Can Obama Fix Health Care Cancellations?

The president says he’s looking for a solution, but experts don’t see many options.

President Barack Obama speaks at Temple Emanu-El November 6, 2013 in Dallas, Texas.
National Journal
Sam Baker
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Sam Baker
Nov. 11, 2013, 7:12 a.m.

Pres­id­ent Obama says he’s look­ing for a “fix” to ad­dress can­celled in­sur­ance plans. That doesn’t mean he’ll find one.

Obama has dir­ec­ted his health care ad­visers to look for a way to deal with the wave of can­cel­la­tion no­tices hit­ting some poli­cy­hold­ers. But health policy ex­perts have no idea what the White House could ac­tu­ally do to al­le­vi­ate the stick­er shock some con­sumers are fa­cing.

“I can’t ima­gine what they’re think­ing about,” said Tim Jost, a Wash­ing­ton & Lee Uni­versity law pro­fess­or and an ex­pert on the Af­ford­able Care Act.

Policy wonks on both sides of the health care de­bate held open the pos­sib­il­ity that the ad­min­is­tra­tion will come up with something — there have been too many sur­prises already in the im­ple­ment­a­tion pro­cess to rule any­thing out. But it’s hard to see what the White House could do, on its own and spe­cific­ally without Con­gress, that would make much of a dif­fer­ence.

That’s partly be­cause these plan can­cel­la­tions are not a side ef­fect of the Af­ford­able Care Act. The ad­min­is­tra­tion knew they were com­ing, and they were an in­ev­it­able part of the re­forms the law makes to the mar­ket for in­di­vidu­al in­sur­ance policies.

Weak­en­ing the reg­u­la­tions that led to plan can­cel­la­tions might not make any dif­fer­ence at all, or might un­der­mine the ba­sic struc­ture of the law. And try­ing to simply of­fer more as­sist­ance to people los­ing their plans would re­quire con­gres­sion­al ap­prov­al — which, of course, Obama wouldn’t get.

An ad­min­is­tra­tion of­fi­cial con­firmed that the White House is look­ing for ad­min­is­trat­ive fixes, not le­gis­lat­ive ones. That would ap­pear to rule out high­er sub­sidies to help people pay for cov­er­age, an idea floated to The Huff­ing­ton Post after Obama’s in­ter­view.

Obama him­self ac­know­ledged in last week’s NBC News in­ter­view that he doesn’t think the can­cel­la­tions them­selves are a prob­lem. He apo­lo­gized for the con­fu­sion and dis­rup­tion the no­tices have caused, but main­tained that most people would get a bet­ter deal by pur­chas­ing cov­er­age through the health care law’s new mar­ket­places.

“We really be­lieve that ul­ti­mately they’re go­ing to be bet­ter off,” Obama said.

The people hurt most by plan can­cel­la­tions are healthy con­sumers who were able to get cheap policies with de­cent cov­er­age, and who are too wealthy to qual­i­fy for Obama­care’s in­sur­ance sub­sidies. They are “losers” now be­cause they were “win­ners” un­der the old sys­tem, in which in­surers set premi­ums for each in­di­vidu­al plan based on the health of the in­di­vidu­al buy­ing it.

That sys­tem put people with preex­ist­ing con­di­tions at a huge dis­ad­vant­age — and that’s the im­bal­ance the Af­ford­able Care Act tries to cor­rect by mov­ing healthy people in­to the same risk pool as sick people.

So, leav­ing those healthy cus­tom­ers on their old plans just to solve a polit­ic­al head­ache might only help prop up the two-tiered sys­tem Obama­care was de­signed to end.

Even if the ad­min­is­tra­tion could find a middle ground, weak­en­ing or delay­ing cer­tain reg­u­la­tions might not make much dif­fer­ence.

In­sur­ance com­pan­ies have already set their premi­ums for 2014, so the high­er prices some con­sumers are ex­per­i­en­cing aren’t go­ing to change this year. And in­surers’ busi­ness mod­els already ac­count for mov­ing people in­to the health care law’s new in­sur­ance mar­ket­places.

“In short, I’m flum­moxed,” Uni­versity of Michigan law pro­fess­or Nich­olas Bagley wrote at the In­cid­ent­al Eco­nom­ist blog. “Maybe the ad­min­is­tra­tion has something cre­at­ive up its sleeve, and it’s cer­tainly prudent to re­serve any kind of fi­nal judg­ment un­til we learn more. For now, though, col­or me skep­tic­al.”

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