OPINION: the peril of Obamacare’s promise

Introduction

Presidents often live to regret some of the words speechwriters put in their mouths. The first President Bush paid a steep price for his ill-advised “Read my lips. No new taxes!” promise in 1988. He lost his bid for a second term.

No doubt President Obama regrets saying, with equal bravado: “If you like your health care plan, you will be able to keep your health care plan.”

That was just plain stupid. For starters, he and his speechwriter either didn’t understand or chose to ignore this reality: for most Americans, whether or not they keep an existing health plan is not up to them or the government. Insurance companies and our employers are the ones making those decisions.

Like most Americans, Obama probably had never heard of terms like “benefit buy-down” and “full replacement.” Insurance company executives use them frequently, but almost never to anyone other than their corporate customers and Wall Street financial analysts.

If the employer-sponsored health plan you have today has fewer benefits or requires you to spend more of your own money for medical care than the plan you had last year — the one you liked but can’t keep — you have been the victim of benefit buy-down, a practice employers have been using for years to limit their share of the cost of providing coverage to workers.

And if you were in an HMO or PPO but found out during open enrollment that your employer has eliminated those options in favor of a high-deductible plan, you have become a victim of full replacement. The health plans you liked were fully replaced by a plan enabling your employer to shift more of the cost of care to you.

So if the President’s speechwriters were paying attention to what has been going on in the health insurance world, they would have found some other way of saying what Obama reportedly meant — that the reform he supported would build on the uniquely American employer-based system while reducing the number of folks without coverage. In other words, people would not have to give up their private insurance and enroll in a government-run plan, even though many consumer advocates believed something like Medicare-for-all would have been a better way to go.

As we get closer to the date when most Americans will be required by Obamacare to enroll in a private health plan if they’re not eligible for Medicare or Medicaid, it’s becoming clear, especially to the president’s critics, that the law will indeed mean that health plans offering the least protection from financial ruin after a serious illness or injury — especially in the individual market — will soon go away. That is unless, as I wrote last week, insurance companies are able to take advantage of loopholes in the law that will enable them to continue selling junk insurance.

Banning junk insurance is a good thing for consumers, but making such policies unlawful — as Obamacare will do — means that people who are currently enrolled in them will have to find health plans that offer real coverage by January 1 of next year.

Obama’s speechwriters should have been thinking ahead to the day when Obamacare will protect us from buying the equivalent of snake oil. If they had, they might have understood why the president didn’t want to promise folks they could keep existing plans.

The advantage that Obamacare’s critics have is that many people who buy junk insurance don’t realize they’ve been paying good money for almost nonexistent coverage — that is, until they wind up in the hospital after getting sick or hurt. And because most Americans stay relatively healthy and injury free, those who are in junk plans can go years without testing the limits of their coverage.

States are starting to disclose how much insurers plan to charge for the policies they sell through the online health insurance marketplaces beginning Oct. 1, and so far, we are seeing little evidence of the “rate shock” some politicians and insurance executives were predicting earlier this year. But it won’t be long before people who are enrolled in plans with the skimpiest benefits will find via cancellation notices from their insurers that their plans won’t be available next year. Some inevitably will find that premiums for more comprehensive coverage — which many undoubtedly will insist they don’t need or want — will be considerably higher than what they were paying for junk.

That’s all the president’s political opponents will need to claim, with some justification, that Obama made a promise he didn’t keep when he was trying to sell the public on the need for reform. The president’s speechwriters better be thinking now how to get him out of the trap they set for him four years ago.