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.