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No, You Can’t Keep It

Nice plan you had there. Shame you had to lose it.

Nov 11, 2013, Vol. 19, No. 09 • By JOHN MCCORMACK
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For five years, Barack Obama repeatedly, emphatically, and unequivocally promised that under his health care scheme, “if you like your plan, you can keep your plan.” That promise has now been proven to be blatantly untrue. Multiple reports during the last 10 days of October made it clear that hundreds of thousands of Americans across the country were losing their health insurance plans because the plans didn’t comply with Obamacare.

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During an October 30 speech in Boston, the president tried two tacks to spin his way out of the problem. First, he rewrote history. Obama revised his “if you like it, you can keep it” pledge to: “For the vast majority of people who have health insurance that works, you can keep it.” Second, he cast blame on others. He said the cancellations were the fault of “bad apple insurers” who had “decided to downgrade or cancel these substandard plans” and therefore forfeited the right to sell them under Obamacare’s regulations. In fact, the regulations were written so narrowly that even a minor change to a noncompliant plan required its cancellation. Now, Obama promised, “for the fewer than 5 percent of Americans who buy insurance on your own, you will be getting a better deal.”

Will the president’s pushback tamp down the anger among Americans losing their insurance plans? More likely, the uproar will grow louder over the coming year as more and more Americans realize they’ll actually be paying more money for worse plans.

CBS reported last week that two million Americans have received cancellation letters so far. But many insurers haven’t publicly announced their cancellations, and by the end of 2014 the total number of cancellations is likely to hit 16 million, according to health policy analyst Bob Laszewski. That’s more than twice the number of Americans projected by the Congressional Budget Office to receive Obamacare subsidies in 2014.

Cancellation letters go out 30 to 60 days before a plan expires, and plans will continue to expire each month throughout the year. “A lot of companies are allowing these early renewal deals that let you keep your plan until December of 2014. So next December’s going to be a huge month,” Laszewski told The Weekly Standard. One industry executive told him that by a ratio of 15 to 1, policyholders are opting to extend their coverage to December 2014. Laszewski pointed out that policyholders with plans expiring next December will receive their cancellation notices at a very inopportune time for Obamacare’s supporters. “What’s 30 to 60 days before December 1?” he asked. “The November election.”

During his speech in Boston, the president said that because the healthcare.gov website isn’t working, “a lot of people haven’t had a chance to see just how good the prices for quality health insurance through these marketplaces really are.” But by keeping people in 36 states that are reliant on the website in the dark about how much plans will cost and what they will offer, the administration’s fumbles have delayed the rate shock that millions of Americans will experience.

You can’t browse prices or plans on the Obamacare website or by calling its 1-800 number. When I called the number on October 30, I was told it would take “four to six weeks” to process an application and determine eligibility. Until then, a call center worker told me, he couldn’t say how much plans would cost or what they had to offer. But you can browse plans on a private site called eHealthInsurance.com, and there you can see that many middle-class Americans will be worse off under Obamacare. 

Take, for example, the case of a 31-year-old woman in Arlington, Virginia. Prior to Obamacare, she could purchase a plan from Blue Cross for $96 a month with a $2,500 deductible and a $5,000 annual out-of-pocket maximum. The cheapest Obamacare “bronze” plan that same 31-year-old can buy in Virginia costs $160 per month, with a $6,000 deductible and a $6,000 annual out-of-pocket maximum. That’s a 77 percent increase in the premium and a 140 percent increase in the deductible.

If she wanted to keep comparable coverage and purchase a “silver” plan with a $2,500 deductible, her monthly premium would cost $260 a month—nearly three times what she paid prior to Obamacare.

But what about Obamacare’s subsidies? Won’t they bring the cost down? According to Obama, there’s just “a fraction of Americans with higher incomes who will pay more on the front end for better insurance with better benefits.” But according to a study by the Kaiser Family Foundation, 52 percent of Americans who now purchase insurance on the individual market won’t qualify for any subsidies at all.

Subsidies will certainly help people with low incomes, but they will be of little help for most of the middle class. If our hypothetical 31-year-old Virginian were working full-time at the minimum wage (that’s $15,000 a year), she could purchase a silver plan for $25 per month. But if she earned just $21,000 a year, the cost would jump to $96 per month—the exact same price at which she could buy a plan without subsidies before Obamacare. The subsidies continue to diminish and would phase out altogether for this 31-year-old if her salary were $31,500—274 percent of the federal poverty level.

But won’t the plans be better under Obamacare? Not really. The president frequently says that all plans sold on the Obamacare exchange will “cover” 10 “essential health” benefits. Some “preventive services,” like contraception and mammograms, are covered at no cost to the policyholder. But many essential benefits, like hospitalizations and prescription drugs, aren’t covered at all until one pays a deductible of thousands of dollars on many silver and bronze plans.

In response to the news that millions of Americans are being dropped from their current plans and forced to buy more expensive ones from a website that doesn’t work, Senator Ron Johnson, a Republican from Wisconsin, has introduced the If You Like Your Health Plan, You Can Keep It Act. The bill would allow any plan sold in 2013 to be sold in 2014.

Johnson’s measure is gaining traction among some Democrats. On October 29, Senator Mary Landrieu, a Democrat from Louisiana, told The Weekly Standard that Democrats had only promised that Americans could keep “good insurance.” But two days later, she announced she would introduce her own bill to let people keep their current plans.

Bob Laszewski points out that now, however, it would be difficult for insurers to get their old plans back online. “They’ve already sent out cancellation notices, changed their computer programs, and filed their new products and rates,” he said.

“You can’t sell an individual health insurance plan without it being filed and approved in a state,” Laszewski told me. “That takes a year,” he noted. “I can’t imagine how technically and operationally they can straighten this out.”

“Hypothetically, I think it’s a brilliant idea,” he said. “Operationally, holy s—!”

It’s possible, though, that compared with implementing Obamacare, working to let people keep their plans might seem like a cakewalk.

John McCormack is a staff writer at The Weekly Standard.

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