"Fix" Obamacare? How the President's New Plan Could Make It Even Worse


In an early afternoon announcement from the White House briefing room on Thursday, President Obama called for insurance companies to continue offering existing individual insurance policies through 2014, even if those policies do not meet the coverage standards set by the Affordable Care Act. So if you like your health care plan, you may be able to keep your health care plan— for one more year.

This decision could undermine the central goal of the Affordable Care Act, which is to get as many young and healthy people to sign up for the Obamacare exchanges as quickly as possible in an effort to subsidize the poor and sick. More on this later.

The proposal comes exactly seven days after an interview with Chuck Todd of NBC News in which Obama issued a non-apology apology to the many Americans who were forced off their current health care plans due to the Affordable Care Act.

“I am sorry that they are finding themselves in this situation, based on assurances they got from me…Most of the folks who ... got these cancellation letters, they'll be able to get better care at the same cost or cheaper in these new marketplaces,” Obama told Chuck Todd.

So in other words, Obama is sorry that people can’t get on the HealthCare.gov website to see the better option available to them. But he did not apologize for misleading the American people, even though he knew as early as 2010 that many Americans would lose their insurance. On Thursday, however, President Obama expressed regret for assuring Americans that if they liked their health care plan, they could keep it. “That’s on me. . . . That’s something that I deeply regret because it’s scary getting a cancellation notice.” Obama said.

But let’s get back to the substance of Thursday’s proposal. Allowing insurers to continue to offer individual insurance plans for another year — even if they do not meet the standards in the Affordable Care Act — could actually destabilize the insurance market and lead to higher premiums in 2015 and beyond.

If the young and healthy choose not to enroll in the exchanges, then there wouldn't be enough funding to subsidize the old and sick, which could in turn lead to higher premiums in the future.

According to Karen Ignani, president and CEO of America’s Health Insurance Plans, “premiums have already been set for next year based on an assumption of when consumers will be transitioning to the new marketplace. If now fewer younger and healthier people choose to purchase coverage in the exchange, premiums will increase and there will be fewer choices for consumers.”

Meanwhile, Congressional Democrats and Republicans  have proposed various measures that will enable Americans that like their current health care plans to keep them. Senator Mary Landrieu (D-La.) sponsored a bill (Keeping the Affordable Care Act Promise Act) that requires insurance companies to grandfather in all plans that existed as of Dec. 31, 2013, even if they do not meet the Affordable Care Act standards. Representative Fred Upton (R-Mich.) also sponsored a bill that would allow insurers to grandfather in plans that existed as of January 1, 2013, as opposed to the March 23, 2010 date that was imposed by Affordable Care Act.

It remains to be seen how these proposals will play out in Congress. But President Obama’s one-year fix shifts responsibility to insurers, and could lead to higher premiums for consumers.