Cancellation politics
by Susan Estrich
November 14, 2013 01:13 AM | 857 views | 2 2 comments | 36 36 recommendations | email to a friend | print
President Clinton’s comment that he personally believes that “even if it takes a change to the law, the president should honor the commitment the federal government made to those people and let them keep what they got” has, predictably, set off a firestorm that all the stories of individuals with canceled plans did not. Now, White House press secretary Jay Carney is telling reporters the president agrees. According to Carney, “The president has tasked his team with looking at a range of options, as he said, to make sure that nobody is put in a position where their plans have been canceled and they can’t afford a better plan, even though they’d like to have a better plan.”

Really?

Look, I’ve done my best to support the poorly nicknamed “Obamacare.” Funny, we don’t have Roosevelt Security or Johnson Care, but that’s another column.

These cancellations were 100 percent predictable. Honestly, they were more than predictable; they were required.

Absent Obamacare, there is no guarantee that you get to keep your insurance. Individual policies, the kind that are getting canceled, tend to be one-year deals. They are subject to cancellation. Period. So that’s not the president’s fault, and he never should have suggested that Obamacare would stop the practice.

But Obamacare doesn’t just leave the status quo intact. It establishes minimum requirements for health insurance policies, expanding the coverage people get (whether they want it or not). Many of the canceled policies were cheaper than the new ones because they covered less — less than the law now requires and less than any insurer would provide without charging more.

So, if you had one of those cheap policies that only covered you in the event of a catastrophe, with high deductibles, no preventive care, no pregnancy coverage, no prescription drugs, if you had a cheap policy that provided minimal benefits and you were happy with it, then guess what? You were going to lose your policy. No rocket science required.

Of course, the answer is: But now you will get a better policy, and you might even get a subsidy to help you pay for it. And that is a very good thing — if you get sick. If you don’t get sick, it just means you pay more.

That’s why people are angry. They don’t plan to get sick, and they don’t want to pay more.

Again, guess what? Many of those people who don’t plan to get sick are actually right. That’s because they’re young and healthy right now. And the reason they need to sign up for policies that are more expensive than they want (and likely need) is precisely because they aren’t going to get sick and require expensive health care. But some of us (older and sicker) are, and so we need them to subsidize us.

That is how the system works. People who don’t get in accidents subsidize people who do. People who don’t get sick subsidize people who do. If you get rid of the exclusions for pre-existing conditions (which is certainly a very good thing for anyone with pre-existing conditions), then you need a whole lot of healthy people to subsidize the sick people who otherwise would either not get coverage or have to pay a large fortune for it.

I’m not saying President Obama was wrong to insist that everyone get better coverage. Actually, I think it’s a good idea. One way or another, all of us end up paying for the people who didn’t plan to get sick but did. Prevention is a good thing.

The problem is that the president had to know that when he told people they could keep their policies, he wasn’t including the people who had cheap plans that didn’t cover as much as the new law requires.

He had to know this. So why did he say otherwise? Why did it take so long for him to own up?

This is a mess of the administration’s own making, and for all the talk about fixes, it’s not the least bit clear that it can be fixed.

Susan Estrich is a law professor in Southern California. She managed the presidential campaign of Democrat Michael Dukakis in 1988.
Comments
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Eugene Williams
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November 17, 2013
Ms. Estrich writes: "Individual policies, the kind that are getting canceled, tend to be one-year deals. They are subject to cancellation. Period." What a bunch of hot air! To date approximately 5 million Americans have lost their existing insurance policies - there has never ever before been this large scale turnover of Americans losing their health insurance - this massive tsunami of cancellations is solely attributable directly to Obamacare. What dishonesty to try to mislead the reader to believe it is a natural occurrence that 5 million Americans have been kicked off their existing plans! Shame on you Ms. Estrich!
Mike Woodliff
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November 15, 2013
What this broad knows about actuarial science and the insurance industry could be written on the head of a pin with room to spare. Unfortunately, she's not a local writer and will never see the criticism of her writing. It's best to drop her from the paper.
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