Pryor signs on to bill to address health insurance plan cancellations | Arkansas Blog

Thursday, November 7, 2013

Pryor signs on to bill to address health insurance plan cancellations

Posted By on Thu, Nov 7, 2013 at 10:29 PM

PRYOR: Signs on to Landrieu's bill to tweak Obamacare
  • PRYOR: Signs on to Landrieu's bill to tweak Obamacare
Sen. Mark Pryor
today pledged support for a bill sponsored by Sen. Mary Landrieu and Sen. Joe Manchin that would seek to "grandfather" existing plans on the individual insurance market, thereby allowing people to keep insurance plans that have been cancelled to comply with the Affordable Care Act.  The text of the bill, called Keeping the Affordable Care Act Promise Act, is not yet available, but The Hill has a report

The bill, S. 1642, would make changes to the grandfather clause under ObamaCare, which Landrieu said was "not written as tightly as it should have been." Under the bill, all insurance companies would have to continue to offer plans offered before the new ObamaCare standards took effect, and would also have to explain to policyholders how their current plan might fall short of those standards.

However, her bill makes clear that no one would be forced to buy plans that meet these new standards.

Landrieu's goal is to make good on that line that has been giving the president so much grief: "if you like your plan you can keep it." I can certainly understand the political appeal for red-state Democrats, but at first glance, this doesn't really make sense as a policy.

Under Obamacare, any plans issued before March of 2010 were "grandfathered" — insurance companies could keep offering them to the old customers as long as they didn't make certain changes to the policy, even if they weren't compliant with the law's new requirements. But insurance companies typically like to make changes to policies over time, so many plans lost grandfather status. Others were cancelled. And of course lots of people bought plans after March of 2010 so never had grandfather status.

Landrieu's bill is an apparent attempt to give blanket grandfather status to any plan currently on the individual market  (and relax the requirements to keep that status). In other words, she wants to reverse all of those cancellations we've been hearing about the last few weeks and give people a choice. If they like their current plan better than the new options, they can keep it. Sounds good! Here's the problem: this bill would apparently set up a separate, exclusive insurance pool for people who currently have individual plans (much larger than the previous grandfathered population), which would almost certainly lead to higher premiums for everyone else on the Health Insurance Marketplace. The current individual market is generally a healthier pool of people because of exclusion and price discrimination of the sick, practices that Obamacare bans. And those keeping grandfathered plans under Landrieu's bill might be healthier still — remember, these plans were underwritten before Obamacare rules, so healthier people got better deals and would thus be more likely to stay, whereas sick people paying more might do better with an Obamacare plan and leave. 

The likely result: The grandfathered folks would get their cheap premiums, but the Health Insurance Marketplace would be a sicker pool, leading to higher premiums there. The reason that the pre-Obamacare individual market offered good deals for many healthy people is precisely because it excluded the sick. This would basically just freeze the status quo for those who happen to have individual coverage now (that's surely part of the short-term political calculus: it offers special protection to current stakeholders). 

Another question: does Landrieu intend to force insurance companies to keep offering these plans? Under current law, nothing is stopping an insurance company from cancelling a grandfathered plan, and many have done just that (by definition, grandfathered plans can't bring in new customers, so they don't necessarily make sense for the carrier). It sure sounds like Landrieu suggested on the Senate floor that her bill would mandate companies to continue offering the same products they do today to current customers. That would open up a whole other can of worms. 

After the jump, statement from Pryor.

Today I signed on to the Keeping the Affordable Care Act Promise Act, a common-sense bill that would grandfather thousands of Americans’ health care plans. I’ve urged the White House to fix this administratively, but until that happens, this is the most reasonable solution. As I’ve said many times throughout this process, I will always work to find responsible solutions to fix problems where they exist.

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