The full reality of what Obamacare will mean for average Americans is only now becoming clear as the crisis over cancelled insurance plans in the individual market has steadily unfolded in recent days. Some 3 to 4 million people have already received notices from their insurers that their policies have been terminated, effective January 1, 2014, due to the provisions of Obamacare. These cancellations make it absolutely clear that the president’s signature Obamacare pledge – that no one will be forced out of insurance plans they like – is not true. The broken pledge has been made worse by the utter mismanagement of the Obamacare enrollment system. People with cancelled plans can’t even find out what their options are under the new law.
To their credit, House Republicans – led by Energy and Commerce Committee chairman Fred Upton – are planning to pass a bill this week that has the potential to help millions of people who are now in the impossible position of holding soon-to-expire insurance with no good options for replacement coverage. And it would do so by providing an escape from Obamacare, not a fix for the fatally flawed legislation.
The concept of the Upton bill is straightforward: it removes the impediments in Obamacare that have forced insurers to issue the cancellations in the first place. Specifically, it would allow insurers to continue offering individual insurance market policies under the state insurance rules that are in effect in 2013. As a practical matter, that means these insurance plans will be able to offer coverage at far lower premiums than the Obamacare-compliant plans will charge because the plans made viable by the Upton bill will not be forced to subsidize the less healthy risk pool that is likely to show up in the Obamacare exchanges. Further, the Upton bill would allow individuals to stay in these reopened insurance plans without fear of being penalized for not enrolling in Obamacare-compliant products.
There has been a lot of commentary recently that the Upton proposal won’t really do much because insurers do not have the capacity to reopen plans in time to get people coverage by January 1. And it is certainly true that reversing the cancellations will entail significant expense and trouble for the insurance industry.
But that does not mean it is impossible. It’s worth noting the California insurance commissioner is forcing two insurers to reverse cancellations for hundreds of thousands of individual market plan enrollees, and the insurers are reluctantly complying to keep people in their plans beyond January 1. In that case, operational issues were not impossible to overcome.
Insurers respond by noting that it generally takes months to have insurance regulators approve their rates before offering plans in the marketplace. While true, that does not mean that the regulators would not act much more quickly in a crisis. Indeed, there should be no doubt that, if the Upton legislation were to become law, there would be great pressure on the state regulators and the insurance industry to do whatever it takes to keep these plans open. The same political firestorm that is propelling the Upton legislation through Congress would force the states and insurers to be responsive also to the plight of the enrollees in the cancelled plans.
At the same time, the Upton legislation is not a panacea. It provides no guarantees, and it certainly doesn’t try to force insurers to reopen cancelled plans like the bill sponsored by Democratic Senator Mary Landrieu. No matter what House Republicans do at this point, there will be some casualties from the Obamacare train wreck. But strong support for the Upton bill would show voters that Republicans are doing whatever they can to minimize the casualties.
The defenders of Obamacare know full well that the Upton legislation represents a serious threat to the viability of the law. It would provide a lifeline for a viable insurance market outside of Obamacare’s rules and suffocating structure. Millions of Americans would flock to a revitalized insurance marketplace that offered lower premium products with better coverage. The end result would be one more step toward fully reversing the catastrophic mistake of Obamacare.