The Latest ACA Dust-Up Should Not be a Dust-Up

October 29th, 2013 at 3:00 pm

Like Igor Volsky, you might ask yourself why this particularly story has any legs right now since it’s re-litigating an issue that was widely debated a few years ago.  But the answer is obvious: tis the season to attack the Affordable Care Act, no matter if this one is a greatest hit from 2010.

At issue is the President’s claim when selling health care reform that if you like your current health plan, you can keep it.  That point in turn was based on the provision that grandfathered existing plans in the individual market (neither employer-based nor government provided) by granting exemptions from various standards and consumer protections that came into effect when the law was signed in 2010.

However, as was clearly stated at the time, if such a plan were to significantly change in ways that are inconsistent with consumer protections under the ACA, it would lose its grandfathered status.

Like I said, this has been known since the law was written.  In fact, go here to see a 2010 publication by my CBPP colleague Sarah Lueck that lists the ways plans can lose its grandfathered status, like eliminating benefits to treat certain conditions or significantly raising co-pays beyond what’s implied by the rate of medical price inflation.

So, yeah—if a plan changes such that a) it’s not the same plan, and b) those changes, as Volsky notes, “significantly burden enrollees with lower benefits and increased costs, [then] they have to come into compliance with all consumer protections.”

It’s also the case that:

–The administration knew there would be lots of plans in the individual market that would change like this and lose their grandfathered status, and said so back in 2010.

–Despite rumors to the contrary, it’s still a free country and private insurers can discontinue plans whenever they want.  That plan may or may not have been grandfathered in 2010, but now needs to improve to come into compliance with the ACA.

–The vast majority of Americans with health coverage will face few or no changes to their coverage, including the 171 million with employer-based coverage and the 100 million with Medicare and Medicaid.   And any changes they will face will be improvements in benefits.

So, did the President misspeak?  In a way, sure.  He should have said: “If you like your plan and it doesn’t get significantly worse such that it’s out of sync with what we’re trying to do here, you can keep it.”

And, in fact, such nuances were clear at the time and not buried in the weeds but discussed in the open.  Not much to see here folks…move along.

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13 comments in reply to "The Latest ACA Dust-Up Should Not be a Dust-Up"

  1. Elmer Reed says:

    Hi Jared
    This is not a comment per se but I want to tell you about a good young pianist named Charlie Albright who I have seen on youtube.
    He’s really good.
    He gave a concert in my hometown of Keokuk, IA last week, Oct 24. My niece attended and said he was “amazingly good”. Look him up on youtube and give him a listen. I’ll bet you’ll like him.
    Best, Elmer Reed
    I like your column.


  2. Peter K. says:

    One of things I like about Obama is that he’s a cool cat. He’ll keep his head. The sooner they get this fixed, the more likely they’ll take the House. I think they can!

    Undo the sequester, nominate a Fed governor better than Powell or Stein, and goose a little inflation. ACA will kick into gear. Then we’ll be getting somewhere. It seems ultimately that our economic problems are political.


  3. save_the_rustbelt says:

    Jared, you missed on this one. Check the attitude dude!

    Most people are too busy to be policy wonks, as some of us are. Most folks do not read papers by the CBPP. Most people do not read econ and health policy blogs. Apparently Obama does not understand this, or his staff does not understand, or who knows.

    This was no surprise to policy wonks and journalists, a rather tiny percentage of the population. Consumers and workers, different story.

    It was however, one more failure of political messaging and education, made worse by sending the aggrieved consumers into the health care exchange twilight zone.

    Not to mention bad policy. Our household really does not need maternity coverage, thank you.

    And political incompetence. Oh Valerie!!

    (Having spent a chunk of my career explaining health care insurance to patients, families of patients and employees, I understand how dense this stuff is.)

    Good intentions does not equal competence.


    • Benedict@Large says:

      I think this is the real point. Whatever the administration knew or didn’t know about the numbers that would come up, these numbers were knowable (I’m sure everyone in the industry had a close idea) back when the “no changes” claim was being pushed out. Perhaps they were hoping that everyone would be so thrilled with their new ObamaCare by now that they would forget about this, but it simply wasn’t good planning on the administration’s part. with all the predictable morons out there, they now can add a bunch who are actually getting better coverage, but who are turned off because they feel they were deceived. And remember, it’s not so important whether or not they were actually deceived; simply that they feel they were. It’s a problem, and it shouldn’t have been necessary.


  4. Robert says:

    Sorry, Jared, but that is complete and total horseshit.

    The fact is, Obamacare plans cost SIGNIFICANTLY more than private plans… as much as TRIPLE, in some cases… and with the same kind of “catastrophe insurance” levels of out-of-pocket expenses.

    In other words, it’s a typical government program: It costs MORE for less service.

    Our current Blue Cross plan currently costs us $650 a month or $7,800 a year with a $5,000 per person deductible with a maximum out-of-pocket family limit of $15,000. This is the type of plan that the Democrats ridicule as little more than “catastrophe insurance” and “not really health insurance at all.”

    Yet under Obamacare’s Silver Plan (comparable to our current Blue Cross plan) our annual premiums would cost $18,190 – or $1,515 a month.

    That’s $865 more than we’re currently paying – an increase of 133%.

    With a projected tax credit of $4,890, however, that would lower our annual premiums to $13,300 ($1,108 per month). That’s still $458 more per month (or 70% more) than we currently pay—and we have to, in effect, loan the government money because we actually have to pay the $1,515 per month and only get a tax credit at the end of the year.

    But that’s not all.

    All this might be worth it if the Obamacare plan provided better benefits or a lower deductible – but it doesn’t!

    The law’s defenders ridicule our current plan as mere “catastrophe insurance” because of the high deductibles and out of pocket costs, but the Obamacare plan for our family has an annual cap on out of pocket expenses of $12,700 – or just a little less than the Blue Cross limit of $15,000.

    In other words: Obamacare is just as much “catastrophe insurance” as most high-deductible private plans. It just costs a lot more.

    What’s more, many Americans want high deductible plans because they don’t want or need the “benefits” that Obamacare forces them to take — such as maternity care for elderly couples.

    Bottom line: Obama and Democrats LIED through their teeth when they said that “if you like your current health plan, you can keep it.” They KNEW it was a lie when they said it… and they said it anyway.



    • Red says:

      So a $5500 increase in premiums is a huge deal, but a $2300 reduction in out of pocket max is a “little” thing hardly worth mentioning?

      What about the fact that you can’t be dropped if you make a large claim now, like you could have before?

      Yep, it costs more, and yep Obama was extremely deceptive in his messaging and yep you are one of a very small percentage of Americans that might end up with an overall slightly worse deal than what you had before (though that’s highly debatable). But if we’re just arguing from personal anecdotes, there’s hundreds of thousands of people who have already benefited greatly.

      The ACA is nowhere close to perfect, but it’s a damn sight better than where we were. My biggest concern is that all the sturm and drang over the website and such will prevent the real work that needs to be done to improve the law from getting done.


  5. Kevin Rica says:

    Jared,

    Are you saying that people didn’t read the fine print when they listened to the President?

    Lucky he didn’t give us all credit cards!


  6. smith says:

    It is not helpful to hear:

    “As you know, you go to reform healthcare with the website you have. It’s not the website you might want or wish to have at a later time.”

    Brushing aside those facing higher costs despite blanket statements people could keep their current policies.
    http://investigations.nbcnews.com/_news/2013/10/28/21213547-obama-admin-knew-millions-could-not-keep-their-health-insurance

    Not holding anyone responsible for failure while claiming the president didn’t even know there was a serious problem (reason enough to fire Secretary of Health and Human Services)
    http://www.cnn.com/2013/10/22/politics/obamacare-sebelius-interview/

    Not getting more information on the gross errors in testing the software (or not testing it actually)
    http://online.wsj.com/news/articles/SB10001424052702304441404579119740283413018

    Not all liberals are giving the president a free pass. Just because Bush set the bar so low is no reason not to demand accountability, transparency, and forthrightness. It’s not technical issues at all, but basic project management. Why was development contracted out anyway? This system is not disappearing, who is going to support it, maintain it, update it?


  7. Ruthmarie says:

    Perhaps one of the problems here is that many people have what might be called “faux” insurance. They just don’t realize it. It takes a major illness for people to realize whether or not their insurance will stand up to any real “stress”.

    My father had a medicare HMO in the private sector. He was a big believer in the private sector and shunned the slightly more expensive regular Medicare with AARP option. Then he got sick…seriously sick. A convoy of trucks could have driven through the holes in his so-called coverage.

    Worse still, they shilly-shallied around trying to deny him basic chemotherapy. He was lucky that I had a doctorate in microbiology and immunology from a major medical school. I knew the denial that stated his oncologist was prescribing a “specialty” drug was a crock of sh!t. It was standard 5-FU and its been part of the treatment protocol for his type of cancer for longer than I have been alive…which is a long time.

    After 3 weeks of foot-dragging, in which I guess they were hoping he would die (yes, he was that sick) I called them armed for battle. I had to invoke my doctorate and demand to speak to a physician so they could explain to me personally why 5-FU was not part of the standard protocol for treating colorectal cancer. I gave them 24 hours to respond or the phone conversation which I was recording was going to a series of major news organizations. Suddenly, they were eager to get him into treatment.

    It shouldn’t take this to get standard cancer treatment. And my father thought he had great insurance. He would have fought like a steer against having his policy discontinued. After all, it worked well for years. The only trouble was that it stopped working when he needed it the most. The bottom line is that his “policy” damn near killed him.

    As it was my father eventually lost his battle with cancer. But chemotherapy gave him three years and they were good years. He was a veteran of the Korean war and served his country. He certainly deserved better than he got from his insurer.


  8. jeff says:

    This was not clearly stated to the public, who doesn’t have time to pour over public policy documents. And why does a 60 year old need maternity insurance ? What if you don’t want mental health care insurance ?

    Also, millions are losing their private health insurance on January 1 with very little expectation that the ACA website/phone service is going to be able to enlist them all. This is not politics, this is a serious problem for a lot of non-Washington people. What is Washington going to do about these people ?


    • Ruthmarie says:

      The healthy have to pay for the sick. You can’t pick an choose the illnesses for which you are covered based on your current needs. If only people with mental illnesses enrolled in an insurance plan, the plan would go broke because it would always be paying out more than they would collect. EVERYONE has to pony up to some extent or the insurance won’t be there when they need it – and that applies to you as well.


  9. Jill SH says:

    As a freelancer of 30+ years, let me tell you about my health insurance history. A good year was when my premium went up only 10%, but even that meant that my deductible/copays doubled. When I hit my 50s, rates were out of this world.

    My frustrations with the overall market/situation led me to run for state rep in NH, a small state of 1.3 million people with a 400 person legislature, so getting elected is fairly easy. Health insurance was my key issue.

    My state has a very YOYO attitude toward just about everything, so health care reform was at a glacial pace. But I became very well versed in the ins and outs of the large group, small group, and individual market. The rising problem of under-insurance often went unrecognized until people got sick, and found that their insurance didn’t cover anything until they were deeply in debt, and then stopped when they hit a max, or the year ended and their policy was cancelled, halfway through treatment. And that’s if they could afford the premiums in the first place.

    So I’m very pleased with what’s happening with Obamacare, even with all the website hassles. Now just about anyone who wants will be able to get a really good policy, that covers a lot of preventive stuff at no cost, will not have to pay more than a certain percent of their income (8%?) through subsidies, cannot be denied coverage, will not ever be forced into bankruptcy by medical costs– in other words, all that stuff, and the security, we all really need. I hope people can hold on just another month or two till the marketplace/web is working. I’m sure it will be worth it.

    As for me, I’m skating. I start Medicare on Friday, Nov.1.


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