Thursday, November 7, 2013

Losing your Plan is a Feature, not a bug, of the Affordable Care Act

Supporters of the Affordable Care Act (ACA) respond to the "You can keep your plan" broken pledge by saying 1) those were junk plans that are being lost and 2) it only applies to small segment of the individual health care market. Both claims are wrong.

It is curious supporters would make a blanket claim about the quality of plans being dropped, a claim without subtlety and nuance, when it is exactly that lack of specificity that has put the broken pledge of "read my lips you can keep your plan" in such focus. The idea that ALL plans impacting 26 million people are junk is absurd on its face and there is no evidence presented ALL, or the majority, or even some, of those plans are junk.

The claim that losing your plan only applies to a small segment of the population is more troubling. There is plenty of evidence from HHS and CBO that many in the employer-based market will lose there plan. For instance, here is the CBO in May of 2013 estimating 7 million will lose employer based coverage by 2018 and 5 million total in the non-group market by 2017. That's a  lot of junk plans.

Casey Mulligan thinks the estimates are too low. He thinks the number can be 20+ million, driven by the incentives written into the law. Employers have an incentive to drop coverage and employees will have an incentive to allow their coverage to be dropped. He concludes:

Moreover, this is not an issue of the adequacy of the group coverage that's lost, it simply that the ACA induces market participants to tolerate coverage loses in order to, at taxpayer expense, reduce the monetary loses they experience as a consequence of the law.

Losing your health insurance is a feature of the ACA. The ACA was designed to kick people off their plans. This is not a surprise to many who have opposed this plan from the start.



  1. CBO predicts 40-67 percent of individual market healthcare policies will become illegal under ACA, we're right on track for that estimate. 2010 federal register predicts 66 percent of small employer market and 45 percent of large employer market policies will be illegal under the ACA (Forbes Oct 31). If this is true, Forbes reports as many as 93 million will loose their current coverage.

  2. I hadn't seen this argument before today, but an article on Salon says that the ACA grandfathered in individual policies that existed at the time the ACA was passed (with some requirements that could possibly be seen as overly stringent). The plans that people are losing now are plans that insurance companies offered after the ACA was passed, and are ineligible for the grandfathering. If that's true, that seems to change Obama's promise that "you can keep your plan" from an outrageous lie to an understandable PR attempt that's been taken out of context for the benefit of his opponents (an unfortunate but common occurrence in politics).