Obama Offers Partial ‘Fix’ To ‘You Can Keep It’ Health Care Promise

With Democrats in revolt over cancellations, an attempt to fulfill pledge that "if you like your health care plan, you can keep your health care plan"

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Charles Dharapak / AP

President Barack Obama speaks about his signature health care law.

President Barack Obama announced an “administrative fix” Thursday morning to allow Americans with insurance plans that were supposed to disappear under his health care reform law to keep that coverage for another year, responding to a weeks-long maelstrom of cancellation notices that have rattled his presidency.

Obama, speaking at the White House, again acknowledged shortcomings with the problem-plagued Healthcare.gov insurance exchange website, but said the reform law is already showing successes, especially with the expansion of Medicaid coverage.

“I think it’s fair to say that the roll-out has been rough so far,” he said. “There is no question that if the website were working like it’s supposed to, [early enrollment numbers] would be higher.

“We fumbled the roll-out on this health care law,” Obama said bluntly.

The president’s announcement partly corrects his infamous promise that “If you like your health care plan, you can keep your health care plan,” at least for a year. Insurers will be allowed to offer those plans, many of which do not provide comprehensive coverage, to existing customers in the individual market for a year, as long as they educate those re-enrolling about the alternatives in the health care law’s insurance marketplaces.

“I completely get how upsetting [losing insurance] could be for many Americans, especially after they heard assurances from me,” Obama said. “We’re going to do everything we can to help Americans who are receiving these cancellation notices.”

“There is no doubt that the way I put that forward unequivocally ended up not being accurate,” Obama added. “My working assumption was that the majority of those folks would find better policies and lower costs or the same costs in the marketplaces.”

Before Obama spoke, a senior White House official said that “insurers can offer customers the option to renew their 2013 plan in 2014 without change, allowing these people to keep their plans.”

According to senior White House officials, the regulatory solution would remove the need for legislative action that is being pushed by both parties on Capitol Hill. One bill, offered by Republican Rep. Fred Upton, would allow those less comprehensive plans to be sold to new customers. The officials said such a plan “would undermine the Affordable Care Act and the marketplaces.” The White House has been skeptical of any legislative solution, which would quickly become a Christmas tree for amendments to undermine the bill.

“I will not accept proposals that are just another brazen attempt to undermine or repeal the law,” Obama said.

House Speaker John Boehner said what Obama offered “little more than a political response designed to shift blame rather than solve the problem.”

“After finally acknowledging he repeatedly misled the American people to sell his health care law, the president is asking Americans to trust him again,” Boehner said in a statement. “The President has absolutely no credibility on his promise.”

The health insurance industry quickly warned that the administration’s fix could have unintended consequences.

“Changing the rules after health plans have already met the requirements of the law could destabilize the market and result in higher premiums for consumers,” Karen Ignagni, president of the trade group America’s Health Insurance Plans, said in a statement. “Premiums have already been set for next year based on an assumption of when consumers will be transitioning to the new marketplace. If due to these changes fewer younger and healthier people choose to purchase coverage in the exchange, premiums will increase in the marketplace and there will be fewer choices for consumers.”

The White House shift follows a revolt among congressional Democrats over the law’s rocky implementation, one year before the midterm elections. Officials acknowledged that Obama directed the change in response to public outcry over millions of cancellation notices received by Americans in the individual market, saying the change was designed to further “a better and smoother transition” for them onto the exchanges.

But the administration fix is not an absolute fulfillment of Obama’s promise. It  doesn’t require state regulators to allow the continuation of the plans, and simply allowing insurers to continue offering 2013 plans does not mean they will. Insurers have already sent letters to millions of Americans in the individual market, canceling plans. They now presumably have the option of reversing course. But this is a paperwork nightmare and could be very confusing for consumers. Some may have already selected new plans on Obamacare’s insurance exchanges to replace policies they thought were disappearing. Whether these selections can now be reversed is still not clear.

The other risk of allowing insurers to continue underwritten 2013 plans is that doing so could skew the risk pool of Americans shopping for ACA-compliant policies in the exchanges. Obamacare requires new plans to accept all comers, regardless of health or preexisting conditions. Young and health consumers shopping in the individual market will generally pay more through the ACA-regulated exchanges than under the old system. Likewise, older and sicker consumers will pay less through the exchanges. This could lead to adverse selection. If the exchanges only attract the sickest consumers and the healthiest ones stay out — at least for one year — that could drive premiums up in 2015, as insurers try to recover money they lost by setting 2014 premiums on the assumption they would have a diverse risk pool. The White House officials said they do not believe the delay would adversely impact the makeup of the exchanges.

Either way, next year Americans with these plans will find themselves in the same situation, unless the administration makes this “fix” all over again.