Obama’s New and Improved Health Care Pledge

Version 2.0 of “If you like what you have” is far more accurate.

US President Barack Obama speaks about the healthcare reform laws, known as Obamacare, at an Organizing for Action event in Washington, DC, November 4, 2013.  
National Journal
Sam Baker
Nov. 5, 2013, 7:39 a.m.

Pres­id­ent Obama’s new ex­plan­a­tion for can­celed in­sur­ance plans isn’t as catchy as his old “If you like what you have, you can keep it” line — but it’s a lot more ac­cur­ate.

Ad­dress­ing sup­port­ers Monday night, Obama ad­ded in the nu­ance that was miss­ing from his fa­mil­i­ar, un­qual­i­fied pledge that people could keep their in­sur­ance plans.

“Now, if you have or had one of these plans be­fore the Af­ford­able Care Act came in­to law and you really like that plan, what we said was you could keep it if it hasn’t changed since the law was passed,” Obama said at an Or­gan­iz­ing for Ac­tion event.

That’s not, in fact, what he’s been say­ing over the years. If it was, the cur­rent blowup over can­cel­la­tion no­tices wouldn’t be as big a deal. Obama’s new line is a pretty ac­cur­ate de­scrip­tion of what’s go­ing on.

Obama ac­know­ledged Monday night that the law in­ten­ded to move people in­to more com­pre­hens­ive policies than they likely had pre-re­form.

“if we had al­lowed these old plans to be down­graded or sold to new en­rollees once the law had already passed, then we would have broken an even more im­port­ant prom­ise — mak­ing sure that Amer­ic­ans gain ac­cess to health care that doesn’t leave them one ill­ness away from fin­an­cial ru­in,” he said.

What’s really hap­pen­ing to health-care plans has got­ten lost in the back-and-forth over Obama’s “if you like what you have” prom­ise — a pledge that pretty clearly un­der­stated the scope of changes the Af­ford­able Care Act makes.

Re­pub­lic­ans are im­ply­ing that huge num­bers of people will lose their plans and that all of them will be forced to pay more for a new policy through Obama­care. Demo­crats, mean­while, say the plans be­ing can­celed now are lousy and that no one would ac­tu­ally like their can­celed policy if they truly un­der­stood it.

There’s some truth in both claims.

The Af­ford­able Care Act im­poses new reg­u­la­tions on in­sur­ance plans sold through the in­di­vidu­al mar­ket (people who buy in­sur­ance on their own, rather than get­ting it through an em­ploy­er). Plans that were already in ex­ist­ence when the law passed on March 23, 2010 were “grand­fathered,” mean­ing they didn’t have to com­ply with cer­tain re­quire­ments.

This is why Demo­crats ar­gue that con­sumers whose plans are be­ing can­celed will get an “up­grade” by pur­chas­ing a new plan.

Grand­fathered plans, for ex­ample, don’t have to cov­er people with preex­ist­ing con­di­tions — one of the most pop­u­lar ele­ments of Obama­care. They also don’t have to cov­er pre­vent­ive care without char­ging a co-pay, as non-grand­fathered plans do. And they can still im­pose an­nu­al caps on the be­ne­fits they’ll pay out. Those caps are il­leg­al for all non-grand­fathered plans.

Grand­fathered plans also don’t have to cov­er the 10 cat­egor­ies of “es­sen­tial health be­ne­fits” that new policies must in­clude. The ad­min­is­tra­tion left it up to the states to fill in spe­cif­ic re­quire­ments, but broadly, “es­sen­tial” be­ne­fits in­clude pre­scrip­tion drugs, emer­gency-room care, re­hab­il­it­a­tion, and ma­ter­nity care.

Grand­fath­er­ing was seen as a way to pre­serve Obama’s pledge. But to keep the plan you had in 2010, it has to be truly the same. HHS set tight re­stric­tions on the changes plans could make without los­ing their “grand­fathered” status. Those plans were leg­ally al­lowed to con­tin­ue, but it didn’t make fin­an­cial sense for in­sur­ance com­pan­ies to keep of­fer­ing them.

HHS pre­dicted in 2010 that as many as two-thirds of ex­ist­ing in­di­vidu­al policies would not be grand­fathered. Once they lost that status, in­surers could either ad­just those policies to meet the health care law’s re­quire­ments, or can­cel their ex­ist­ing plans and cre­ate new ones that com­plied with the law.

Be­cause most in­di­vidu­al policies only last for one year in the first place, most car­ri­ers chose to can­cel those policies rather than change them. And that’s why so many con­sumers have got­ten can­cel­la­tion no­tices.

Some of them — es­pe­cially young, healthy pa­tients — will have to pay more for a new policy.

Oth­ers, in­clud­ing people with ex­pens­ive preex­ist­ing con­di­tions, might get a bet­ter deal through the law’s ex­changes, once those mar­ket­places be­come fully ac­cess­ible. Plans there must cov­er es­sen­tial be­ne­fits, and low-in­come con­sumers will get tax sub­sidies to help cov­er their premi­ums.

“We should en­cour­age any Amer­ic­an who gets one of these let­ters to shop around in the new mar­ket­place,” Obama said. “Now, I re­cog­nize that while the web­site isn’t work­ing as fast as it needs to, that makes it tough­er, and that makes it scar­i­er for folks.”

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