'Keep Your Plan' Won't Help Democrats or Obamacare

In the wake of the "if you like you plan you can keep it" backlash, the new plan among politically savvy Democrats is this: let people keep their plans, make people happy, keep Democrats in office. It's a really dumb plan.

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On Tuesday, Democratic Sen. Dianne Feinstein agreed to sponsor fellow Democrat Sen. Mary Landrieu's bill to allow people who like their plans to keep them, regardless of any presidency-defining health care bills President Obama signed into law. Former President Bill Clinton, a Democrat, also pressed the federal government to "keep their promise" to the American people, probably to distance his wife from an unpopular policy. In the wake of the "if you like your plan you can keep it" backlash, the new plan among politically savvy Democrats is this: let people keep their plans, make people happy, keep Democrats in office. It's a really dumb plan.

As a "fix," it doesn't work

House Republicans are pushing their own "Keep Your Plan Act" bill by Rep. Fred Upton that will be voted on this Friday, and Feinstein's support of a similar bill will make it harder for Senate Democrats to keep that from passing. Meanwhile, some conservatives are worried that Landrieu's bill is more likely to pass than Upton's. "Now that Feinstein has broken off, that makes it even more important that House Democrats stay together as much as possible — to keep Senate Ds from caving," a senior Democratic aide told The Washington Post. The aide added that the party needs "an administrative fix" before the vote this Friday, though it's hard to say what that might be. What's clear is that the House Republicans' plan would undermine health care reform and probably raise premiums next year.

"This bill provides a simple fix to a complex problem," Feinstein said in a statement, but "fix" isn't the right word. Whether you like Obamacare or not, the health insurance industry is too invested in introducing new plans to keep the old ones. As Danny Vinik noted this week on Business Insider, allowing people to keep their plans would lead to young people keeping their bare bones, "bad apple" plans (to use the president's terms), while old and sick people would flock to Obamacare, leading to a death spiral and higher premiums in 2015. That would be bad.

Of course, that assumes insurers would even be willing or able to keep those old plans. The House's "Keep Your Plan Act" would only allow insurers to keep offering non-compliant plans, not force them. Meanwhile, Landrieu's bill would force the industry to keep those plans, which is easier said than done. The insurance industry has been working for the last three years to create and input their new bronze, silver, gold and platinum plans, Bob Laszewski, president of Health Policy and Strategy Associates, noted this week. He wrote (emphasis added):

Cancellation letters have been sent. Their computer systems took months to program in order to be able to send the letters out and set up the terminations on their systems. Even post-Obamacare, the states regulate the insurance market. The old products are no longer filed for sale and rates are not approved. I suppose it might be possible to get insurance commissioners to waive their requirements but even if they did how could the insurance industry reprogram systems in less than a month that took months to program in the first place, contact the millions impacted, explain their new options (they could still try to get one of the new policies with a subsidy), and get their approval?

It's an insincere move that undermines health care reform

So, insurance companies probably aren't going to turn around and let people keep their plans in the blink of an eye, which means Feinstein and Landrieu's bill would have accomplished... nothing, other than to make some people happy until they realized how silly this stunt is. This isn't about letting people keep their plans—Democrats knew that possibly millions of plans would not be grandfathered, but assumed the website would work, alleviating the problem. It's because the website doesn't work that all this politicking is necessary, but even from that angle this doesn't work.

Before the Affordable Care Act, insurers were able to cancel plans much more freely. "Since insurance companies now won’t be allowed to collect premiums while you’re healthy only to yank coverage when you get sick, they have no choice but to pre-emptively cancel plans that wouldn’t be financially beneficial to actually pay out," Matt Yglesias argued Tuesday night at Slate. "Clearing the landscape of this kind of mirage insurance and making sure that everyone has proper coverage—which, yes, may be more expensive—is a feature of the Affordable Care Act, not a bug."

That's what Feinstein, Landrieu, Clinton, and Sen. Joe Manchin (who also supports Landrieu's bill) have been supporting the last three years. Now they're getting cold feet.

Politically, it hurts the party

Brian Beutler at Salon argued on Tuesday that, if the the Affordable Care Act works in the long run, Democrats will benefit from a failed "Keep Your Plan Act," which, in retrospect, will seem like a Republican attempt to kill a working law. "Starting on Jan. 1, votes to repeal Obamacare will become votes to take health insurance away from a lot of people," Beutler writes. "They’ll be deeply relevant to hundreds of thousands of people. And because politics don’t always obey the laws of entropy, it’s safe to assume that Democrats will characterize past votes for repealing Obamacare as if they’d taken place in 2014." Democrats just have to make it 2014 without passing their own keep your plan act first, and deal with the political ramification of voting against the flawed "Keep Your Plan Act."

Of course, politicians should do what's right for the country, not their party. But a "Keep Your Plan" bill, from the House or the Senate, isn't really going to help many people.

This article is from the archive of our partner The Wire.