Losing Health Insurance Due to Obamacare

Millions of Americans are finding out they will lose their current health plan due to Obamacare. Contrary to the statements made by some, Obamacare interrupts insurance for everyone, not just the Americans who purchase coverage directly in the individual market.

These sweeping changes are why the President’s proposed actions, and alternative legislative efforts like Chairman Fred Upton’s “Keep Your Health Plan Act” (H.R. 3350), Senator Ron Johnson’s S. 1617, and Senator Mary Landrieu’s S. 1642, while well intentioned, will not solve the problem. The Upton bill, for example, would allow people to enroll in plans that currently exist in the individual market for one more year. All of these efforts are temporary and, most importantly, do not roll back the many onerous Obamacare mandates that disrupt coverage for the 49 percent of Americans with employer-provided coverage.

How Obamacare Impacts Everyone’s Coverage Employer-Provided “Grandfathered” Insurance Plans: Designed for Extinction

• While the Obamacare bill included “grandfathered” plan language theoretically allowing Americans to keep plans they have and like, other sections of the legislation undermined this promise. For instance, Section 2301 of the reconciliation legislation included provisions requiring all plans, including “grandfathered” plans, to abide by some of the law’s new benefit mandates—thus making the plans different from pre-Obamacare offerings.

• Shortly after the law’s enactment, the Obama Administration released regulations further restricting individuals’ ability to keep their pre-Obamacare plans. The regulations stated that an increase in co-payments of more than $5, or an increase in the employee’s share of premiums paid by more than 5 percent, could cause plans to lose “grandfathered” status.

• The result: the percent of covered workers in “Grandfathered plans” went from 56 percent in 2011 to 36 percent in 2013. Employer-provided coverage is impacted by Obamacare in this and many other ways.

Individual Health Insurance Plans: Upending Coverage for Millions

• Because individuals who buy their own health insurance receive no employer subsidy for their health coverage, and often receive no taxpayer subsidy, they frequently shop for the most economical plan available. However, most individual plans do not comply with Obamacare’s new mandated benefits.

• Obamacare includes a list of 10 “essential benefits” that health plans must cover—including coverage of maternity services, habilitative services, and pediatric vision care.

• The law also requires that most health plans cover at least 60 percent of expected medical expenses. A study last year suggested that more than half of individual market insurance policies do not meet these so-called actuarial value requirements.

• Because they do not comply with the law’s new required benefits, one expert has concluded that as many as 85 percent of individual health insurance policies—affecting up to 16 million individuals—will be canceled due to Obamacare.

Small Business Insurance Plans: Canceled for Nonconformity

• Obamacare’s effects will not be felt only in the individual market. The Administration’s own regulations assumed that up to 69 percent of small business plans—covering as many as 41 million Americans—could be lost, because they do not comply with Obamacare’s requirements.

• For instance, Obamacare sets maximum deductibles for small business insurance plans at $2,000 for a single person. However, nearly one-third of covered workers at small firms are in plans that do not meet this requirement—meaning these individuals could face higher costs, or the loss of their current plan, or both.

• When it comes to both individual and small business insurance policies, losing one’s policy will often come with a big price tag. A Heritage Foundation analysis concluded that Obamacare’s benefit mandates will raise individual insurance premiums in 42 out of 47 states, in many cases causing rates to double.

Just as eliminating pre-Obamacare health plans was one major result of the law, so too are the higher premiums many will face upon losing their plan. It’s why the American people need relief from this unworkable, unfair, and unpopular law.

This post was originally published by The Heritage Foundation.

Can Appropriations Bills Defund Obamacare?

  • Some have argued that because much of Obamacare constitutes “mandatory” spending— namely, new entitlements such as the massive Medicaid expansion and exchange insurance subsidies—Congress is powerless to defund the entire law as part of its annual appropriations bills. These claims are false.
  • Congress routinely enacts changes to mandatory spending programs as part of its annual appropriations process. The non-partisan Congressional Budget Office (CBO) recognizes these changes when analyzing spending bills and scores them as CHiMPS—changes in mandatory program spending.
  • In February 2011, the House of Representatives passed H.R. 1—legislation intended to reduce federal spending by $100 billion, consistent with House Republicans’ “Pledge to America.” CBO found 23 pages’ worth of CHiMPS in the House-passed version of H.R. 1. These reductions in mandatory spending ran the gamut from $26 million in savings over one year, and $74 billion in savings over ten years, achieved by reducing the maximum Pell Grant award (Section 1831), to $30 million in savings achieved by reducing mandatory appropriations to the Consumer Financial Protection Bureau (Section 1517).
  • Congress has already defunded mandatory programs within Obamacare—and done so through appropriations measures. Section 1857 of the continuing resolution Congress enacted in April 2011 (P.L. 112-10) “permanently cancelled” $2.2 billion in mandatory funding to Obamacare’s co-op health insurance program.
  • Congress has also defunded elements of health care entitlements for decades. Every year since 1976, Congress has enacted the Hyde Amendment, which bans federal funding of abortion. This provision, enacted as part of discretionary appropriations legislation, prohibits abortion coverage in the Medicaid entitlement program.
  • Historically, Congress has used the “power of the purse” broadly to make key policy statements through defunding. For instance, in 1982 Congress acted to block the Reagan Administration’s policy for supporting the Contra forces opposing the Nicaraguan government. As part of Public Law 97-377, Congress prohibited both the Department of Defense and the Central Intelligence Agency from furnishing military equipment and support to any group for the purpose of overthrowing the Nicaraguan government. Even though defense spending is not funded through mandatory appropriations, the example demonstrates that defunding has been—and remains—a powerful tool Congress can use to affect public policy.
  • Given the examples above, and numerous others, it is beyond dispute that Congress can use its power of the purse to defund Obamacare—both its mandatory and discretionary spending—in appropriations legislation this fall. The lone remaining question is whether Congress can summon the political will to do so.

This Fact Sheet was originally published by The Heritage Foundation.

Defunding Obamacare


• On January 1, 2014—three months into the next fiscal year—Obamacare’s new entitlements are scheduled to take effect. According to the Congressional Budget Office, the federal government will spend $48 billion in 2014—and nearly $1.8 trillion through 2023—on these new entitlement programs.

• Also on January 1, Americans will be forced by their government to buy a product—health insurance—for the first time ever. This mandate will be enforced by tax penalties administered through the Internal Revenue Service (IRS). The Obama Administration has requested over $400 million in funding, and nearly 2,000 bureaucrats, for the IRS to implement the individual mandate and 46 other statutory provisions in its remit.

• Within the Administration, the blizzard of Obamacare rules and regulations continues apace. Regulators have now written over 20,000 pages of Obamacare-related rules and notices in the Federal Register. Many of these regulations will raise the cost of insurance; the Congressional Budget Office concluded Obamacare would raise individual health insurance premiums by $2,100 per year.

Questionable Spending

• In addition to Obamacare’s new entitlements, Secretary Kathleen Sebelius has used much of the Department of Health and Human Services’ (HHS) budget as a “slush fund” for Obamacare implementation.

• Earlier this year, HHS announced it was diverting $150 million in community health center funding toward Obamacare enrollment and outreach. HHS also created “in-person assisters”—a program not authorized in Obamacare—to allow state exchanges to use more federal dollars for Obamacare enrollment efforts.

• Congressional committees recently opened investigations into HHS’s actions. Secretary Sebelius has acknowledged making calls asking outside organizations to fund a pro-Obamacare campaign run by former White House officials. And the Food and Drug Administration—which has no jurisdiction over health insurance programs—used taxpayer funding to promote Obamacare enrollment efforts.

Need for Immediate Action

• The only way for Congress to stop the new entitlements and executive branch spending abuses is to defund all Obamacare implementation efforts across the federal government.

• Full defunding of Obamacare would halt the law’s new entitlements before they start—and prevent HHS from raiding other parts of the departmental budget to promote Obamacare.

• Defunding Obamacare would also prevent the application of the law’s new regulations and 18 separate tax increases, including the tax for not complying with the individual mandate.

• While Congress cannot unilaterally repeal Obamacare, the Constitution grants Congress the ultimate “power of the purse.” If Congress chooses not to fund Obamacare activities for the upcoming fiscal year, the Obama Administration cannot act to implement the law. Congress can, and Congress should, act to defund all of Obamacare now.

This Fact Sheet was originally published by The Heritage Foundation.