THE BLOG
11/07/2013 04:33 pm ET Updated Jan 23, 2014

Obama's 'You Can Keep Your Plan' Comments Problematic, Not a Big Lie

Do you remember when President Obama said insurance companies will be forced to keep offering -- forever and ever -- the same kinds of insurance products to individuals that they offered in 2010?

I don't, either. But, apparently, that's what Republicans heard when Obama said that people who were happy with their health insurance could keep it.

Years after the passage of the Affordable Care Act (ACA), the president's opponents are shocked -- shocked -- to discover that the "government takeover" of the health care system provides the private sector with a lot of freedom to operate.

I won't deny it. Obama's "you can keep your insurance" comment was problematic. It is easily misunderstood and provides an opening for opponents to use the president's words against him. But, it is hardly the "big lie" the right wing wants to pretend that it is.

The ACA actually does make it possible for people to keep their coverage -- unless the insurance company decides to stop offering it. Plans in existence in March 2010 do not have to meet the requirements of the new law. They can remain in effect so long as the terms do not change. In policy speak, those plans are "grandfathered" in. That's where things become complicated.

As the Washington Post's Sarah Kliff recently pointed out:

From an insurance company's vantage point, grandfathered plans are a bit of a dead end: They can't enroll new subscribers and are really constrained in their ability to tweak the benefit package or cost-sharing structure. There's not a whole lot of business sense, for a managed care company, in maintaining a health plan that doesn't meet the health law's new requirements.

Canceling such plans is legal because most individual health insurance policies -- like policies for homeowners insurance -- are purchased using 12-month contracts. After the 12 months ends, the "renewal" policy can be significantly different. It's also allowable for the insurance company to simply exit a particular line of business.

Critics of the ACA point out that the law's byzantine rules make it far too easy for an insurance plan to lose its "grandfathered" status. Fair enough. But, as Georgetown University's Center on Health Insurance Reforms points out, the lost policies typically won't be much of a loss for the policy holders. "For most people shopping on the marketplace," the center stated in a recent blog post, "the policies available there will be a better value than anything they have been able to buy on the individual market."

That certainly turned out to be the case for Diane Barrette, 56, of Winter Haven, Fla. Barrette showed up on CBS News after being outraged by the cancelation of her $54-a-month insurance. Her insurer had offered her a replacement plan costing $591 per month. That sounded pretty bad, but her situation was not what it seemed.

When Consumer Reports dug deeper, they found that Barrette's current insurance plan was "a textbook example of a junk plan that isn't real health insurance at all." They also discovered that the $591 Blue Cross Blue Shield policy offered to her was not her only -- or best -- option. By taking advantage of tax credits, Barrette could get real -- and far better -- health insurance for $165 per month.

Regardless, it's indisputable that Barrette's health plan, which she claimed to be happy with, is going away. So, should Obama have said what he said exactly the way he said it? In retrospect, it is pretty clear he should have been more nuanced.

My take on the "you can keep your insurance" statement is that Obama was trying to dispel the widespread fear that the ACA creates "government insurance" and that we would all be forced to sign up. That false impression was reinforced by groups like FreedomWorks which encouraged people to burn their nonexistent "Obamacare cards."

Nobody who now has employer-sponsored insurance will be forced by the government to give that up. So, for the vast majority of Americans, the ACA really will allow them to stay with their current insurers. But even in those cases, employers remain free to change insurance providers and the providers have latitude to make changes as well.

That's the problem with sound-bite politics. Politicians are encouraged to explain complex issues in sweeping terms and to gloss over the boring, complicated substance of issues. Obama never should have allowed himself to fall into that trap. But the biggest share of the blame for this new "scandal" belongs to the disingenuous critics who manufactured it.