‘If You Like Your Plan, You Can Keep It’ Is Easier Said Than Done



Flooded with news stories and constituent calls from Americans losing their health care plans, a bipartisan group of lawmakers have proposed seemingly easy solutions that they say will allow everyone keep their existing insurance coverage. On Friday, the House will consider such a measure, spearheaded by Rep. Fred Upton (R-MI). Several Democrats in vulnerable districts are expected to back the effort. On Tuesday, even Bill Clinton threw his support behind the change and Sen. Dianne Feinstein (D-CA) said she would vote for similar legislation being introduced in the Senate by Mary Landrieu (D-LA).

But lawmakers who have fought for years to enact a law that expands health care coverage to sick people, overcame almost insurmountable legislative hurdles, and survived a constitutional challenge before the Supreme Court, should be wary of supporting measures that undermine key consumer protections for millions of Americans and increase costs for millions more.

The truth is, letting everyone in the individual health care market maintain their existing coverage would have real consequences for health care reform.

Upton’s legislation, and other proposals like it, would allow health insurers that issued individual market plans as of Jan. 1, 2013 to continue selling their policies through 2014 to current and new enrollees. The policies would not have to meet health care reform’s new consumer protections, meaning that the issuer will still be free to deny coverage to people with pre-existing conditions, offer skimpy policies that lack essential health benefits or drop coverage altogether.

Insurers will market these policies to young and healthy enrollees at cheaper rates, keeping this population out of the exchanges. The new marketplaces, will consequently attract sicker enrollees who need to use the coverage they purchase, thus significantly increasing premiums. Insurers may be moved to reassess their rates for 2014 and will likely raise costs for 2015 — the new rates would be revealed in the fall of 2014, in the midst of the midterm elections. Federal spending on subsidies would also increase to keep pace with the cost of coverage.

(Incidentally, Landrieu’s companion legislation requires insurers to continue policies indefinitely but does not appear to allow for new enrollees.)

It’s hard to quantify the damage. But keeping young and healthy people out of the exchanges for even a year sets a dangerous precedent and represents a huge step backwards. On the eve of implementing hard fought reforms, lawmakers are essentially considering re-segregating the health care market: healthy uninsured individuals without an offer of employer-sponsored coverage, Medicare or Medicaid will be lured away into subprime policies that include few consumer protections (and probably won’t be there for them should they fall ill); sicker people will find themselves in exchanges that resemble high-risk insurance pools, paying ever-more for coverage.

“[W]hile the Upton bill would extend the availability of non-ACA-compliant plans only through 2014, there would be pressure next summer and fall to then extend the availability of these plans through 2015 or (more likely) permanently,” Sarah Lueck observes in a new analysis for the Center for Budget and Policy Priorities. “That would permanently raise premiums in marketplace plans, further discouraging healthy people from enrolling and threatening the marketplaces’ long-term viability.”

And though there may be some more modest fixes that would provide relief during this transition period, there is no silver bullet that would retain the old plans without disrupting the new policies. For instance, lawmakers could prohibit insurers from sending deceptive and inaccurate cancellation notices that fail to mention other coverage options available in the exchange and simply push customers into other plans offered by the issuer. This would inform Americans about the law and help them search for more affordable coverage but wouldn’t necessarily allow you to keep the plan you have.

Insurers could also be required to extend existing plans for a several months — providing beneficiaries more time to find health coverage through the exchanges — or receive narrow grandfather protections for policies on the market before Oct. 1. This too may have limited impact, since many issuers have already moved to terminate these plans, and could similarly undermine the balance of the risk pool within the exchange.

Ultimately, extending these plans is bad policy: they formed the backbone of the old broken health care system in which sick people were deemed uninsurable and too many healthy people went bankrupt once they became sick. The Affordable Care Act’s grandfather rules and the minimum standard benefit requirements came out of these experiences and frustrations. They establish a federal floor of consumer protection that prevents insurers from shifting the cost and risk of health care to the individual and puts an end to the kind of practices that plagued the consumer driven health care market for years.