Adrianna McIntyre agrees that the optics and legality of allowing consumers to extend old health care policies is dodgy. However, she also thinks that its practical impact is pretty slight:
Senior officials reported that some 1.5 million people might be eligible for the latest administrative tweak to the Affordable Care Act, an extension of the “like it/keep it” fix that would permit individuals to maintain plans that don’t meet new coverage requirements through October 2017. The move has already been roundly criticized, but I’m inclined to believe the substantive policy impact will be small.
The thing about the individual market is that it’s volatile. The Kaiser Family Foundation found that about a third of those enrolled in nongroup plans exit within six months. Fewer than half remain after two years. This coverage is transitory for many, a bridge between employer-sponsored plans or other forms of insurance. Since the “fix” only applies to people maintaining these plans, the population eligible for the extension will dwindle over time.
There’s a fear that individuals who cling to old, less generous plans are healthier than those who already jumped to the exchanges. That might be true, but it also probably doesn’t matter much. CBO estimates that the exchange population will swell to 22 million by 2016 as people become more aware of coverage options and the penalty becomes more severe. The specter of adverse selection fades pretty fast when you set 1.5 million—a number that will erode over the life of the administrative fix—in that context.
Actually, according to research published in Health Affairs, only 17 percent of those with individual coverage keep it for more than 24 months. In other words, by the end of 2015, the number of people affected by this extension will be down to about 250,000 at most. That’s not enough to affect the overall operation of Obamacare very much, and it’s also a small enough number that pushback will be pretty slight by the time those remaining few folks are forced to switch to different plans. This is obviously what makes it politically attractive to the Obama administration.
Bottom line: it’s legally a little dodgy but practically of little consequence. Probably not something to get too worked up about.