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things you need to know about grandmothered health plans

Even if you liked your health insurance plan, the Affordable Care Act might have been better off if President Obama hadn’t let you keep it.

It’s rate-filing time for insurers, and Washington is gripped by anxiety about rising premiums. Although this is the fourth go-around of exchange premium proposals and announcements, new markets have yet to stabilize. It’s widely expected that premiums will rise in some regions in 2017.

This might be partially explained by a set of occurrences that the ACA writers didn’t anticipate. One is the establishment by the administration of ‘grandmothered plans,’ or transitional plans that were bought between the passage of Obamacare and its implementation.

Another is the initial premium rates set by health plans in 2015, which were about 15 percent lower than the Congressional Budget Office expected. (The administration reminded people of this fact in a blog post released Tuesday). Insurers bid low in the beginning, and are still feeling the pinch.

Put together, these two things may have had consequences that continue to ripple through the insurance marketplace today.

“I think we’d be looking at a very different picture right now if premiums had come in as expected rather than 15 percent below what CBO projected,” said Larry Levitt, a senior vice president at the Kaiser Family Foundation. “But it’s easy to say that now looking through the rear view mirror.”

And as for grandmothered plans, Levitt said they “have definitely [kept] healthy people out of the ACA risk pool.” That makes covering people under Obamacare exchanges more expensive.

Obamacare allowed some ‘grandfathered plans,’ or plans established prior to the ACA. In general they weren’t required to cover the same range of benefits as post-ACA plans. But then Obamacare hit a couple of serious setbacks. The administration’s launch of healthcare.gov in October 2013 was a technical disaster. The president was also under attack for his “If you like your healthcare plan, you can keep it” promise. People were getting notices about cancelled plans, and the administration responded.

In November of that year, the Department for Health and Human Services announced that transitional plans would not, in fact, be cancelled. If state insurance commissioners allowed it, people could keep plans they bought in advance of October 2013. Originally, this waiver was for one year. It has since been extended several times.