Obama retreats on Obamacare, allows existing low-cost policies to continue

Neil Munro White House Correspondent
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President Barack Obama has decided to save his endangered Obamacare law by suspending for one year enforcement of the law’s critical but unpopular elimination of roughly 15 million low-cost insurance plans held by Americans who buy insurance on their own.

The plan sets up the insurance companies to take the political blame for the Democratic-designed Obamacare plan during the 2014 election.

Officials explained the president’s decision as a prerogative of the nation’s chief law-enforcement officer.

“He will be suspending enforcement for 2014 … [and the Department of Health and Human Services] will be using its enforcement discretion,” said an official.

The suspension applies to people who hold pre-Obamacare policies purchased on the individual market, not via their employers.

The suspension is similar to his June 2012 suspension of immigration law, when he offered work permits to younger illegal immigrants, despite opposition from Congress, said one White House official.

That decision was dubbed “Deferred Action for Childhood Arrivals,” and it has provided work-permits to hundreds of thousands of illegal immigrants, without any approval from Congress or the public.

If the insurance companies decide to keep selling pre-Obamacare policies, Thursday’s decision will create a two-tier insurance system where people who hold low-cost, pre-Obamacare insurance will be able to keep their low-cost plans.

But other people, including self-employed young people who are buying health insurance for the first time, will be forced to buy expensive, Obamacare-compliant insurance.

The presidential directive is likely to be protested by insurance companies because it will likely cost them a large amount of money.

That’s because they would be selling high-cost Obamacare-compliant insurance at low prices to older and sicker people people, but would not be recouping all their losses by selling the same insurance to young people who likely won’t get sick.

Instead, the younger and healthier people could buy lower-cost pre-Obamacare insurance.

But if the insurance companies protest this money-losing plan, Democrats will be able to blame them during the 2014 campaign.

An official said the new plan may be continued into 2015, leaving the insurance companies in the lurch.

Shortly before Obama’s speech, House Speaker John Boehner suggested that Obama does not have the legal authority to make his changes to the law, which was passed by a Democratic-majority House in 2010.

“I am highly skeptical,” Boehner said. “I just don’t see, within the law, [how they can] do this.”

Americans should be allowed to “keep the plan they have and the plan they like,” he said.

“The only way to fully protect the American people is to scrap this law, once and for all,” he said. “There is no way to fix this.”

The decision to suspend the law is a risky step because it may cause younger and healthier individuals to ignore the law’s requirement that they buy one of the expensive Obamacare plans by March.

They may delay buying any insurance of the hope that legislators will pass a law allowing them to buy pre-Obamacare insurance.

The Obamacare plans are expensive because the Obamacare network is designed to transfer premiums paid by younger and healthier Americans to hold down the costs of older and sicker Americans, and to poor Latino and African-Americans.

If young people delay buying the plans, the costs for older and sicker Americans will rise, likely pushing insurance companies out of the Obamacare market in late 2014 and leaving the network with few or no insurance companies.

But Obama’s drastic decision is needed to fend off a huge wave of protest from millions of Americans whose current plans are being canceled, and who are being forced to buy the expensive, government-designed insurance plans.

Many Democratic politicians are demanding that people be allowed to keep their current policies.

“We’re being responsive to that” public protest, said one official.

That decision is “a way to smooth the transition from where we are to where we are going,” the second official explained.

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