Robert Laszewksi explains what Obama’s announcement means for insurance companies:
This means that the insurance companies have 32 days to reprogram their computer systems for policies, rates, and eligibility, send notices to the policyholders via US Mail, send a very complex letter that describes just what the differences are between specific policies and Obamacare compliant plans, ask the consumer for their decision — and give them a reasonable time to make that decision — and then enter those decisions back into their systems without creating massive billing, claim payment, and provider eligibility list mistakes.
Sarah Kliff considers insurers’ options:
[I]nsurers are in a bit of a tricky spot. It will look pretty bad if they don’t allow people to keep enrolling in their 2013 plans; as the president said, its a whole lot harder to blame the cancellations on Obamacare. But if they do allow that to go forward, it could screw up the risk pool in the new insurance marketplaces by letting the younger and healthy people (who would likely stick with their skimpier plans) stay out of the exchange. They’d essentially be siphoning off the exact same customers they were hoping to woo into the exchanges.
Beutler has no sympathy for insurers:
Obama’s remedy is a justified comeuppance for carriers who defaulted beneficiaries into obscenely expensive plans, which they characterized as “comparable” to the canceled coverage, without apprising them of their options, and blamed the whole disruption on Obamacare. It’s a scolding reminder to particular insurance companies that their lack of integrity exacerbated a problem that might have been contained if they hadn’t acted with such avarice. They are now reaping the whirlwind.
I think that most of the canceled policies have been canceled because insurance companies wanted to cancel them. They were designed in the first place to entice buyers away from their old grandfathered policies, and insurance companies did this explicitly so that they would be free to cancel them when 2014 rolled around. This allowed insurers to replace them with more expensive policies without taking any heat for it. They could just blame it on Obamacare.
This is just speculation on my part, so don’t take it to the bank. But I think Obama’s main goal here is to remove this handy excuse.
But, as Suderman points out, the administration needs the cooperation of insurance companies if the law is going to succeed:
Obama is creating a long-term policy problem in order to solve a short-term political problem. Even if this temporarily reduces some of today’s political pressure, those long-term policy problems will rebound to create additional political problems as time goes by. Premiums will rise, and if consumer demand turns out to be lower than expected as a result, plans may withdraw from the market. At the same time, insurers, who have been targeted by the administration for blame and had their assurances about the state of the law (and thus their business plan) upended, will be less likely to cooperate with the administration. They are already frustrated with the administration, and this will hasten the break between them. The opposition of insurers will add a new layer of opposition that the administration must contend with in order to make the law—which is built around the goal of making insurance coverage accessible—work.
Rich Lowry questions the legality of the administrative fix:
In attempting to stem the panic of congressional Democrats, Obama has thrown the insurers who had bought into Obamacare under the bus, a move that itself could harm the law’s long term prospects. He has once again acted unilaterally and (presumably) lawlessly rather than going to Congress, but he has undercut his own spin that Obamacare is the immutable “law of the land” and in his press conference, admitted that many of the law’s failures are on him rather than the result of Republican sabotage. We’ll see now whether the president has at least stabilized his position on Capitol Hill. Regardless, a bad day for him and the law.
Nicholas Bagley reviews relevant law and finds that “the administrative fix may be vulnerable to even sharper claims of illegality than the delay of the employer mandate.” Ramesh expects the change to only make the law worse:
In recent weeks, proponents of Obamacare have been arguing that we shouldn’t make too much of its early troubles, because President George W. Bush’s prescription-drug program saw early fumbles, too. (The people behind Obamacare may not be good at building websites, but they’re great at manufacturing excuses.) It’s perverse, of course, to suggest that the difficulties of a smaller, far less complex program are a good omen for Obamacare. But the bigger problem is that Obamacare is vulnerable to adverse selection in a way that Bush’s program was not.
Weigel anticipates the GOP’s new spin:
Whatever Obama does, it won’t restore all the canceled plans. Republicans (and anyone who’s talked to any insurer, ever) know this is not the case. After this week, Republicans will be able to react to any new stories about canceled plans by pointing out that, hey, they wanted to fix this, but the president arrogantly refused them and went with his own plan.
Chait’s bottom line:
Obama’s announcement mainly leaves the law in the same place it’s been for a month and a half: waiting to see if the administration can fix the website.
(Photo: U.S. President Barack Obama speaks on the Affordable Care Act in the White House briefing room November 14, 2013 in Washington, DC. By Win McNamee/Getty Images)