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November 13, 2013 11:48 AM Who Decides If You Can “Keep Your Insurance Plan”?

By Ed Kilgore

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.

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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