Who Decides If You Can “Keep Your Insurance Plan”?

To read many media reports right now, you’d think the big dynamic was a trickle of Democrats signing onto Republican “Keep Your Insurance Plan” bills like the Upton legislation steaming towards a House vote. But lost in a lot of the yelling is a fundamental difference between House Republican and Senate Democratic proposals to forestall cancellation of individual health insurance policies that aren’t compliant with the Affordable Care Act.

The Upton bill gives insurance companies the option of continuing non-compliant policies. They would almost certainly react by cherry-picking the most profitable existing policyholders–i.e., those with the best health records. And that’s why it would not only provide limited help to the people getting all those cancellation notices: it would also provide the maximum disruption of the risk pools needed to make the Obamacare exchanges function, as TPM’s Sahil Kapur points out:

Under Upton’s bill, if insurers opted to do so, some existing policies outside the insurance exchanges would continue in next year. In short, some people would end up keeping their existing plans and waiting a while longer before buying on the exchanges. That could arguably be good news for the young, affluent individuals who stand to pay more under Obamacare. But it would disrupt the fragile actuarial models of insurers, who have based their range of policy options and premiums on the assumption that those individuals would be participating in the new marketplaces.

The Landrieu legislation that is now being cosponsored by six Senate Democrats–including, to everyone’s surprise, progressive icon Jeff Merkley of OR–requires that insurance companies continue to offer existing individual policies; the policyholders decide if they want to keep them in force. It operates very much like the well-known COBRA system for people losing employer-sponsored insurance plans, who can, if they pay the entire premium, keep them in force for a period of time.

The Landrieu legislation could threaten the Obamacare individual policy risk pools as well, but does not give insurers cherry-picking opportunities, and makes policyholders, not insurance companies, the decision-making authorities. Those are pretty large differences that need to be reported as such.

Support Nonprofit Journalism

If you enjoyed this article, consider making a donation to help us produce more like it. The Washington Monthly was founded in 1969 to tell the stories of how government really works—and how to make it work better. Fifty years later, the need for incisive analysis and new, progressive policy ideas is clearer than ever. As a nonprofit, we rely on support from readers like you.

Yes, I’ll make a donation

Ed Kilgore

Ed Kilgore is a political columnist for New York and managing editor at the Democratic Strategist website. He was a contributing writer at the Washington Monthly from January 2012 until November 2015, and was the principal contributor to the Political Animal blog.