The Obama administration made it official Wednesday: The number of people who signed up for health coverage through new state and federal insurance exchanges last month was dwarfed by the number whose policies have been canceled as a result of the 2010 Affordable Care Act. The figures were disappointing but not surprising, considering how badly the federally run exchanges' website, HealthCare.gov, has malfunctioned. Yet as tempting as it may be for lawmakers to delay or reverse some of the changes set in motion by the law, they should give the administration more time to get HealthCare.gov back on track and consumers more time to learn about their options.
According to the Department of Health and Human Services, slightly more than 106,000 people obtained private insurance coverage through the exchanges between Oct. 1 and Nov. 2. The federally run exchanges, which serve 36 states, accounted for only a quarter of that number (which is arguably inflated, given that it includes people who have not yet paid any premiums). The administration had hoped that as many as 500,000 would enroll in the first month.
Meanwhile, analysts expect millions to have their policies canceled because the coverage doesn't meet the standards set in the 2010 law. The exact number is unclear, but four insurers in just two states — California and Florida — have told close to 700,000 customers their policies were being eliminated.
To some critics, the cancellations and the botched launch of HealthCare.gov are just the latest sign that Obamacare is misguided and unworkable. It's certainly true that the closer we've gotten to Jan. 1, when several of the biggest changes made by the law were scheduled to take effect, the more problems the administration, insurers and the public have encountered. The Treasury Department has postponed for one year the mandate that large employers provide health coverage to full-time workers. Several large insurers have pulled out of the market for individual policies in certain states, including California. And the new insurance exchanges for small businesses have been delayed in some states and the options they provide have been narrowed.
The cancellation notices that many individual policyholders are receiving represent something different: They are the product of a deliberate choice by lawmakers and the administration to set a higher standard for insurance plans. The goal was not just to eliminate plans with dangerously thin coverage, as President Obama has emphasized in recent weeks, but also to spread risks and costs more broadly across the population. That meant ending plans that effectively segregated younger, healthier people from those with potentially expensive healthcare needs — for example, by excluding coverage for maternity care or schizophrenia.
Such changes invariably produce winners and losers in the short term in the hope of better results for everyone in the long term. News accounts have been filled lately with laments from healthy people whose low-cost policies have been canceled; they complain the government is forcing them to subsidize older, sicker Americans. But they'll almost certainly be on the other side of the equation at some point, because there's no guarantee against illness and injury. The point of the law's insurance reforms was to make the market for individual insurance policies behave more like the one for large groups, in which the broad sharing of risks helps make premiums more affordable and no one loses coverage because they were unfortunate enough to get sick.
The same explanation applies to the people who've lost coverage and are having trouble finding a new plan that includes the same doctors. The state exchanges pressure insurers to compete on costs, and one way insurers have tried to hold down premiums is by excluding from their networks hospitals and physicians that charge more to deliver the same level of care. These "narrow" networks will help slow the growth of healthcare costs by promoting more efficient care that delivers better results for the money, which is a good thing. In the short term, however, some patients will struggle to keep seeing the doctors they know and trust.
These developments were easy to see coming, yet they took much of the public by surprise because Obama had promised, repeatedly, that the law wouldn't force anyone to change insurance plans or doctors. He's now reaping the fruits of that broken promise: plummeting approval ratings and increasing signs of a revolt in Congress. In recent days, Democrats (including former President Clinton) have joined Republican lawmakers in proposing that anyone who wants to keep his or her coverage be allowed to do so, effectively postponing the new coverage standards.
Such a step could wreak havoc for insurers and regulators forced to revive policies that had been abandoned. More important, it would likely keep younger, healthier people out of the new pool the law is trying to create in the individual market, causing premiums there to rise sharply. Rather than abandoning one of the fundamental principles behind the 2010 law, Washington should look for more ways to help those with canceled policies sign up for a new plan by Jan. 1. As bad as things may seem, lawmakers shouldn't lose sight of what the law has accomplished already, or what it's trying to achieve.