“If you like your plan, you can keep it” and other half truths

If you like your plan and you like your doctor, you won’t have to do a thing. You keep your plan. You keep your doctor.

President Barack Obama, press conference, June 23, 2009

It’s one of those statements that will live on political infamy — like when George H.W. Bush said, “Read my lips. No new taxes” during his 1988 campaign and then later decided to raise taxes. And, in Obama’s case, he kept repeating it or at least a version of it as late as 2012.

So did former Health and Human Services secretary Kathleen Sebelius.

The bottom line is that under the Affordable Care Act, if you like your doctor and plan, you can keep them.

HHS Secretary Kathleen Sebelius, June 14, 2010

Obviously there are millions of people who were unable to keep their old plans, and some people have had to switch doctors. And conservative opponents of the Patient Protection and Affordable Care Act of 2010 (a.k.a. PPACA or Obamacare) have gleefully pounced.

Millions of people have lost their health insurance. Millions of people can’t see their own doctors.

Americans for Prosperity ad

The Administration is recognizing the grim reality that more Americans have lost health insurance than gained it under Obamacare.

Senator Marco Rubio (R-FL), press release, December 19, 2013

Cutting through the rhetoric — what really happened

All of the quotes above are misleading and confuse the issues at hand. (They are, after all, from politicians and political groups, so no one should be surprised at the sleight of hand.) They are all half truths. So I will try to parse them out and get to the whole truth.

The PPACA includes a provision for grandfathering plans that were already in place as of the date the law was signed (March 23, 2010).

SEC. 1251. PRESERVATION <<NOTE: 42 USC 18011.>> OF RIGHT TO MAINTAIN EXISTING COVERAGE.

(a) No Changes to Existing Coverage.–
(1) In general.–Nothing in this Act (or an amendment made by this Act) shall be construed to require that an individual terminate coverage under a group health plan or health insurance coverage in which such individual was enrolled on the date of enactment of this Act.

Patient Protection and Affordable Care Act of 2010 (emphasis added)

Based on that, it certainly sounds like what Obama and Sebelius said was completely true. So, with this very clear provision in place, how did so many people end up “losing health insurance?”

Insurers misleading the public

Private health insurance companies have been running afoul of state insurance commissioners for how they have communicated to their subscribers about changes related to the Affordable Care Act. Health insurer Humana was fined by the Kentucky Department of Insurance in 2013 for sending out misleading policy amendment letters to 6,543 subscribers. The penalty was $65,430 — $10 per subscriber who received the misleading letter.

While nothing in the law requires insurers to discontinue plans that were in place before the law was enacted, there’s also nothing in the law that prohibits them from discontinuing these plans. And private insurers were discontinuing plans long before Obamacare.

Even the conservative Heritage Foundation acknowledges that is what happened in this case.

But since the enactment of the Health Insurance Portability and Accountability Act of 1996 (HIPAA), insurers have been broadly prohibited from canceling or refusing to renew coverage. One of the few exceptions to that prohibition is if an insurer discontinues a particular plan or type of coverage. In such cases, the insurer must provide the affected individuals the option to enroll in any other applicable coverage that the insurer offers.

That is largely what happened with the 4.7 million plan cancellations that were reported at the end of 2013. The insurers were discontinuing their pre-Obamacare plans and offering policyholders replacement coverage that complied with Obamacare’s wide variety of new mandates and regulations.

The Heritage Foundation, “‘Junk’ Health Plans and Other Obamacare Insurance Myths,” February 11, 2014 (emphasis added)

This was no surprise

In June 2010, Obama administration officials from the Department of Health and Human Services predicted that exactly this would happen while writing the interim regulations for grandfathered plans.

Using these turnover estimates, a reasonable range for the percentage of individual policies that would terminate, and therefore relinquish their grandfather status, is 40 percent to 67 percent. These estimates assume that the policies that terminate are replaced by new individual policies, and that these new policies are not, by definition, grandfathered.

U.S. Department of Health and Human Services. “45 CFR Part 147: Interim Final Rules for Group Health Plans and Health Insurance Coverage Relating to Status as a Grandfathered Health Plan Under the Patient Protection and Affordable Care Act.” Federal Register, Vol. 75 No. 116, June 17, 2010.

So, Obama and Sebelius should have known better than to over-promise, especially in a situation where the thing that they promised would not happen would happen in such a clear and obvious way. Experts were even predicting this scenario long before the interim rules were written.

In October 2013, the White House was forced to clarify — saying what they should have said all along.

Nothing in the Affordable Care Act forces people out of their health plans: The law allows plans that covered people at the time the law was enacted to continue to offer that same coverage to the same enrollees – nothing has changed and that coverage can continue into 2014.

White House spokesperson Jessica Santillo, cited by USA Today, October 29, 2013

Yet for the people whose plans were canceled, Santillo’s more accurate explanation is a distinction without a difference.

Americans losing their doctors

A contract dispute close to home

Here in the Greater Indianapolis area where I live, we are home to Anthem Blue Cross and Blue Shield, one of the nation’s largest health plans. (I was employed there from 2008 to 2012.) But we also have some major hospital systems. The two largest are Indiana University Health and St. Vincent Health.

When Anthem began offering its health plans for Indiana in the federal exchange on HealthCare.gov, the company knew it was going to be competing not only with the only other exchange player (a non-profit called MDWise that is partly owned by Indiana University Health) but also with the individual mandate penalty for not buying insurance at all. So, in order to keep premiums on the exchange plans to a minimum, it offered low reimbursement rates to physicians and hospital systems participating in the exchange plans. Although the third- and fourth-largest hospital systems in the area (Community Health Network and Franciscan St. Francis Health Network) accepted the lower reimbursement rates, Indiana University Health and St. Vincent Health balked at the low reimbursement rates, leaving them out of network for anyone choosing an Anthem plan on the exchange. The MDWise plans on the exchange were priced comparably but included Indiana University Health and St. Vincent Health.

Perhaps more disconcerting to many Americans than having their plans discontinued was not always being able to keep their in-network physicians. But can this really be blamed on Obamacare?

Not in the slightest. There is nothing in the law that explicitly addressed this one way or another. The PPACA did not require people to change physicians, but it also did not explicitly require physicians to participate in any particular health plan. And contract disputes between physicians, hospitals, and health plans have been going on forever.

By 2000, many providers were pushing plans for large payment rate increases and more favorable contract terms, such as reimbursement based on a percentage of charges, to recover ground previously lost to health plans. Providers also experimented with more aggressive bargaining tactics, such as contract terminations or threatened terminations, to seek new contracts. Negotiations in a number of cases degenerated into bitter public disputes. Providers’ negotiating success emboldened other providers to push back and contract showdowns became commonplace across the country during 2000-01.

White, et al. “Getting Along or Going Along? Health Plan-Provider Contract Showdowns Subside.” Center for Studying Health System Change, Issue Brief No. 74, January 2004 (emphasis added).

The other side of the coin

Up until this point, I’ve been very critical of the Obama administration’s messaging for being imprecise or perhaps even deliberately misleading. But the opposition was also misleading.

When it came to keeping a current plan or a current doctor, Obama promised something that the law could not deliver. But it would also be misleading to blame the PPACA for a problem that was going on before it was passed and would have continued to happen whether it was passed or not.

When Sen. Rubio said “more Americans have lost health insurance than gained it under Obamacare,” he was making a doubly misleading statement.

First of all, the timing of his statement (December 19, 2013) was a premature assessment of the enrollment period that was still going until March 31, 2014. So it would not be surprising by that point in time that few people had enrolled…especially given the early technical problems with HealthCare.gov. By the time the 2014 enrollment deadline arrived, 7.1 million people had enrolled in private health plans on the exchanges — and, the last time I checked, that’s more than 4.7 million. And that doesn’t include the people who became newly eligible for Medicaid in the states that opted to expand it.

Secondly, those who had their plans cancelled did not lose their health insurance in the sense that they became uninsured. Their existing plans were discontinued, and they were left with many options to choose a new plan in order to remain insured. If a shoe manufacturer stops making your favorite brand of shoes, does that mean that you’ve become shoeless? No, you can just buy a different brand of shoes. That’s how free markets work. In fact, it’s a fairly safe bet that many of the 4.7 million who had their plans discontinued became part of the 7.1 million new enrollees in exchange plans.

If the PPACA had been written in a more explicit way that forced insurers to maintain plans that were in place before March 23, 2010 or forced physicians to participate in plans in which they did not find the contract terms acceptable, then the Republicans could have rightly accused Congress of overreaching and micromanaging these contractual relationships. So there was no realistic solution available to this problem. A single-payer system might have allowed nearly everyone to keep their current doctors (who’s going to go out of network when there’s only one payer?), but it also would have terminated EVERYONE’S health insurance plans. But any policy that addresses the cost drivers in the health care system and reforms the insurance market is bound to be at least a little disruptive. And that’s not a bad thing because some disruption was needed. The Obama administration’s mistake was to over-promise.

What have we learned?

Health policy is complicated, and all politicians have to speak in sound bites to explain themselves to the public by way of the news media. Also, what’s not written into a law may just be as important as what is written.

Politicians of all stripes will always be motivated to spin what a particular bill or law actually does. Those who support it will over-promise its benefits, and those who oppose it will exaggerate its flaws. That goes for any kind of legislation, not just the PPACA.

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