Obama Dares Insurance Companies to Put Up or Shut Up

| Thu Nov. 14, 2013 11:04 AM EST

Here's the latest on Obamacare:

The White House on Thursday will announce a plan for allowing insurance companies to continue offering existing individual insurance policies even if they fall short of the coverage standards set by the 2010 health-care law, a Democratic official briefed on the plan said.

....The plan, which the official said could be implemented without passing legislation, would allow insurance companies to extend "substandard'' plans in 2014 only if they are already in existence. Unlike the House bill, the administration plan wouldn't allow insurance companies to offer such plans to new customers.

Here's my guess: this is primarily a put-up-or-shut-up move from Obama, not a plan designed to really fix the problem of canceled policies. I base this on two things.

First, I think insurance companies are mostly allowed to do this already. Second, I think that most of the canceled policies have been canceled because insurance companies wanted to cancel them. They were designed in the first place to entice buyers away from their old grandfathered policies, and insurance companies did this explicitly so that they would be free to cancel them when 2014 rolled around. This allowed insurers to replace them with more expensive policies without taking any heat for it. They could just blame it on Obamacare.

This is just speculation on my part, so don't take it to the bank. But I think Obama's main goal here is to remove this handy excuse. He's basically daring insurers to go ahead and reissue the old policies. If they don't do it, it means that Obamacare was never really responsible for the cancellations in the first place. And if the insurers see that their bluff is being called and decide they don't want to take the PR hit, then the old policies get reissued and everyone is happy. It's a win-win for Obama.

There are more details to this, including its intersection with state laws and the size of the price increase insurers would attach to re-issued policies. But I suspect this is basically the shape of the river here.