If You Like Your Can, You Can Kick It

Cohn translates the latest Obamacare tweak, which allows people to keep insurance plans that don’t meet the law’s minimum coverage standards through the end of 2016:

Administration officials argue that this announcement merely changes the duration of the transitionary period, without altering the end result. They make a good case. From the get-go, the law had a “grandfather clause,” allowing people with insurance as of March, 2010, when the Affordable Care Act became law, to hold onto their policies. This decision is similar to expanding that protection—and not to a very large group of people. One estimate, from the Rand Corporation, suggests only a half million people still have the old plans. And as Greg Sargent pointed out on Wednesday, that number will dwindle over time, because the non-group market is so volatile, with people moving in and out as they obtain or drop coverage from employers.

Allahpundit calls the delay nakedly political:

Quite simply, Obama was forced to choose between doing something that would help his party at the ballot box but hurt his signature health-care law and doing something that would help stabilize the law financially at the risk of generating a nasty backlash to his party from consumers with cancellations. He made the political choice. Which is exactly what O’s critics feared would happen as government insinuated itself further into the health-care industry via O-Care. Decisions on health-care policy are now a species of politics. You’re welcome, America.

Drum concedes that point:

It would hardly be the first time that a particular provision of a complex law got delayed a bit, after all. On the other hand, most delays are due to agencies flatly being unable to meet statutory deadlines, something that’s just part of the real world. The Obamacare delays, conversely, are pretty clearly being announced for calculated political purposes. What’s more, to the best of my knowledge the administration has never provided a definitive legal justification for these actions, which suggests that they don’t really have one they aren’t embarrassed to defend.

Bob Laszewski warns that this endangers the law’s long-term sustainability:

As a person whose policy is scheduled to be cancelled at year-end, I am happy to be able to keep my policy with a better network, lower deductibles, and at a rate 66% less than the best Obamacare compliant policy I could get. But for the sake of Obamacare’s long-term sustainability, this is not a good decision. The fundamental problem here is that the administration is just not signing up enough people to make anyone confident this program is sustainable. Yes, the law’s $20 billion “3Rs” health insurance company reinsurance program will prop up the program through 2016––and even be enhanced because of these changes. But then the “training wheels” come off and the program has to stand on its own. As I have said on this blog before, I don’t expect the insurance industry to be patient past 2015 before it has to begin charging the real cost of the program to consumers.

But Adrianna McIntyre doubts the delay will have a major impact:

There’s a fear that individuals who cling to old, less generous plans are healthier than those who already jumped to the exchanges. That might be true, but it also probably doesn’t matter much. CBO estimates that the exchange population will swell to 22 million by 2016 as people become more aware of coverage options and the penalty becomes more severe. The specter of adverse selection fades pretty fast when you set 1.5 million—a number that will erode over the life of the administrative fix—in that context.

“Looking at the issue more broadly,” Philip Klein argues, “the change undermines a central rationale for Obama’s health care law”:

Obama and his allies long-defended the outlawing of certain health care plans, arguing that they were substandard. And they argued that depriving people of the ability to purchase such plans was essential to making the health care law work. If young and healthy people can purchase cheap health insurance with fewer benefits, they argue, it would make coverage more expensive for older and sicker Americans.

Now, not only is Obama saying that these legacy plans can remain, but he’s saying they can stay alive for three years longer than intended. If they can be extended for three years, the new rules may never fully go into effect (unless Obama will allow a wave of cancellations in October 2016, just before the presidential election). And maintaining these plans will further drive up the cost of insurance on the exchanges.