Demonstrators protest against the healthcare bill outside the Capitol in Washington December 15, 2009. The healthcare bill has been passed by the House of...
KEVIN LAMARQUE/Reuters

The Keep Your Health Plan Act

Updated
Over the weekend, The Hill published an interesting piece suggesting congressional Republicans, who had been fully committed to repealing the entirety of the Affordable Care Act since its inception, have “shifted their strategy.”
 
The “pivot,” the article said, was from repealing the health care to law to helping “fix” it through something called the Keep Your Health Plan Act, sponsored by Energy and Commerce Committee Chairman Fred Upton (R-Mich.). “The GOP,” The Hill reported, “wants to rebuild its political capital and public credibility by solving ObamaCare’s implementation problems.”
 
With respect to The Hill, whose reporting I rely on frequently, the piece was a little naive. To think that House Republicans, a month after shutting down the government over a health care law they hate with blinding rage, suddenly want to improve the Affordable Care Act is hard to take seriously. Upton’s Keep Your Health Plan Act is about a partisan game to undermine the law and put Democrats on the defensive – and little else.
 
The issue started taking on new urgency this week as panicky congressional Democrats, responding to media pressure and widespread confusion, began inching towards support for Upton’s bill (or at least one like it). Even Bill Clinton said yesterday, “I personally believe, even if it takes a change to the law, the president should honor the commitment the federal government made to those people and let them keep what they got” – which delighted Republicans who immediately saw the comments as an endorsement of their plans.
 
(It was rather ironic to hear the former president make the comments – the reason President Obama made the “you can keep your plan” comments in the first place was due in part to the disaster surrounding Clinton’s plan 20 years ago, which would have upended the coverage of nearly every U.S. consumer, causing a broad public backlash.)
 
The public debate has started to stagnate a bit, with Republicans and the Beltway obsessing over whether the president “lied” – I tend to think this is a silly accusation, since Obama’s position was more of an oversimplification than an attempt to deceive – and much of the media giving the misleading impression that this is a systemic flaw in the law.
 
Perhaps it’s time to pause, catch our breath, and take stock.
 
The current argument, separate from concerns over the dysfunctional website, has to do with consumers who buy coverage through the individual, non-group market – less than 5% of the population. When Obama said folks who like their plan could keep it, he was pretty much referring to the other 95%.
 
But the individual, non-group market has been a mess, and the architects of the Affordable Care Act designed the system to clean up that market on purpose. As Jonathan Cohn explained yesterday, for all the uproar from Republicans and reporters, this is a feature, not a bug.
Broadly speaking, the Affordable Care Act seeks to make two sets of changes to what’s called the “non-group” market. It establishes a minimum set of benefits, which means everything from covering “essential” services to eliminating annual or lifetime limits on payments. At the same time, the law prohibits insurers from discriminating among customers: They can’t charge higher prices, withhold benefits, or deny coverage altogether to people who represent medical risks. They have to take everybody, varying price only for age (within a three-to-one ratio) and for tobacco use.
 
If you buy your own insurance now, it probably doesn’t live up to these standards. For starters, it probably isn’t as comprehensive as you think. It may not cover prescription drugs, for example, or it might leave out rehabilitative services and mental health. It might expose you to out-of-pocket expenses greater than $6,350 (if you have a single person’s policy) or a $12,700 (if you have a family policy). Until three years ago, when Obamacare’s first regulations went into effect, it was even possible the insurer could yank it retroactively – a process known as “rescission” – if you got sick and the carrier scrubbed your medical records for some previous sign of illness, maybe even one you didn’t know you had.
Because of various changes – some related to the law, some related to the market – many of the consumers in this narrow slice of the population are discovering that their old plan is no longer going to be available. What’s more, they’re also finding that they’re moving to a better insurance package that offers more security and broader coverage, but at a higher price.
 
But about 1% to 2% of the population is in a real pickle. The individual, non-group market has been a dysfunctional mess for years, but there’s a group of consumers – who tended to be fairly affluent and healthy – who could get a pretty good deal. These folks (a) are finding that their plan will no longer be an option; (b) may have to change their doctor; and (c) are being sought out by Republicans and reporters eager to find “Obamacare victims.”
 
Bill Clinton and others are saying the Obama administration should give them a hand and let them keep what they had. But that’s not nearly as easy as it sounds. Jonathan Chait (not to be confused with Jonathan Cohn) explained, “It would be really, really hard.”
The main rationale for Obamacare is that the individual-health-care market is dysfunctional. Most people who can’t get group insurance – either through their job or through a government-financed plan, like Medicare – can’t get any insurance at all. Insurers have to make sure they don’t attract sick customers, so they either attach hidden conditions to their insurance to protect against covering expensive care, or else limit their policies to very healthy people. That’s why people with individual insurance are much less satisfied than people with group-based insurance. […]
 
If you want to make sure every healthy person paying low rates in the individual market right now can keep their plan, then you have two choices. One is to abolish Obamacare altogether, which means making it impossible for people with preexisting conditions to get affordable insurance. Clinton doesn’t want to do that – he continues to endorse the law. The second is to come up with some other source of funding to compensate insurance companies for their losses. Clinton doesn’t say where that money would come from.
Along come congressional Republicans saying their Keep Your Health Plan Act will solve the problem. But GOP lawmakers, none of whom seems to take the substance of health care seriously and haven’t held any hearings on the idea to explore the repercussions, don’t fully appreciate the scope of their suggestion. For one thing, insurance companies “would still be able to cancel or replace” policies bought through the individual market.
 
For another, as Sarah Lueck explained yesterday, the Keep Your Health Plan Act would carry drastic unintended consequences: “The Upton bill would do serious damage to the Affordable Care Act and the millions of Americans who are expected to benefit from the improved coverage and premium and cost-sharing subsidies available through the new health insurance marketplaces.  Allowing insurers to continue selling all existing individual-market plans through 2014 would raise premiums significantly. It also would threaten the long-term viability of the marketplaces and hence the extension of coverage to millions of uninsured near-poor and middle-income Americans, undermine the new insurance market reforms, and create new problems for an already troubled open enrollment period.”
 
And finally, whether Republicans realize this or not, they’re undermining their own long-term policy argument for short-term ideological gain. The more the GOP commits to the principle that Americans must be able to keep insurance that they like once they have it, the harder it is for Republicans to pursue their own health care goals.
 
Regardless, because policy doesn’t seem to matter much in Congress anyway, we can expect to see the Keep Your Health Plan Act brought to the House floor this week. It’ll draw opposition from House Democratic leaders, but under political pressure, it seems likely that many House Dems will vote for it anyway. In the meantime, some of the less-progressive members of the Senate Democratic caucus are working on a related alternative, the details of which have not yet been released.
 

Affordable Care Act and Obamacare

The Keep Your Health Plan Act

Updated