Another Obamacare Delay

President Obama, Kathleen Sebelius /AP

The White House announced another Obamacare delay late Wednesday, a move that will let health insurance companies continue to offer plans that do not comply with the standards set by the Affordable Care Act.

The Wall Street Journal reports:

The Obama administration further postponed a provision of the Affordable Care Act on Wednesday, the latest in a series of changes that have delayed or pared back the health overhaul so much that many of its ambitious goals won't be achieved during its first years in full effect. […]

The latest delay came Wednesday, when federal officials said insurance companies could continue selling plans that don't meet the law's more rigorous standards until 2016 in some instances. It was the second time the administration delayed that requirement after the law's tougher standards prompted insurers to cancel millions of people's health plans last year. The latest delay averts another raft of cancellations before this year's midterm elections.

You’ll remember the outrage that came last fall when millions of people received notifications that their plans would be cancelled. In response, the White House issued a series of delays to limit the political fallout over the president’s false promise: "If you like your plan, you can keep your plan."

Congress has tried to do its part as well, but has for the most part been thwarted by Senate Majority Leader Harry Reid (D., Nev.). Senator Mary Landrieu (D., La.), who is up for reelection in 2014, introduced a proposal that would have compelled insurance companies to continue offering cancelled plans for an additional year. Reid made sure it didn’t come to the floor for a vote.

In the House, Rep. Fred Upton (R., Mich.) proposed the "Keep Your Health Plan Act of 2013." It would have offered insurers the option of extending noncompliant plans for one year, and additionally allow people who did not have those plans in 2010 to buy them. Upton’s bill passed with bipartisan support, but died in the Senate.

Then there was President Obama’s proposal, the first of three, which made it optional for insurers to continue offering these plans, if they had them before 2010—similar to Landrieu’s proposal. Obama’s executive order didn’t need congressional approval, so that’s what went into effect. Wednesday’s delay will give insurers until 2016, in some cases, before they have to comply with the law as written.

Previous delays have been met with mixed results. For various reasons, some states and insurance companies said, "No, we can’t do this," and refused to re-offer cancelled plans. "Insurance regulators in at least 23 states… allowed renewals to go through," but states from California to Washington to Massachusetts did not.

One concern is that delays could cause "market disruption." Insurers had already set their premium levels for 2014, and were anticipating that the people with cancelled plans would move into the exchanges.

Many of the people who had these low-cost plans were young and healthy. Insurers were counting on them to be in the risk pool and paying for older, sicker people who cost more to insure. If they decided to keep their old plans – which most probably would – then insurers would probably not have enough money coming into the pool to cover the cost of the services being used.

The latest extension is a little different because insurers have not yet set premiums for 2015 or beyond. They might be able to account for the potential cost change. Depending on how many plans are still offered, it could mean insurers increase their premiums for future years in order to accommodate for a risk pool without these younger, healthier individuals.

Some Democrats argued that people shouldn’t be allowed to keep their cancelled plans because they were "lousy" or "junk" plans. It sounded harsh, but the law really was supposed to get rid of those plans – why else would they have put essential benefits in the law? The issue was that a lot of lawmakers promised it wouldn’t happen. All of these reasons could come into play again, and result in state insurers rejecting this new extension.

White House sources are reportedly saying that it won’t affect very many people. Percentage wise, that’s probably true, but one thing is for sure: This latest delay is a blatant political move, and it’s not nearly as simple as it seems. Even Obamacare architect Zeke Emmanuel acknowledges that this is a decision based on politics.

The administration is hoping to give Democrats a reprieve from a politically volatile issue in an election year. Now if plans are cancelled, the administration can put their hands up and say, "That wasn’t us! The insurance companies did it!"

The question is: will that work? I highly doubt it. They tried that last time and it did not appear to soften the public’s disdain.