As Barack Obama said, “We fumbled the rollout on this health-care law.” While the problems have been greatly exaggerated and conservatives took advantage of this to further distort the facts, Obama did make some political mistakes and it was important that he respond. The headline is now that the White House to allow insurer to continue canceled health plans. That is the line he needs to help reduce problems caused by previous misleading headlines on Obamacare causing cancellation of plans.
This actually affects very few people. Most people obtain their health insurance outside of the individual market. For those who did purchase insurance on the individual market, plans in effect prior to when the Affordable Care Act passed could still be grandfathered in, but in many cases the insurance companies decided against continuing such plans. For such plans, today’s statement does not really change anything, except that it might put pressure on insurance plans to continue plans they previously decided against continuing. When consumers go beyond the hype (and get past the poorly-working computer system) a tremendous number will find that they can receive more comprehensive coverage at a lower price, especially after the subsidies are considered, and will hopefully decide against taking advantage of this option.
In some cases canceled policies have nothing whatsoever to do with the Affordable Care Act, despite the sensationalist and untrue stories seen on Fox. Insurance companies have left markets every year. Sometimes they would technically remain, but jack up the premiums so high that they would force everyone out (as once happened to me). Some insurance companies would also drop people who became too expensive to cover. A tremendous number of people who have declared bankruptcy due to medical expenses were insured when they first developed a serious medical problem. These are the types of problems that the Affordable Care Act was designed to solve, such as preventing an insurance company from dropping people who developed a serious medical problem. In addition, in past years if an insurance company left a market those with pre-existing medical conditions might not be able to obtain coverage. Under the Affordable Care Act they will be able to purchase insurance regardless of pre-existing conditions.
Insurance plans which were sold prior to the passage of the Affordable Care Act could be grandfathered in, independent of any changes made based upon today’s announcement. Plans sold after the Affordable Care Act passed could not be grandfathered in if they did not meet current requirements. In many cases plans sold on the individual market have been terrible plans which were not worth keeping. Many would cover very little, often after high deductibles were met, such as not covering hospitalizations.
It was still a mistake on Obama’s part to ever say that “if you like your health insurance plan, you can keep it.” This was said in an atmosphere in which conservatives were scaring people into thinking that everyone would be forced to drop their current plan and switch to some sort of government run health plan. In this context, he was correct to point out that people would be remaining in private health plans, but wrong to make such an absolute statement. There were always going to be exceptions. It was inevitable that insurance companies would stop offering old plans, even if they could be grandfathered in, and concentrate on the plans they could continue to sell. There was no way that the government could compel insurance companies to continue to offer every plan currently on the market. In many cases people are better off by the passage of the Affordable Care Act by taking advantage of the opportunity to switch to better plans, but that is not what Obama said.
While very few people are both actually having insurance canceled which the insurance companies don’t already have the legal ability to continue and are actually going to have to pay more, this issue has become far more about political posturing. People are hearing the exaggerations and distortions which suggested the issue was far more significant than it was. Headlines have been negative, with stories failing to put the issue in perspective. Bill Clinton weighed in earlier this week on the need for Obama to fix this, but it is important to note that Clinton also said “The big lesson is that we’re better off with this law than without it.”
Ezra Klein has summarized the various responses coming from Congress and the President. For Republicans, this is largely about exaggerating the problem and weakening the Affordable Care Act. In reality, Republican schemes to weaken the Affordable Care Act will actually wind up causing more people to be at risk of losing their coverage or having to pay more. Democrats who are running for reelection also see the need to distance themselves from this problem now that it has been totally blown out of proportion. Obama’s credibility has been harmed, even though Republicans claims on health care have been far more dishonest. Making a statement such as what Obama said today might help calm down some of the rhetoric on this issue. It will help even more when the exchanges are working properly and people can more easily compare the coverage which was available before to the coverage now available.