Obama's New and Improved Health Care Pledge

Version 2.0 of "If you like what you have" is far more accurate.

US President Barack Obama speaks about the healthcare reform laws, known as Obamacare, at an Organizing for Action event in Washington, DC, November 4, 2013.   (National Journal)

President Obama's new explanation for canceled insurance plans isn't as catchy as his old "If you like what you have, you can keep it" line — but it's a lot more accurate.

Addressing supporters Monday night, Obama added in the nuance that was missing from his familiar, unqualified pledge that people could keep their insurance plans.

"Now, if you have or had one of these plans before the Affordable Care Act came into law and you really like that plan, what we said was you could keep it if it hasn't changed since the law was passed," Obama said at an Organizing for Action event.

That's not, in fact, what he's been saying over the years. If it was, the current blowup over cancellation notices wouldn't be as big a deal. Obama's new line is a pretty accurate description of what's going on.

Obama acknowledged Monday night that the law intended to move people into more comprehensive policies than they likely had pre-reform.

"if we had allowed these old plans to be downgraded or sold to new enrollees once the law had already passed, then we would have broken an even more important promise — making sure that Americans gain access to health care that doesn't leave them one illness away from financial ruin," he said.

What's really happening to health-care plans has gotten lost in the back-and-forth over Obama's "if you like what you have" promise — a pledge that pretty clearly understated the scope of changes the Affordable Care Act makes.

Republicans are implying that huge numbers of people will lose their plans and that all of them will be forced to pay more for a new policy through Obamacare. Democrats, meanwhile, say the plans being canceled now are lousy and that no one would actually like their canceled policy if they truly understood it.

There's some truth in both claims.

The Affordable Care Act imposes new regulations on insurance plans sold through the individual market (people who buy insurance on their own, rather than getting it through an employer). Plans that were already in existence when the law passed on March 23, 2010 were "grandfathered," meaning they didn't have to comply with certain requirements.

This is why Democrats argue that consumers whose plans are being canceled will get an "upgrade" by purchasing a new plan.

Grandfathered plans, for example, don't have to cover people with preexisting conditions — one of the most popular elements of Obamacare. They also don't have to cover preventive care without charging a co-pay, as non-grandfathered plans do. And they can still impose annual caps on the benefits they'll pay out. Those caps are illegal for all non-grandfathered plans.

Grandfathered plans also don't have to cover the 10 categories of "essential health benefits" that new policies must include. The administration left it up to the states to fill in specific requirements, but broadly, "essential" benefits include prescription drugs, emergency-room care, rehabilitation, and maternity care.

Grandfathering was seen as a way to preserve Obama's pledge. But to keep the plan you had in 2010, it has to be truly the same. HHS set tight restrictions on the changes plans could make without losing their "grandfathered" status. Those plans were legally allowed to continue, but it didn't make financial sense for insurance companies to keep offering them.

HHS predicted in 2010 that as many as two-thirds of existing individual policies would not be grandfathered. Once they lost that status, insurers could either adjust those policies to meet the health care law's requirements, or cancel their existing plans and create new ones that complied with the law.

Because most individual policies only last for one year in the first place, most carriers chose to cancel those policies rather than change them. And that's why so many consumers have gotten cancellation notices.

Some of them — especially young, healthy patients — will have to pay more for a new policy.

Others, including people with expensive preexisting conditions, might get a better deal through the law's exchanges, once those marketplaces become fully accessible. Plans there must cover essential benefits, and low-income consumers will get tax subsidies to help cover their premiums.

"We should encourage any American who gets one of these letters to shop around in the new marketplace," Obama said. "Now, I recognize that while the website isn't working as fast as it needs to, that makes it tougher, and that makes it scarier for folks."

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