Thursday, November 14, 2013

Obama gives "grandfather" status to existing health insurance plans for one year

Posted By on Thu, Nov 14, 2013 at 1:45 PM

President Barack Obama announced today that the administration is extending "grandfather" status for one year to any health insurance plans for which coverage was in effect on October 1 of 2013. Basically, this means that carriers can choose to continue to offer plans for an additional year to existing customers even if the plans are not compliant with the Affordable Care Act. That includes plans that have been cancelled over the last few weeks, the source of much political grief for the Obama administration. 

It's always been the case under Obamacare that customers could renew their policy with a carrier late in 2013 in order to keep it through the end of 2014. In some states, insurance regulators banned this practice, but Arkansas Insurance Department Commissioner Jay Bradford allowed early renewals in Arkansas, and carriers in the state have already been marketing the option. In Arkansas, in other words, carriers could already give customers the option to keep their plans through the end of 2014.

The Obama proposal goes a little bit further: carriers can give customers the option in 2014 (through Oct. 1, 2014) to renew a plan for one more year, meaning that they could keep a plan into 2015. Here is the letter from the Obama administration to insurance commissioners explaining the policy. It will ultimately be up to state commissioners whether and how to implement these rules. One question for Arkansas: can customers who "early renew" in December of this year then do so again in October of 2014? If so, everyone who currently has an individual plan in Arkansas would have a means to keep their plan well in to 2015. I've got a line in to Bradford asking for clarification on this point. 

Here's the thing. Just because carriers can offer a plan doesn't mean they will. The individual health insurance market has always been extremely volatile. People move in and out and rarely stay with a given plan for more than a year or two, and carriers discontinue plans all the time. Continuing to offer a plan for an additional year via the new grandfather policy may or may not make any business sense. Meanwhile, in terms of plans that have been cancelled, there are major logistical hurdles to un-cancelling at this stage in the game. In short, it's too early to say whether today's announcement will have much impact in practice. Depending on how state regulators and insurance companies react, it might not change much at all. That said, it's certainly a better proposal than Sen. Mary Landrieu's bill (which Sen. Mark Pryor has endorsed), which would permanently grandfather existing plans — creating a separate, exclusive pool of healthy people, leading to higher premiums on the Health Insurance Marketplace for everyone else — and mandate carriers to continue offering existing policies. The Obama plan, if carriers and state regulators choose to use it, would basically create additional time for people to transition and adjust to disruptions in the individual market. 

And let's be clear: Disruptions to the individual market, where about 5 percent of Americans currently get health insurance, were an inevitable part of Obamacare. Given that, Obama's "if you like your plan you can keep it" was dumb. It was especially dumb since even without the law, there was no way to guarantee that people could keep a particular plan in the individual market. But all this talk of "fixes" is even dumber. Currently the individual market is a place where exclusion and price discrimination often make it impossible for the people who need affordable health insurance the most to get it. And it's a place where people often find they aren't covered if they face serious health problems (most medical bankruptcies happen not to the uninsured but to the underinsured). Obamacare is an effort to reform that market. You can't make these reforms without changes for some people. Ezra Klein nailed this last week: 

There's been an outpouring of sympathy for the people in the individual market who will see their plans changed. As well there should be. Some of them will be better off, but some won't be.

But, worryingly, the impassioned defense of the beneficiaries of the status quo isn't leavened with sympathy for the people suffering now. The people who can't buy health insurance for any price, or can't get it at a price they can afford, or do get it only to find themselves bankrupted by medical expenses anyway have been left out of the sudden outpouring of concern.

If people have a better way to fix the individual market — one that has no losers — then it's time for them to propose it. But it's very strange to sympathize with the people who've benefited from the noxious practices of the individual market while dismissing the sick people who've been victimized by it.

That last point is worth repeating: the reason that currently healthy people can often get very cheap premiums in the individual market today is precisely because the individual market is so good at keeping out sick people (and doesn't always do much for the healthy when they do get sick). If our main goal is to protect the few already benefiting from the current system, it will be to the detriment of those who are hurt by it.

All of this circles back around to the website. Disruptions in the individual market would be happening whether or not the website was functioning, but the broken has led to an asymmetry that has been a political disaster. We're hearing stories about cancelled plans but not about millions gaining coverage. Some of the people whose plans were cancelled will end up with a better deal in the Obamacare marketplace, but they don't know because the site isn't working. And while some people, particularly healthier and more affluent people, will end up paying more, a cancellation is a whole lot scarier when the other options aren't available to easily buy. It feels like losing coverage altogether.

It's boring to keep saying "if the website starts working" but that's the key to everything, as Obama himself acknowledged today. This grandfathering "fix" may help to buy time politically, but it's really a sideshow. 


Tags: , , , , , , ,

From the ArkTimes store


Speaking of...

Comments (9)

Showing 1-9 of 9

Add a comment

Subscribe to this thread:
Showing 1-9 of 9

Add a comment

More by David Ramsey

Readers also liked…

  • State Police issues statement on Jason Rapert 'threats'

    The State Police have issued a minor clarification in what appears to be an effort to soothe an enraged Sen. Jason Rapert, exposed here as overly excited about both a Conway parking lot question from a constituent as well as some inflammatory Internet rhetoric that he's interpreted as a dire threat on his life. State cops took his reports seriously, they say. But in the end, they found nothing actionable.
    • Sep 15, 2015
  • UPDATE: Judge rethinking punishment for attorneys in insurance settlement case

    Judge P.K. Holmes is rethinking whether lawyers deserve punishment in a class action lawsuit against an insurance company abruptly pulled from his court after pending more than a year and then quickly settled in a state court.
    • Jun 24, 2016
  • The plight of the refugees: Dark episodes in Arkansas

    Ernest Dumas reaches into history, some personal, for moments in Arkansas's view of refugees. It was brought to mind by the current crisis in Europe and the political divisions over whether the U.S. should respond to the needs of the displaced.
    • Sep 22, 2015

Most Shared

  • Judge Griffen writes about morality, Christian values and executions

    Pulaski County Circuit Judge Wendell Griffen, who blogs at Justice is a verb!, sends along a new post this morning.
  • The Ledell Lee execution thread

    Arkansas Times contributor Jacob Rosenberg is at the Cummins Unit in Grady filing dispatches tonight in advance of the expected execution of Ledell Lee, who was sentenced to death for the Feb. 9, 1993, murder of Debra Reese, 26, who was beaten to death in the bedroom of her home in Jacksonville.

Visit Arkansas

Haralson, Smith named to Arkansas Tourism Hall of Fame

Haralson, Smith named to Arkansas Tourism Hall of Fame

Chuck Haralson and Ken Smith were inducted into the Arkansas Tourism Hall of Fame during the 43rd annual Governor’s Conference on Tourism

Most Viewed

  • The Jack Jones, Marcel Williams execution thread

    The Arkansas Department of Correction is planning for the first double execution in the U.S. in 16 years tonight. Jack Jones, 52,  and Marcell Williams, 46, are scheduled to die by lethal injection. They would be the second and third prisoners put to death as part of a hurried schedule Governor Hutchinson set in advance of the state's supply of one of the three drugs used in the execution protocol expiring on April 30.
  • Lee's lawyer writes about executed man's last hours

    Lee Short, the lawyer for Ledell Lee, the man Arkansas put to death just before midnight last night, posted on Facebook the following letter of thanks for personal support and a bit about Lee's last hours, distributing his possessions and talking to family.
  • Legislature set to tackle changes to "Arkansas Works" Medicaid expansion in special session

    The governor is expected to call the special session to get legislative approval of his proposed alterations to the private option (now known as "Arkansas Works"). Here's what to look for.

Most Recent Comments




© 2017 Arkansas Times | 201 East Markham, Suite 200, Little Rock, AR 72201
Powered by Foundation