Obama Offers ‘Fix’ for Millions Who Lost Health Plans
Policy + Politics

Obama Offers ‘Fix’ for Millions Who Lost Health Plans

REUTERS/Larry Downing

Stung by criticism that he misled the public about a key element of his health reform law, President Obama announced on Thursday he would take administrative action to try to protect millions of Americans from losing their existing health insurance under the Affordable Care Act.

His move would allow people with individual insurance policies to keep those policies for another year, regardless of whether the plans provide the minimum benefits mandated under Obamacare. But the proposal lacks teeth: It would leave the final decision up to state regulators and insurance companies. 

Related:  How the Federal and State Exchanges Stack Up

Obama made the announcement at a White House news conference amid public and congressional howls that he repeatedly misled Americans by promising they could keep their current health plans if they liked them. The president repeatedly apologized today for misleading the public and acknowledged he would have to work hard to regain Americans’ trust “and win back credibility.”

“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 that they could keep it,” Obama said today. “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.”

A new Quinnipiac University poll this week showed that for the first time a majority of Americans – 52 percent – say Obama is not honest or trustworthy.

Many congressional Democrats have joined Republicans in denouncing the clumsy and technically flawed rollout of Obamacare. They’re calling for legislation to protect those who want to retain their old health care plans.

So far, some 4.2 million Americans have received notices canceling their existing insurance policies next year because their plans do not meet the new requirements. Experts estimate that number will grow to close to 12 million by the end of the year. These plans were purchased on the individual market instead of through an employer or group and don’t include some of the 10 essential benefits required by Obamacare, including emergency services, prescription drugs and maternity coverage.

The ACA includes a “grandfather clause” that allows insurance companies to continue these policies if they have not been altered since 2010. The problem, though, is that changes are typically made to insurance plans every year, so the grandfather clause likely wouldn’t apply to most plans.

Related:  4 Things the White House Still Hasn’t Told Us About Obamacare

Under Obama’s proposal, the Department of Health and Human Services will notify state insurance commissioners around the country that they have federal permission to allow people who already have such coverage to keep it through 2014. But since health insurance policies are regulated by the states, and not the federal government, it will be up to the individual state commissioners to make the final determination. Moreover, there is nothing in the president’s plan to force insurance companies to reissue the old policies – and many are expected to resist such action because of cost and inconvenience.

“This fix won’t solve every problem for every person,” Obama said. “Doing more will require work with Congress. And I’ve said from the beginning I’m willing to work with Democrats and Republicans to fix problems as they arise.”

A Push for Legislative Action
The move came as Republicans and Democrats on Capitol Hill pressed for legislative action to protect those who have lost their old policies and postpone penalties for those unable to buy new insurance because of technical problems with HealthCare.com, the federal marketplace. 

So far, the flawed federal website has signed up just 26,794 Americans for health insurance, compared with a much larger number, 79,391, who signed up through the exchanges for 14 states and the District of Columbia throughout October, according to figures released by the administration on Wednesday.

Related:  Low Obamacare Enrollment More Proof of a 'Disaster'

One bill, introduced by Sen. Mary Landrieu (D-LA), would require insurers to continue offering insurance plans that existed this year, even if it means reinstating plans that were canceled because they didn’t meet Obamacare requirements. The bill would only include policies purchased before Dec. 31, 2013. It would also require insurers to annually provide policyholders with information reminding them that their current plans do not meet the new minimum coverage standards as well as information on how they can find better value coverage on the exchanges.

Insurers have expressed concern over the plan, saying it’s already too late to retract the cancellations that have gone out. Others worry the bill would cause premiums to rise, since healthy people would be able to stay on the old plans, denying to the exchanges the people needed to balance out the costs to cover sick Americans.

The House, meanwhile, is scheduled to vote on Friday on a rival GOP plan drafted by Rep. Fred Upton (R-MI). It would allow insurance companies to indefinitely continue to offer the types of policies they recently canceled – a measure the White House fears would undercut new standards for coverage contained in the law.

The House GOP plan would allow insurers to continue offering individual insurance market policies under the state insurance rules that are in effect in 2013 throughout 2014. The plans would also be available to new enrollees as well as to current ones. The bill would deem these plans “grandfathered.” They would not have to comply with ACA requirements that otherwise apply to individual-market plans in 2014, including plans available through the new insurance marketplaces under Obamacare.

Critics say the Upton bill would essentially gut Obamacare standards. According to a recent analysis by the liberal Center on Budget and Policy Priorities, the Upton measure would raise marketplace premiums for coverage in 2015 and beyond by encouraging healthier people to remain in individual market plans outside the new insurance exchanges. Consequently, those people who enroll in Obamacare-style plans would be sicker and older, on average, than under current law. 

“The higher premiums would, in turn, threaten the long-term viability of the marketplaces, potentially placing coverage at risk for millions of uninsured people who stand to gain coverage under the Affordable Care Act (ACA),” according to the CBPP analysis.

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