If You Like Your Health Care Plan, You Can Keep It

In an effort to make good on the President's promise, Rep. Fred Upton has introduced HR 3350, which would authorize insurers to offer for sale in 2014, outside of the health care exchanges, any insurance policy that they had in place on January 1, 2013.  A news item and the text of the bill is here.  The reason for this measure is to address the cancellation of (so far) 1.5 million individual policies because the coverage provided under those policies does not comply with the minimum mandated coverage under the ACA.  See here. Given the website snafu and its problematic fix this seems like a good idea to me.  A more philosophical and less pragmatic reason for the bill is that it is obnoxious to force people to buy more coverage than they need or want,a t a price that they may not be able to afford.  That reason supports removal of the entire minimum coverage requirement, but the health care mandarins refuse to believe that people can make rational choices on their own.    

Comments

[Adam]

You mean the President was wrong that the bill he shoved through Congress, attacking his opponents for disagreeing with him about, does not actually allow everybody to keep the health care plan they had pre-ACA? This is a shocking turn of events!

My apologies for the dripping sarcasm. Yet it is disappointing that there has not been even greater criticism for how the ACA was enacted. The President and others made claims about what would / not be on enactment despite not actually bothering to read the bill. This thing is the source of considerable problems because nobody actually read the entire thing! The reality is that if this was a Republican President who'd done this, the media would be having a field day about how he's stealing people's health care away.

[Bill Turnier]

I would be interested in explanations of how insurance companies can sustain a bar against pre-existing conditions in the presence of "cheapie" policies with very high deductibles, etc. If people can buy such policies and then jump to a "gold plated" policy once they are involved in a serious accident or incur a serious expensive disease, the insurance companies will then become charities rather than profitable capitalistic businesses they are supposed to be.

[Cent Rieker]

Really, "the people can make rational choices on their own?" Not to sound like Michael Bloomberg, but there is a whole body of economic literature, and everyday anecdotal evidence of the American public being far from rational, especially when it comes to taking care of themselves (look at obesity rates, the American diet, smokers, etc). Professor Massey- I think you're taking the whole "live free or die" thing a bit too seriously.

As far as the criticism of the health care bill... obviously Adam has never had the problems of obtaining health insurance due to pre-existing conditions, or lifetime caps (fortunately, neither have I).

Try asking the millions of people who tried to obtain previously unobtainable health insurance the days the exchanges came online how they feel. Are there problems? Absolutely. Does the Obama administration care more about winning elections than the average American? No argument there. Nevertheless, preventing the free-riding problem, and taking steps for everybody to be a part of the system is necessary for health care to run more efficiently.

As far as the partisan argument on a Republican President "stealing people's health care away"... if you want to compare Obama's mistake versus his predecessor's mistakes, Obama's mistake was a dysfunctional website (maybe if the states in Flyover Country, minus Kentucky, set up their own exchanges, then the federal sites wouldn't be overwhelmed)... Bush's was a chosen war that killed hundreds of thousands of Iraqis and thousands of Americans.

The insurance that was guaranteed was employer-provided insurance, which 80% of Americans have as their insurance. Additionally, the greater numbers of the risk pool in the individual market will also provide lower premiums and better care in the long-run.

Ps- it wasn't "shoved through Congress." Democrats won two presidential elections in a row, and in both those elections actually voted in larger numbers for a Democratic Congress (thank gerry-mandering for a Tea Klux Klan House). There is a certain segment in this country that loves to yap about freedom, the flag, Jesus, and apple pie, but throws a hissy fit when they lose elections.

[Calvin Massey]

Bill,
The problem you raise is real and insoluble without massive rate increases to cover the costs of treating pre-existing conditions. That problem is embedded in the ACA. Either a person pays the penalty and then obtains insurance when the medical catastrophe strikes, or they buy the cheapest "bronze" plan (which probably costs more than their current plan, unless they are getting a subsidy) and then switches to a "gold" plan when serious illness erupts. In either case, the cost of the care is inadequately funded by premium income. This is but one of many flaws in the scheme.

[Josh]

Bill,

Your point first because it's the simplest. There are two things preventing a (say) bronze level insured from upgrading when facing substantial expected health care costs. First, after March 2014, enrollment periods will only be open from October 15 to December 7, with the new enrollment effective January 1. So the newly injured or diagnosed individual will have to wait until January 1 to upgrade, which provides a timing risk for anyone tempted to game the coverage levels in the way you suggest. Second, and probably much more importantly, the way that all ACA compliant health insurance policies work, out-of-pocket costs are capped at $6,350 (individual) or $12,700 (family) for all levels of coverage. So upgrading policies in the face of catastrophic expected costs wouldn't save anything -- the same out-of-pocket cap would apply regardless of coverage level.

Calvin,

A couple of points in response to your post. The practical one first. A number of companies are offering "short term" 364 days policies to give consumers the option of purchasing less coverage than mandated by the ACA (this is a loophole in the statute). Purchasers probably will have to pay the mandate penalty (regs aren't completely clear on this, but it's anticipated that they'll be clarified/changed to make that the case), but for the vast majority of people who are buying in the individual market, it will be cheaper (and probably much cheaper) to buy the less expensive product and just pay the penalty. The problem with all of this is that these "short term" policies typically have the traditional preexisting condition exclusion, so there is a huge concern that what they are going to do is siphon off the healthiest people in the exchanges (who will want to pay less for less), and then push them back on if/when they get sick or injured. In other words, your classic death spiral. I'll have more to say about this in my about-to-be-launched health law blog.

Second, and more philosophically, many times people buy cheap policies with little coverage because that's all they could afford. I'm talking about policies that only pay out up to $5,000, or ones that exclude hospitalization, or some other type of product that is worthless in the event of any sort of major health care event. Many of these people don't understand what the point of health insurance is. They know that they need "insurance," so when a predatory company advertises that they can buy it for $150/month, that's what they can afford, and they think they're doing the responsible thing.

Now, maybe you're not talking about those sorts of borderline (and sometimes not-so-borderline) fraudulent policies. Maybe you're talking about high deductible catastrophic coverage. In that case, keep in mind that anyone under thirty is permitted to buy one in lieu of an ACA-compliant policy (and yes, this should probably be closer to forty). People can also apply for a hardship exemption and purchase coverage. And, of course, grandfathered employers are permitted to offer this coverage (I have one, in fact!).

I think I've rambled long enough.

[Calvin Massey]

Josh,
Thanks for the thoughtful comment. I look forward to your forthcoming health-care blog.

[it won't work]

Upton's bill has zero percent chance of ever becoming law so let's not waste too much time debating its merits. My question is how is the new system expected to be economically viable? I have heard no well reasoned arguments that it will reduce federal health care spending as a whole. Given that such health care spending is completely unsustainable already, how will we as a nation pay for it? The proposed Medicaid expansion alone will be a financial disaster. Giving millions more people free healthcare when we are already broke is irresponsible and bad public policy. There were no "hard choices" made when creating the new healthcare law, just handouts to various interest groups.