WASHINGTON—Bowing to intense political pressure from within his own party, President Obama announced Thursday that he will allow health insurance companies to provide insurance coverage for one year that falls short of the Affordable Care Act’s new standards.
Purging substandard plans, which carry low premiums but weak coverage, from individual insurance markets around the country was a key goal of the president’s 2010 health care reform law. Individual insurance buyers have been hammered by coverage denials, gaps in coverage, big premium increases, and high deductibles.
But Obama had promised Americans multiple times that they would be allowed to keep their insurance under his new law, if they liked it. So when insurance companies sent out hundreds of thousands of cancellation notices for non-compliant plans in recent weeks, it created a political furor.
``That’s on me,’’ Obama said in a White House news conference Thursday announcing the change.
Combined with the botched rollout of the healthcare.gov online insurance marketplace, which is still under repair more than six weeks after its launch, Obama said the troubled start of the new health plan is damaging the law and costing Democrats in Congress politically. He apologized for ``not executing better.’’
``These were two fumbles on a big game,’’ he said. ``But the game is not over.’’
The political pressures intensified this week as Democrats in Congress began backing legislation that would force Obama to honor his promise. Obama’s move seemed to cool some of the immediate anger from within his own party, but it was not clear how effective it will be in calming the waters in coming days and weeks.
Republicans like Senator Lindsay Graham of South Carolina continued to criticize the law, capitalizing on the sense of confusion and frustration. He dismissed Obama’s change as a ``duct tape solution.’’
For affected consumers, a one-year reprieve may just offer a new target of their anger: insurance companies.
Insurers who have already canceled plans may choose not to revive them, because premiums and coverage have already been calculated for new plans. The health insurance trade group Thursday warned the president’s action could be disruptive.
``Changing the rules after health plans have already met the requirements of the law could destabilize the market and result in higher premiums for consumers,’’ said Karen Ignagni, president of America’s Health Insurance Plans. ``Premiums have already been set for next year based on an assumption of when consumers will be transitioning to the new marketplace.’’
One reason for the political uproar over the cancellations was that consumers were unable to make that transition, because the healthcare.gove website was not working. While many people required to switch may qualify for government subsidies because they have low or moderate incomes, about half of those losing coverage would not. Those people faced higher premiums in many individual states.
Under Obama’s administrative changes, if insurance companies continue offering the substandard plans, they will be required to tell consumers what additional coverage those plans lack. They also will be required to notify consumers what plans with better coverage are available through healthcare.gov.
“It is important to understand that the old individual market was not working well. It’s important we don’t pretend that that’s a place worth going back too. Too often that works well when you’re healthy. It doesn’t when you’re sick,” Obama said.
Jonathan Gruber, an MIT professor who was an architect of the landmark 2006 Massachusetts health plan and an advisor on the Obama plan, said Obama’s move seemed like a reasonable compromise given the deep problems encountered with the rollout. But eliminating weak insurance plans from the marketplace remains an integral part of preventing insurance companies from denying insurance coverage and jacking up premiums for people with pre-existing conditions.
“What this whole debate misses is that Obamacare is the least disruptive way we can fix insurance markets in America to achieve the goal of non-discriminatory insurance.”
But people wanted more, he observed. “They wanted a free lunch. They wanted to fix discriminatory insurance markets without inconveniencing anyone who holds discriminatory insurance. You can’t do that.”
The parameters of the White House plan took shape over the past week. “This step today is in the interest of fixing some of the challenges that have arisen,” said a White House official.
Unlike a Republican plan that the House is expected to vote on Friday, the president’s relief plan would not allow the substandard plans to be sold to new customers.
“That opening up of the market ... to an entirely new universe of people is what would undermine the Affordable Care Act,” said the White House official. “This is an administrative solution that will give consumers more information and additional choices.”
Republicans in Congress kept up their criticism of the president’s approach.
House Speaker John Boehner said Obama could not fix the problem administratively, without breaking the law. Boehner also took a more personal shot at Obama, hoping to highlight the President’s broken promise.
“When it comes to this health care bill, the White House doesn’t have much credibility,” Boehner told reporters.
House Democrats said they would introduce their own bill to counter the GOP proposal. Minority Leader Nancy Pelosi said it would go hand-in-hand with the president’s changes.
“Think of a belt and suspenders,’’ Pelosi said. ``What the president will do will be one, and what we will do will be the other.”Tracy Jan can be reached at email@example.com. Follow her on Twitter @GlobeTracyJan.