. That’s probably the only fix we’re getting, and the rest of the machinations among Dems are probably going to amount to little more than noise and posturing. Indeed, even Obama’s fix, if insurers don’t play along, is probably not going to be a major factor.
So we’re back where we’ve always been: All that really matters is whether the law works over the long haul, and the fate of Dem lawmakers is heavily bound up in that outcome. Dems should probably just resign themselves to that political reality and do all they can to make the law a success, and to communicate to constituents that patience and a long view are necessary.