Obama announces “administrative fix” for Obamacare

President Barack Obama bowed to pressure from congressional Democrats worried about the impact that insurance cancellations could have in the 2014 mid-term election by announcing an “administrative fix” to the law.

“Already people who have plans that pre-date the Affordable Care Act can keep those plans if they haven’t changed. That was already in the law. That’s what’s called a grandfather clause that was included in the law,” President Obama told reporters at the White House.

“Today we’re going to extend that principle both to people whose plans have changed since the law too effect and to people who bought plans since the law took effect,” he said. “[I]nsurers can extend current plans that would otherwise be cancelled into 2014. And Americans whose plans have been cancelled can choose to re-enroll in the same kind of plan.”

The administrative fix, which will be carried out through regulatory fiat, will let insurers continue to offer plans already in effect that are slated to be canceled at the end of the year, if they so choose. It would also require insurers to let inform consumers about plans available on the federal and state exchanges.

“So if you’ve received one of these letters I’d encourage you to take a look at the marketplace,” said President Obama. “Even if the website isn’t working as smoothly as it should be for everybody yet, the plan comparison tool that lets you browse cost for new plans near you is working just fine.”

This fix is similar to the Keep Your Health Plan Act, legislation proposed by Rep. Fred Upton (R-MI). Speaker John Boehner (R-OH) said this morning that doesn’t believe an administrative fix is legal, telling reporters that the House will still vote on the vote on a statutory solution.

The Keep Your Health Plan Act would permit insurers to let consumers keep health plans in effect before January 1, 2013 through 2014. It wouldn’t force insurers to offer the plans, but it would give these plans “grandfathered status,” meaning that they wouldn’t have to compliant with Obamacare’s minimum mandates.

Another point worth noting is that President Obama knows that a number of House Democrats were planning break with him by voting with Republicans to pass the Keep Your Health Plan Act. The announcement of a fix preempts and undercuts tomorrow’s vote and, if it satisfies those in his party who planned to vote for the bill, could prevent stories of Democrats losing confidence in him and his administration.

The fix also comes with a big risk. It ostensibly undercuts Obamacare by allowing people who the administration needed to purchase coverage on the exchanges to keep their current health plans. This could reduce the size of the risk pools, possibly leaving insurers with less young and healthy people to balance the costs of the sick and unhealthy who purchase coverage.

This could cause insurance premiums to rise, making the promise of “affordable” plans even less of a possibility than it already was.

Responding to a question about the federal exchange website, Healthcare.gov, being ready by the administration’s self-impose November 30 deadline, President Obama said that it will work better than when it was launched, which he acknowledged was a “low bar.” He didn’t say it would be fully functional.

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