Yesterday's confirmation that the Obama administration will extend a previous administrative tweak allowing individuals with non-compliant health plans to keep their current coverage through 2016 reveals two things about the White House and its approach to the health law.
The first is that President Obama is willing to deviate from the statute of the legislation to the extent that he sees fit, regardless of his legal authority to do so. The second is that the politics and policy considerations surrounding the law are at odds—and that right now, short-term political considerations are winning.
The legal authority for the delay is murky at best. When President Obama announced the first fix back in November, the administration was vague about the basis of its power to alter the provision. This time around, administration officials are describing the move as a "transitional policy." But what it boils down to is that the executive branch is simply declining to enforce part of the law, because it's inconvenient for them to do so.
This makes 20 alterations to the health law through some sort of administrative action, according to a count by the Galen Institute, many without obvious legal authority. That the administration has gone forth with so many dubious tweaks suggests that they do not feel bound by such considerations, or, at the very least, that they are more worried about the law's failures than about the legal niceties.
The legal haziness of the latest fix raises some thorny issues for insurers—among them, that they might be liable to be sued by someone who stayed on a non-compliant plan. If someone stays on their current plan, files a claim for coverage that is not covered by that plan but is mandated under Obamacare, then what happens? As Case Western Reserve law professor Jonathan Adler told National Journal's Sam Baker when this question was raised last year, the law is still the law. The administration may be declining to enforce the provision. But what would the courts say?
Aside from the legal liability, insurers have other concerns. When the initial tweak was announced, Karen Ignagni, the head of the biggest insurer trade group, said that the change could "destabilize the market and result in higher premiums for consumers." If people are allowed to stay on their old plans, then they won't be buying into the new coverage insurers are selling through the exchanges. And since the people most likely to stay on the old plans are healthier and cheaper, that leaves the exchanges with a sicker, more expensive population than expected—and raises the likelihood that premiums will rise as a result. Already, insurer has reported that the composition of the exchanges is more adverse than expected, and cited last November's tweak as a reason why.
The latest tweak further undermines the policy foundation of the law. So why did he go through with it? Because the immediate political problems were even greater.
When the Obama administration announced the tweak, it took the unusual step of noting a group of legislators it had consulted with in determining the change. Oddly enough, the group consisted almost entirely of Democrats in tight races taking fire for their support of the unpopular health law. Asked whether the change was made in response to political concerns, a senior administration official told reporters that he could "understand why some folks could look at it" that way, according to The Hill, but then insisted that there were no political considerations involved. None whatsoever.
The timeline tells another story. The first change was announced in response the outcry that resulted when the public found out that President Obama had repeatedly misled about the effects of his health law. If you like your plan, you can keep your plan, he promised over and over. Despite his promise, millions of people found out that they could not. So Obama announced that in some circumstances they could, at least for another year. But that merely pushed off the wave of cancellations until an election year—a big problem, especially with so many Democrats already vulnerable because of their support for Obamacare. The newest change extends the transition period beyond the next presidential election.
In other words, Obama chose to postpone the law's political consequences at the expense of its policy design. The result will be plans that are sicker, smaller, and likely more expensive for years. Additional risk corridor funding included in the change may mitigate some of the cost, but the fundamental problem remains: the law is politically problematic for Democrats, but solving its political difficulties requires exacerbating its policy problems. Each time Obama chooses to fix the law this way, he only makes it worse.