President Donald Trump hit Joe Biden with a familiar attack in Thursday night’s presidential debate, warning that the former vice president would wipe out private health insurance for 180 million Americans.
Biden pointed out that Trump was criticizing a position the Democratic nominee doesn’t actually hold. Although many Democrats support “Medicare for All,” which would eliminate private insurance in order to create one government-run plan, Biden is not among them.
Biden has made it clear he prefers to bolster the Affordable Care Act, also known as Obamacare. Biden would do that, in part, by offering more financial assistance to insurance buyers and by creating a voluntary government-run plan, what’s known as a public option.
But Biden said something else in Thursday’s debate: “Not one single person with private insurance would lose their insurance under my plan.”
That’s a dangerously ironclad promise. And if Biden wants to know why, he should ask his old friend, Barack Obama, who famously promised that people who liked their old insurance plans could keep them ― when, in fact, some could not.
Obamacare’s “Keep Your Plan” Promise
Democrats first started making such vows during the 2008 presidential campaign. The primary purpose was to distinguish their health care proposals from President Bill Clinton’s 1993 proposal, under which most employer plans would have disappeared.
The specter of such a dramatic change was one reason the Clinton proposal became so politically toxic and ultimately failed to get through Congress.
Obama and his allies sought to minimize that sort of disruption, by avoiding major changes to employer coverage, when they wrote the legislation that eventually became the Affordable Care Act. But they also wanted to rewrite the rules for people buying private insurance on their own, because those were the policies with huge benefit gaps and the ones insurers frequently would not sell to people with preexisting conditions.
Obamacare’s new rules have proved wildly popular, and today Republicans fall all over themselves to express their support for them, even as they simultaneously try to undermine them. But those rules also forced insurers to upgrade their existing policies in order to meet the new standards. Many just canceled the old policies instead, to the dismay of people who had enrolled in them and had taken Obama’s promise literally.
Many of the people who lost policies ultimately got cheaper ones because they were eligible for the law’s tax credits. And even those who paid more were getting coverage with new protections, not realizing their old policies had limits that would have left them with ruinous expenses if a serious illness or injury occurred.
Still, some people lost plans they liked, and others lost access to beloved providers because alternative plans didn’t include them in their networks. Nobody ever figured out how many people fell into these categories, but it was probably in the low millions, which is significant even if it’s just a small percentage of the total population.
Some ended up paying a lot more for coverage they felt was inferior. Others sought out alternatives, such as religion-based health sharing plans that may be no more reliable than the skimpy plans the Affordable Care Act eliminated. And some went uninsured.
Obama, meanwhile, took a hit to his political standing and reputation. PolitiFact named “keep your plan” as its 2013 lie of the year
Bidencare’s Immediate Effect On Employer Coverage
Now it’s Biden with a new health plan that, by design, leaves most existing insurance arrangements in place. His proposal would reinforce and expand existing programs, in part by making the assistance available through HealthCare.gov and similar state-run exchanges more generous and available to people of all incomes, though still on a sliding scale.
But Biden also recognizes that one of the Affordable Care Act’s biggest shortcomings is that it didn’t do enough to help people who have access to employer-sponsored coverage but can’t afford the premiums or out-of-pocket costs that come with the policies. These workers, many of them low-income, hourly employees, struggle with payments or turn down the coverage altogether.
Biden’s plan would allow these under-insured or uninsured workers to go into the health coverage exchanges and take advantage of the newly enhanced subsidies there by enrolling in one of the private insurance options, whether it’s a local Blue Cross plan or something from a big company like Aetna. They could also choose to enroll in the new public option that Biden has promised to create.
More than 12 million people with employer coverage could save money that way, according to a recent study from the Henry J. Kaiser Family Foundation, and for some the savings could be into the thousands of dollars.
In theory, the existence of a new, more attractive insurance option might persuade some employers to stop offering coverage altogether. But few experts think employers will be rushing to drop coverage, no matter how generous Biden and his allies manage to make assistance inside the exchanges.
The reason, as economist Linda Blumberg of the Urban Institute think tank explained to HuffPost, is that employers would still have tons of incentive to offer insurance.
The existing tax break for group policies makes a dollar of benefits worth more than a dollar of income. And company benefits are a way to attract and retain employees, especially the higher-wage workers that companies often compete to hire.
The Urban Institute, which is nonpartisan but generally center-left, has modeled plans similar to Biden’s. Overall, Blumberg said, about 10% of people with employer-sponsored coverage would end up with subsidized exchange coverage instead. And mostly it would be low-income workers choosing to do it on their own, not employers dropping insurance.
Bidencare’s Long-Term Effect On Employer Coverage
Christine Eibner, an economist at the Rand Corp. think tank, said she too believes the Biden plan is “unlikely to have an immediate impact on ESI [employer sponsored insurance] offerings — inertia is a powerful force.”
But, she added, that could change over time.
“With expanded and enhanced subsidies, an increasing share of workers may find that they are better off getting coverage on the marketplaces and would prefer that their employers drop coverage so that they can receive a wage bump,” Eibner said. “The availability of a cheaper public option might also push people towards the marketplace if the public option successfully negotiates competitive prices with providers without sacrificing on quality or network breadth.”
The key is that a big shift over to subsidized insurance, to the point where large numbers of employers start dropping coverage, would happen only if subsidized insurance turned out to be a viable, attractive alternative ― which sounds a lot more like a change for the better than a change for the worse.
The reality is that insurance arrangements in the U.S. are not static. Employers frequently alter benefits from year to year, while individuals often must switch plans when job status or income changes. In the process, many end up with inadequate coverage or no coverage at all.
Ultimately, the test of reform isn’t whether it leaves a flawed status quo in place. It’s whether it brings America closer to a place where everybody can get health care when they need it. Biden can defend his plan on those grounds without hesitation.
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