Right-wing pundit Michelle Malkin’s insurer has canceled her health insurance plan, due, they say, to the Affordable Care Act (aka Obamacare). She quotes Obama, “If you like your health care plan, you will be able to keep your health care plan. Period. No one will take it away. No matter what.” Malkin concludes, “Obama lied. My health plan died.”
Did Obama lie? Yes—and no—and yes. But Malkin fails to admit that her plan died so that people like her could be protected for life. Period. No matter what medical tragedy might occur.
In some sense, what Obama promised was obviously impossible. Millions of Americans have experienced the end of their health plan—or major changes in it—even without health care reform. Insurers (and employers) change their plans because of recessions, rising medical care costs, hospital mergers, and such. In a market, companies react to market forces.
And Obamacare was designed to use private insurers and market forces. In such a system, Presidents can’t force private insurers to keep offering plans. Obama “lied” when he promised you could keep your health plan, no matter what.
But in another important sense Obama told the truth. Right-wing politicians and pundits have described Obamacare as a government takeover. Obama needed to make very clear that under Obamacare, if a private insurer is willing to offer a plan, you are free to take it. The government will not force you into a government plan. Nor will it make you buy insurance on the exchanges. Nor will it force your insurer to end a particular plan.
The ACA is not a government takeover but rather a bunch of regulations and subsidies. Obama needed to say so in simple, even simplistic, terms. Obama told the truth when he promised that the government, under Obamacare, would not stop you from taking any plan your insurer offers.
Finally, in a third sense Obama did lie. It was always a sure thing that insurers would react to biting ACA regulations: Insurers cannot charge you more if you had cancer—or any other medical condition, past, present or predicted for the future. And insurers can’t refuse to sell you a plan based on your medical status.
But those new rules totally undermine a lot of how the individual (i.e., not employer-provided) health insurance market has been working until now: insurers get a pool of healthy people who don’t use much medical care and charge them a lower premium. In many states, pre-Obamacare, if someone got sick, the insurer could raise their premiums. Plus, insurers didn’t have to sell plans to uninsured sick people. And a sick person who lost their job (and employer provided health insurance) could be charged a very high premium.
Those practices are called medical underwriting. And insurers didn’t practice medical underwriting because they are evil. They would have gone broke without it. They’ll need Obamacare’s unpopular mandate and complicated risk adjustment to make no underwriting viable.
Malkin is right that Obamacare killed her plan. More precisely, its new regulations—the popular anti-underwriting ones—made her insurer fear that the plan would attract too many unhealthy buyers, causing it to lose money in 2014. A PPO with “a wide choice of doctors,” the Malkin family’s 2013 plan, would look very attractive to the medically high risk once they were eligible for it. Technical fixes, like risk adjustment, are supposed to protect insurers but they fear the fixes won’t be good enough to prevent them losing money, maybe a lot of money. That is why they are dropping or drastically changing some nice plans.
The Malkins may, as she said, be forced to choose between a higher premium and a more restricted network. Obama “lied” in that he could have predicted insurers would change and eliminate plans in response to the ACA rules.
Of course, he couldn’t have explained all of this in sound bites. The truth is that the short-run harm to some is the price we pay for a lot of benefits. So, who are the Obamacare regulations helping?
They’re helping people who’d like to have a career like Malkin’s, as a self-employed pundit (or entrepreneur or anything self-employed) but couldn’t, because once upon a time they had breast cancer or depression or whatever. So, until Obamacare takes effect, the once sick have to stick with a secure, unrewarding job to avoid losing their health insurance. Not to mention being terrified of losing that job.
The regulations are helping presently self-employed people (and others without employer-provided insurance) who are now or were once in bad health. They are now uninsured or paying financially painful premiums and out-of-pocket costs.
Most importantly to Malkin, one would hope, is that the regulations are helping a potential future Malkin if she or a family member got medically unlucky. Under Obamacare, the hypothetically sick Malkins would avoid financially draconian premium increases and out-of-pocket payments.
So Obama lied in some senses and told the truth in others. It’s hard to do anything else when explaining complex stuff in sound bites.
But if politics allowed him to be truthful, he could have said that Obamacare is a lot like forcing people to pay taxes to fund defense. Taxes do make people poorer. And the defense it pays for doesn’t always end up helping them personally. But we don’t have any other way of making sure that we are all protected. Period. No matter what.
“Those practices are called medical underwriting. And insurers didn’t practice medical underwriting because they are evil.” Sad but true…
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