The Obama Pledge on Keeping Your Insurance
Source Dave Anderson
Date 13/11/12/11:58
The Obama Pledge on Keeping Your Insurance
By Dean Baker

President Obama has been getting a lot of grief in the last few weeks
over his pledge that with the Affordable Care Act (ACA) in place,
people would be able to keep their insurance if they like it. The
media have been filled with stories about people across the country
who are having their insurance policies terminated, ostensibly because
they did not meet the requirements of the ACA. While this has led
many to say that Obama was lying, there is much less here than meets
the eye.

First, it is important to note that the ACA grand-fathered all the
individual policies that were in place at the time the law was
enacted. This means that the plans in effect at the time that
President Obama was pushing the bill could still be offered even if
they did not meet all the standards laid out in the ACA.

The plans being terminated because they don't meet the minimal
standards were all plans that insurers introduced after the passage of
the ACA. Insurers introduced these plans knowing that they would not
meet the standards that would come into effect in 2014. Insurers may
not have informed their clients at the time they sold these plans that
they would not be available after 2014 because they had designed a
plan that did not comply with the ACA.

However if the insurers didn’t tell their clients that the new plans
would only be available for a short period of time, the blame would
seem to rest with the insurance companies, not the ACA. After all,
President Obama did not promise people that he would keep insurers
from developing new plans that will not comply with the provisions of
the ACA.

In addition to the new plans that were created that did not comply
with the terms of the ACA, there have been complaints that the
grandfathering was too strict. For example, insurers can only raise
their premiums or deductibles by a small amount above the rate of
medical inflation. As a result, many of the plans in existence at the
time of the ACA are losing their grandfathered status.

In this case also it is wrong to view the insurers as passive actors
who are being forced to stop offering plans because of the ACA. The
price increases charged by insurers are not events outside of the
control of insurers. If an insurer offers a plan which has many
committed buyers, then presumably it would be able to structure its
changes in ways that are consistent with the ACA. If it decides not to
do so, this is presumably because the insurer has decided that it is
not interested in continuing to offer the plan.

As a practical matter there are many plans that insurers will opt to
drop for market reasons that may or may not have anything to do with
the ACA. It’s hard to see how this could be viewed as a violation of
President Obama’s pledge. After all, insurers change and drop plans
all the time. Did people who heard Obama’s pledge understand it to
mean that insurers would no longer have this option once the ACA

If Obama’s pledge was understood as ensuring that every plan that was
in existence in 2010 would remain in existence, then it would imply a
complete federal takeover of the insurance industry. This would
require the government to tell insurers that they must continue to
offer plans even if they are losing money on them and even if the
plans had lost most of their customers. This would at the least be a
strange policy. It would be surprising if many people thought this was
the meaning of President Obama’s pledge.

Finally, there will be many plans that insurers will stop offering in
large part because of the changed market conditions created by the
ACA. For example, last week the Washington Post highlighted a plan for
the “hardest to insure” that was being cancelled by Pathmark Blue
Cross of Pennsylvania.

This plan is likely being cancelled because it is unable to compete
with the insurance being offered through the exchanges. The exchanges
charge everyone the same rate regardless of their pre-existing health
conditions. A plan that is especially designed for people who have
serious health conditions would almost certainly charge a far higher
rate. If these high-priced plans no longer exist because they cannot
compete with the exchanges would this mean that President Obama had
broken his pledge?

On closer inspection, the claim that President Obama lied in saying
that people could keep their insurance looks like another Fox News
special. In the only way that the pledge could be interpreted as being
meaningful, the pledge is true. The ACA does not eliminate plans that
were in existence at the time the bill was approved.

If we want to play Fox News, President Obama also promised people they
could keep their doctor. Since 2010 tens of thousands of doctors have
retired or even died. Guess the pledge that people could keep their
doctor was yet another lie from the Obama administration.

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