No easy fixes for Obamacare cancellation issue

Aamer Madhani | USA TODAY

WASHINGTON — President Obama has vowed to do something to help people whose insurance policies have been canceled because they don't meet the new minimum benefit requirements set by the Affordable Care Act.

But health care and insurance analysts say Obama faces a mountain of complications in his hunt for an administrative fix for the problem —something the president has suggested he will seek to allay the concerns of some of the hundreds of thousands of Americans who have received cancellation notices in recent weeks.

"I just can't see an administrative fix that doesn't make things worse," said Timothy Jost, an expert on health care law at the Washington and Lee University law school in Lexington, Va.

The situation was further complicated for Obama when former president Bill Clinton weighed in during an interview Tuesday with the website OZY.com. Clinton said people should be allowed to keep the insurance they have — even if it means Obama has to make changes to the law.

"I personally believe, even if it takes a change in the law, that the president should honor the commitment the federal government made to those people and let them keep what they've got," Clinton said.

White House press secretary Jay Carney downplayed Clinton's remarks during his daily press briefing Tuesday, arguing the 42nd president's comments are in line with Obama's statement last week that he has tasked his staff with finding a solution to the problem.

Clinton has been a strong supporter of Obama's signature health care legislation. The comments come after Obama said Thursday that he is sorry that some Americans are losing their current health insurance plans as a result of the ACA, despite his assurances that Americans could keep their insurance plans if they like them.

House Republicans seized on Clinton's comment and made the case that Obama should get behind legislation that would grandfather all plans as of January 1st, 2013, not March 23, 2010.

The House is expected to consider the bill later this week, and similar bipartisan legislation has been floated in the Senate codifying Obama's promise that if consumers had insurance they liked, they could keep it after the ACA became the law of the land.

"These comments signify a growing recognition that Americans were misled when they were promised that they could keep their coverage under President Obama's health care law," said House Speaker John Boehner, R-Ohio.

Carney declined to say if Obama's considering backing any of the legislation in Congress. A White House official, who was not authorized to comment on the deliberations because they have not been made public, said the president was particularly concerned about helping those receiving cancellation notices who will have to pay higher rates but also earn too much to be eligible for a tax subsidy.

But Jost said such legislation could potentially create a situation where sick people purchase health insurance policies that comply with the ACA, while healthy people who are on the individual insurance market can insist on staying on policies that are cheaper but don't comply with the law.

"That's just not a tenable insurance risk pool situation," Jost said. "You would essentially end up with one low-risk pool and one high-risk group."

The ACA established a minimum bar requiring that insurers, among other things, offer preventive care without co-payments, provide maternity care and not refuse applicants with pre-existing conditions.

The ACA "grandfathered" insurance plans that existed in March 2010 prior to the Affordable Care Act becoming law, allowing those insurers to keep selling coverage even if their less-robust plans didn't meet the health law's requirements as long as the policy was not significantly changed.

But in an ever-changing market — particularly the individual insurance market, where turnover is historically high — millions have seen major changes to their policies and have received cancellation notices from their insurers. The Department of Health and Human Services expected as much in June 2010, when it released guidance projecting as many as 67% of individual market policies would lose grandfathered status by the following year.

Robert Laszewski, president of Health Policy and Strategy Associates, said that one path Obama could take would be to rewrite regulations for those getting cancellations that date back prior to March 2010 – effectively broadening the number of Americans grandfathered.

But Laszewski said the option would only help a small sliver of those affected and would create an avalanche of problems for insurers trying to comply with the law. "If it took the insurance industry months — three, four, five, six months in that range— to get the cancellation letters prepared and sent out, how are you going to reverse it in six weeks?" he said.

Jost said the prospect of Obama broadening who receives tax subsidies seems unlikely. "You can't just appropriate money," he said. "That's just nonsense."