Bill Clinton Is Wrong: It's Okay That Some People Can't Keep Their Insurance

Our healthcare system has a lot of problems.

We spend much more than anyone else—almost twice as much the average rich country—but we don't get more than anyone else. We get less. See, our health outcomes are about the same, but we don't cover everybody like other rich countries do. It's a disaster, really. (Or as Josh Barro puts it slightly less diplomatically, it "sucks").

But, as Ezra Klein points out, there's a paradox when it comes to healthcare reform. Most people think the system needs to be changed, but they don't want their insurance changed. That's why there's been so much backlash now that people are finding out that, despite what Obama promised, some of them will lose their current coverage under Obamacare. And why Bill Clinton said he thinks we should change the law to let people who won't get subsidies keep their coverage.

There's already a Democratic bill that would do just that. Senator Mary Landrieu's "Keeping the Affordable Care Act Promise Act" would require insurance companies to keep offering people the plans they have right now as long as they keep paying their premiums. It's the kind of poll-tested idea that's good politics, and horrible, horrible policy. That's because it's a good thing if some people lose their plans. That's how reform should work, the White House's false promises and hopelessly bungled roll-out, notwithstanding.

The individual insurance market doesn't work. You can't get insurance if you are sick, and don't get much insurance if you become sick. In other words, insurers won't sell policies to people with preexisting conditions, and sell insufficient policies to healthy people. As Jonathan Cohn explains, these insufficient policies often don't cover things like prescription drugs and won't cover high out-of-pocket expenses. And if your plan wasn't insufficient, insurance companies would look for excuses to cancel it after-the-fact if you did become seriously ill—what's known as "rescission."

Obamacare tries to fix these problems with the individual market—and the inescapable logic of that is some people will end up paying more than before. Here's why in three steps. First, Obamacare makes insurers offer everyone the same policies at the same prices regardless of preexisting conditions (though not age). But bare bones coverage with high out-of-pockets, and even lifetime limits, isn't much use if you're sick. So, second, it sets minimum benefit levels. But what about healthy people who already have individual policies that don't meet these levels? Well, if they had those plans before Obamacare was passed in March 2010, and those plans haven't changed at all since, they can keep them. Otherwise, they can't. They have to buy conforming plans that are almost certainly more expensive. Because, third, Obamacare needs healthy people paying for more than just catastrophic (and even junk) insurance to help pay for all the sick people now getting coverage. In other words, Obamacare needs health insurance to be ... insurance.

Now, the law's subsidies will help pay for some of this. But people can't see if they'll get a subsidy. They can't even see what plans they can buy. All they see is a non-functioning website and a notice that their coverage has been canceled. It's understandable they're upset. And it's understandable that healthy people who make enough that they won't get subsidies are upset that they'll definitely be paying more. But nobody knows if or when they'll stop being healthy. It's why we have insurance in the first place. So it helps us all if we know we can get affordable insurance when we need it most. That means paying more when we don't need it as much, but that's how insurance is supposed to work.

Pretending otherwise is good politics, but it won't solve any of our problems.