With his announcement on Nov. 14 of a plan to offer a temporary reprieve to people facing cancellation of their health-care policies, President Barack Obama may have created his own version of the much-maligned, often yearly, Medicare “doc fix”.
The doc fix, a recurring effort by Congress to override statutory formulas that limit the growth in Medicare payments to doctors, often sparks political theatrics as lawmakers work to assuage the concerns of physician groups and Medicare recipients. Many members of Congress want to repeal and replace the underlying program — the sustainable growth rate formula for reimbursing physicians — but agreement has proved elusive, in part because of deficit concerns and the high cost of repealing the formula.
The president may have set himself up for another situation similar to the doc fix with his proposal to administratively tweak the health law. Obama said he will temporarily allow health insurance companies and state insurance commissioners to continue offering insurance plans “that would otherwise be terminated or canceled” for failing to meet the requirements of the Affordable Care Act (ACA).
Has President Obama created his own version of the annual “doc fix” by continuing insurance plans that would have otherwise been canceled?
While this change will help some health-insurance consumers, it is a serious complication for health insurers who in a few weeks will have to readjust their plans. In the 24 hours since the announcement, the initial reaction from insurers and state health insurance commissioners has been mixed. Some insurers have already voiced concerns that any short-term fix will deprive their ACA-compliant exchange plans of the healthier customers needed to keep rates down for everyone, including older, sicker customers.
Fast-forward 11 months to late October, 2014, with the midterm elections imminent and the president’s “transitional policy” about to expire. Will Democrats want the issue of whether people can “keep their health plan if they like it” raising its ugly head again, just as voters are about to cast their ballots?
The sentiment of voters on the health law probably will be a key factor in next year’s elections, and having the one-year extension about to expire could prove damaging to the law’s supporters. The administration may feel enormous pressure from vulnerable Democrats to issue another administrative extension — even if it is unwelcome to insurers and state officials.
The doc fix provides a relevant example of how elected officials will maneuver to avoid tough choices that could cost them their jobs, instead preferring small steps that do nothing to address an underlying problem.
Until now, efforts to repeal and replace Obama’s health law have come almost exclusively from Republicans. That political calculus may be changing as events unfold and bad news mounts in the rollout of the health law.
The fate of the law may depend on the response of consumers, insurers and state health commissioners to the new transitional policy. If only a small number of people choose (or are allowed to choose based on the actions of their insurers and state officials) to retain their existing or previously canceled coverage, the issue may fade quickly.
But if a significant number of people opt to continue their existing coverage, the chances of a “grandfather fix” next fall (and beyond) increase dramatically. And if that happens, the prospects for continued fixes in years ahead, as with the doc fix, also grow. Too many of these fixes could undermine the actuarial balance of the new insurance policies created by the Affordable Care Act, and with it the law itself.
Matt Barry is a senior health-care analyst with Bloomberg Government, where this post originally appeared.