5 Big Questions About President Obama’s Health Law Tweak

Earlier today, President Obama
announced a plan to tweak Obamacare by allowing state insurance
commissioners to let health insurers continue to offer plans that
do not pass muster under Obamacare’s health insurance regulations.
The announcement came following mounting public outrage about the
millions of individual market health plans being terminated as a
result of the health law’s regulations—in direct contradiction to
the president’s repeated promise that people who liked their health
plans could keep them. Congressional Democrats had been circling
around plans to address plan cancellations all week; the
announcement was in large part a response to growing pressure from
within the president’s own party to respond.

But the president’s plan doesn’t resolve the mess. Indeed, it
may have just compounded the law’s existing political and policy
troubles. Big questions remain about how it will work, and how
other parties will respond.

1. Will congressional Democrats be satisfied?
The president’s tweak was designed to help congressional Democrats
under fire for supporting a law that caused people to lose their
health plans despite many absolute promises to the contrary. But
while some Democrats appear to be
happy with the change, which allows them to blame insurers for
cancelling plans, it’s not clear that this will placate all of
them. Sen. Mary Landrieu (D-La.), who sponsored a bill to require
insurers to continue existing plans,
said in a press conference this afternoon that the president’s
proposal was a “step in the right direction,” but also suggested
that a further legislative fix might be needed.

2. How will the insurance industry react? This
is potentially a big deal. Right now, the insurance industry is
working closely with the administration, and despite frustrations
with the rocky rollout of the exchanges, has largely avoided direct
confrontation with the administration. Not so here. The head of
America’s Health Insurance Plans (AHIP), issued a statement warning
that the president’s plan could upend the insurance market.
“Changing the rules after health plans have already met the
requirements of the law,”
said AHIP CEO Karen Iganagni, “could destabilize the market and
result in higher premiums for consumers.” That, in turn, could have
political consequences, as next year’s insurance rates will be
revealed in the months leading up to the 2014 election.

3. How will the new policy be implemented? A
letter sent to state insurance commissioners says that the Obama
administration will allow health insurers to “choose to continue
coverage that would otherwise be terminated or cancelled” next year
under a “transitional” policy. But that still depends on the say-so
of state insurance regulators, who are merely “encouraged to adopt
the same transitional policy” regarding specific types of
terminated coverage. Yet insurance regulators aren’t sure how to do
that. “It is unclear how, as a practical matter, the changes
proposed today… can be put into effect,” said the head of an
insurance commissioner’s group, according
to a Wall Street Journal health reporter. So there’s a
significant operational question about how—and whether—this would
work.

4. Will state insurance commissioners actually pursue
the Obama administration’s encouraged change? Maybe not.

At least one has already said no thanks: Washington state
Insurance Commissioner Mike Kreidler, one of
the most liberal insurance regulators in the nation, has
already indicated that his state won’t participate, citing “serious
concerns” about implementation and insurance market stability.
Washington state, notably, has had direct experience with insurance
market meltdowns in the past: In the 1990s, it passed a slew of
health insurance market reforms that eventually
resulted in the large majority of individual market insurance
carriers exiting the market.

5. Is it legal? Right now the administration is
citing “transitional” authority to implement the change. But it’s
all pretty vague. The idea, as with the delay of the employer
mandate, is that transitional authority gives the administration
the power to do what is necessary in order to put the law in place.
But the power to take the steps necessary to implement a law
doesn’t apply here. What the administration is doing is using its
authority to not implement a part of the law.