If you’d like the government to change something about Obamacare, give the White House a ring. They’re in a flexible mood.
President Obama this week approved yet another delay to provisions in the Affordable Care Act, giving insurers until 2016 to sell a type of insurance policy that’s supposed to be banned under the health-reform law. The ban, which was supposed to begin this year, would prevent insurers from selling bare-bones plans that might be affordable but don’t abide by 10 “essential service rules” required under the new law.
When insurers began canceling such coverage last year, however, several million Americans were forced off plans they had chosen, with most alternatives being more expensive. That undermined Obama’s frequent claim that “if you like your health insurance, you can keep it,” and turned into one of the most controversial elements of a law that hardly lacks detractors.
In November, Obama announced a one-year delay in the ban on “substandard” plans, as he used to call them. Now, extending the delay to 2016 will “provide consumers with choices so they can decide what is best,” the government says. Yet these limbo plans — temporarily allowed but bound to vanish at some point — defy the whole intent of Obamacare, as if the president is losing faith in his own plan. “This is a political move to minimize the impact of this as an argument against Democratic candidates,” says Sean Nicholson, a management professor at Cornell University.
Obama and his fellow Democrats certainly need some political cover as the November midterm elections approach. Support for the ACA has never risen above 45% and it actually weakened as the law went into effect. A recent Gallup poll shows 23% of Americans say they’ve been hurt by the law, while only 10% say they’ve been helped. That may overstate the ACA’s actual impact — since 16% of people said the ACA harmed them a year before it even went into effect — yet the negative impression alone is a big problem for Democrats who voted for the law and now must defend it as they run for reelection.
People with bare-bones insurance plans tend to be healthy enough to feel comfortable skimping on coverage. Yet it’s critical to get such people to enroll in the new federal program, so the premiums they pay will help offset the cost of older, sicker enrollees. If the ACA exempted everybody who wanted a cheap, limited plan, it could thwart the whole program, since it would include too many costly patients and premiums would be prohibitively high.
Obama now seems to be backing off one of the key planks of the whole reform effort. Yet many of the people “allowed” to keep a substandard plan will be forced to enroll in Obamacare anyway. The pressure, however, comes from three sources other than the federal government:
States. Insurance commissioners in each state must explicitly allow insurers to offer the limbo policies, and only about half of the states have said they will. So people in many states won’t be able to get a limbo plan even though Obama has said they can.
Insurers. Insurance companies spent three years preparing for the onset of Obamacare, including the ban on bare-bones plans. While reinstating old policies might earn them a few extra bucks, it’s also a hassle to cancel policies, then reinstate them only to cancel them again in a couple of years. “I would expect insurers that have already decided not to offer these are not going to change their minds in great numbers,” says Tim Jost, an expert on health law at Washington & Lee University law school.
Healthcare consumers. Bare-bones plans are the type consumers drop most frequently, as they get new jobs that offer better coverage, go onto a spouse’s plan or simply drop their insurance. Since insurers are only allowed to carry over plans that were offered in 2013 — not offer new ones — turnover alone should quickly reduce the number of people who have such plans, diminishing the importance of limbo plans.
The change means Democrats will be able to say Obamacare really does let you keep your insurance plan (wink, wink). But Jost says even that strategy carries risks. “By delaying it until 2016, that means some people might get cancellation notices right before the next presidential election," he says. “That doesn’t seem very smart.”
Of course, Obama could always extend the deadline.
Rick Newman’s latest book is Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman.