Campaigning for the ACA’s passage, President Obama stated on several
occasions that Americans who were satisfied with their healthcare plans
would be able to keep their current plans.105 In broad concept, that may
have been the ACA’s objective; but it’s not easy to make major changes to
a highly complex, deeply embedded system and still keep wholly intact a
key element of it.106 The President undoubtedly regrets making this
“promise” without the necessary qualifiers,107 but the underlying rationale
made sense: keep what is good and valued in the system, strengthen it
where necessary, and build in options for alternatives. This section explores
how the ACA accomplishes these goals, starting with an overview of a key
concern with free-market insurance systems, “Adverse Selection”.
A. The Adverse Selection Problem
For the ACA’s promise of universal coverage to be attainable and
sustainable, the whole population must be enrolled in the system because of
the perils of “adverse selection,” an economic phenomenon well known in
the insurance industry.108 If people are allowed to choose whether to
participate in a risk pooling arrangement, the ones who know or believe
themselves to be at low risk will opt out and withhold their premiums,
leaving the risk pool overpopulated with the poorer health risks who will
require more care and, thus, drive up the cost of the insurance.109 To make
(“Obama says he supports the idea of universal health care but does not think a single-payer
government system is feasible . . . He has said he is reluctant to switch to a ‘single-payer’
national health insurance system because of the difficulty in making a quick transition from
the employment-based private system.”).
105. See, e.g., Obama: ‘If You Like Your Health Care Plan, You’ll Be Able to Keep
Your Health Care Plan’, POLITIFACT,
http://www.politifact.com/obama-like-health-care-keep/ (last visited Mar. 16, 2015); see also Washington Free Beacon, 36 Times Obama Said
You Could Keep Your Health Care Plan, YOUTUBE (Nov. 5, 2013), https://
www.youtube.com/watch?v=qpa-5JdCnmo (compiling 36 times that President Obama stated
“if you like your health care plan, you can keep your health care plan”).
106. The story behind why Obama and other Administration spokespeople made this
claim so strongly and unequivocally, without the limitations, caveats, and qualifiers needed
to make it fully accurate is interesting and bears importantly on the question of the future of
employment-based health care. However, it is too lengthy and complex to be adequately
covered here. For a fuller explication, see Matthew O’Brien, Everything You Need to Know
About Obama’s New ‘You Can Keep Your Plan’ Policy, ATLANTIC (Nov. 16, 2013), http://
107. Ashley Killough, Obama Apologizes for Insurance Cancellations due to
Obamacare, CNN (Nov. 7, 2013), http://www.cnn.com/2013/11/07/politics/obama-
108. Mark Pauly & Sean Nicholson, Adverse Consequences of Adverse Selection, 24 J.
HEALTH POL. POL’Y & L. 921 (1999).
109. Hyman & Hall, supra note 16, at 31-32.