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November 13, 2013 3:41 PM Sorting Out Types of Insurance Cancellation Panic

By Ed Kilgore

Well, there’s no getting around it: the political environment surrounding implementation of the Affordable Care Act is in danger of going totally toxic. The panic among people with non-group health insurance policies getting cancellation notices is made immeasurably worse by their fear that the Obamacare exchanges won’t be functional by January (it’s a fear of having no insurance, not just of facing higher premiums or being forced to buy policies with more extensive coverage than they want). But any measure, ill-intentioned or not, to reassure these people will undoubtedly undermine the exchanges and risk the “adverse selection death spiral” that could make Obamacare truly fail.

Here’s how Ezra Klein put it today:

The biggest problem for Obamacare is that HealthCare.gov remains a mess. If HealthCare.gov was working smoothly, a lot of the people getting insurance cancellations would be learning that they’ll have better, cheaper insurance under the law. And at the same time, a lot of people who couldn’t get insurance at all would be learning that they were going to get affordable coverage. “The number of winners will vastly outweigh the number of losers but no one knows that yet because of this Web site,” says Gruber.

If you add in the people who won’t necessarily have cheaper or even better insurance but right now fear they won’t have any insurance at all, there’s a pretty big mood swing associated with assurances the exchanges will be up and running by January.

And if they can’t get those assurances, then there’s no question Congress will do something about it.

When I wrote this morning about the differences between the Upton and Landrieu bills aimed at addressing this problem, I certainly didn’t mean to minimize the disruptive effect of the latter. Yes, by giving insurers the choice of who to continue to insure, the Upton bill invites some truly impressive cherry-picking while giving consumers no real assurances whatsoever. But the kind of consumers who would choose to keep their old insurance after January 1 are likely to be to a considerable extent the healthier and wealthier people the insurers want; that’s why they’re insured right now and reasonably happy with their policies.

What’s really called for (other than an end to unreasoning panic and misinformation) is a short-term fix that continues existing polices not indefinitely or even for a year or two, but until such time as replacement insurance is actually available on the exchanges, along with the subsidies designed to help pay for it. I hope supporters of Obamacare in Congress can come up with something like that asap, before everything unravels politically and substantively.

Ed Kilgore is a contributing writer to the Washington Monthly. He is managing editor for The Democratic Strategist and a senior fellow at the Progressive Policy Institute. Find him on Twitter: @ed_kilgore.

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