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November 14, 2013

Obamacare Can Handle the “Keep Your Health Plan” Bill

Posted in: healthcare

Rep. Fred Upton’s bill would allow insurance plans that were sold in 2013 to be also be sold in 2014

President Obama’s repeated lie about “keep your own insurance if you like it” has put Congressional Democrats in a in a serious political bind and the Republicans are out to score points.

One way House Democrats are looking to get out of this bind is to support the Keep Your Health Plan Act, H.R 3350 created by Rep. Fred Upton (R-MI). In the Senate Democrats are looking at a similar but structurally different bill from Sen. Mary Landrieu (D-LA).

While this political measure would cause some policy problems with the Affordable Care Act, Democrats should know the new system can handle this modest change.

Upton’s bill would allow insurance plans that were sold in 2013 to be also be sold in 2014. It lasts for only one year. At most only a few million people in the individual market who make too much to qualify for exchange subsidies might even think about this option.

In reality the number who would take part would probably be much smaller. After all, insurance companies have spent months preparing for the switchover to the exchanges. They have already cancelled many of these plans and tried to move people to new ones. Trying to undo that in only a few weeks it a lot of work for just another year. There is a good chance many insurance companies will simply choose not to offer these plans anymore.

This law would probably result in a few hundred thousand healthier and wealthier people not joining the exchanges next year. While that would impact the actuarial models the insurance companies were using to set premiums on the exchanges, I think the impact would be modest and not of great concern. I feel the danger is being greatly overstated.

These models are just educated guesses to begin with and could end up being way off anyway. It might hurt insurance companies profits for one year because they set premiums too low. Of course I won’t shed a tear for massive corporations because in the long run they are getting billions in government subsidies and millions of people are being forced to become their customers. The impact going forward should be small because this change only lasts for one year.

This Upton bill is not really good policy, but neither was the stupid design of the ACA, failing to build a website on time, or repeating a promise you knew was a lie.


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