Everything you need to know about the plans to ‘fix’ Obamacare

November 14, 2013

Democrats are engaged in a tricky game right now: They want to do something to respond to public outrage over the flawed implementation and broken promises of Obamacare. But they don't want to do something that further breaks Obamacare.

"People are mad at us because the ACA rollout has been a disaster," says one Democratic Senate aide. "So we have to show that we hear them and are willing to address the problems at hand. That is doable. Resisting any changes is probably untenable at this point, but there is still plenty of room to make changes that show the public we are listening without doing irreparable harm to the law long-term."

(REUTERS/Jessica Rinaldi)
(Jessica Rinaldi/Reuters)

Rep. Fred Upton's "Keep Your Health Plan Act of 2013"

The Republican Party's play is Fred Upton's "Keep Your Health Plan Act." The law is poorly named: It doesn't actually guarantee that you can keep your health care. Instead, it allows insurers to keep offering their current plans and also allows them to offer new plans that aren't ACA compliant.

At a slim 235 words, Upton's bill is a master class in the pitfalls of soundbite legislation. It manages to fail to solve the problem it's actually aimed at while creating a new political problem — this time, for Republicans.

The bill gives insurers the option of renewing their cancelled plans — but, crucially, it doesn't require them to do so. Few insurers want to renew those plans, as they don't expect them to be profitable in a post-Obamacare world. So Upton's bill doesn't mean people can keep their current health insurance, but it means they can begin (wrongly) blaming their health insurer rather than the Obama administration for the cancellation of that insurance.

Meanwhile, Upton's bill has a secondary provision allowing insurers to offer new plans in 2014 that don't comply with the Affordable Care Act's consumer protections. So if an insurer wants to continue turning people away for being sick, they can go right ahead. If they want to offer shoddy coverage that'll evaporate the moment a health crisis strikes, that's their prerogative. The result is that Upton guts the law's extremely popular insurance regulations. "A vote for the Upton bill, in short, is a vote for everything Americans say they hate about their health-care system," Jon Cohn writes.

Boehner is already telling Republicans that Upton's bill is a step towards repeal. That'll help it get Democratic votes.

Bottom line: Upton's bill doesn't solve the cancellations problem but it does manage to put Republicans on the side of insurers who want to continue discriminating against preexisting conditions. It also has no chance of passing the Senate.

Sen. Mary Landrieu's "Keeping the Affordable Care Act's Promise Act"

Landrieu's "Keeping the Affordable Care Act's Promise Act" essentially requires insurers to continue offering the plans they intended to cancel. So it actually does solve the problem of cancellations. At the same time, since it wants to move people into the insurance exchanges eventually, it demands that insurers send an annual letter to enrollees explaining why their plan doesn't meet Obamacare's standards.

"Many people may choose to sign up for plans on the exchanges once they have this information and know their options," says a Landrieu staffer. "But because no new people could sign up for these grandfathered plans, and over time grandfathered policyholders will likely seek better value and more comprehensive coverage, the number of grandfathered plans would decrease."

The hope, in essence, is that the plans end up withering on the vine. But that hope may or may not pan out. In the meantime, premiums in Obamacare's exchanges will rise, as millions of mostly healthy people who would've migrated into the system remain in their old plans.

"I think it would be a real substantive mistake to do the Landrieu bill," says MIT health economist Jon Gruber, a supporter of the Affordable Care Act.

Sen. Mark Udall's "Continuous Coverage Act"

Udall's bill basically works like Landrieu's bill, but it only runs for two years. The idea is to give the Affordable Care Act time to get up and running before unwinding anyone's current plan. But unlike Landrieu, the idea is that once the Affordable Care Act is up and running, those plans should be unwound, whether people like it or not.

An upside to Udall's bill is that it ends before the Affordable Care Act's death-spiral protections end. So whatever temporary increases in premiums Udall's bill causes will be blunted by the law's protections, and then those increases will end before the protections do.

A downside, of course, is that the two-year extension could easily be renewed.

President Obama's plan

The White House has its own idea to stop the bleeding: Allow insurers to renew existing plans in 2014 (which means they could continue into 2015) while forcing them to send Landrieu-like letters explaining why their plans don't conform to the Affordable Care Act's standards.

This doesn't really ensure anyone can actually keep their plan — which means it also doesn't affect premiums in the exchanges. But it makes it easier for Democrats to blame insurers for canceling these plans. And it perhaps makes it easier for the White House to stop congressional Democrats from signing onto something like Landrieu or Udall.

The insurance industry is furious. They've been working with the White House to get HealthCare.Gov up and running and they've been devoting countless man hours to dealing with the problems and they've been taking the heat from their customers over canceled plans, and now the Obama administration wants to make them into a scapegoat.

“This doesn’t change anything other than force insurers to be the political flack jackets for the administration,” an insurance industry insider told Evan McMorris-Santoro. “So now, when we don't offer these policies, the White House can say it’s the insurers doing this and not being flexible.”

The question here is whether it's a good idea for the White House to enrage insurers whose cooperation it needs to fix HealthCare.Gov.

Fix the Web site

Of course, behind all this sits a fix that might actually solve a lot of the problems without creating any new ones: Fixing HealthCare.Gov. A working Web site would mean people getting cancellations could see if they could get a better deal in the marketplace — and many of them can. A working Web site would create a flood of winners who could get their stories into the media and ratchet down the pressure on congressional Democrats. And a working Web site would restore some of the congressional Democrats' faith in the Obama administration and give them reason to resist passing any laws that could undermine the now-functional law.

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Brad Plumer · November 14, 2013