Will grandfathering save our current private plans?
Fact Sheet: Keeping the Health Plan You Have: The Affordable Care Act and “Grandfathered” Health Plans
U.S. Department of Health & Human Services
Accessed June 23, 2010
During the health reform debate, President Obama made clear to Americans that “if you like your health plan, you can keep it.” He emphasized that there is nothing in the new law that would force them to change plans or doctors. Today, the Departments of Health and Human Services, Labor, and Treasury issued a new regulation for health coverage in place on March 23, 2010 that makes good on that promise.
Compared to their polices in effect on March 23, 2010, grandfathered plans:
* Cannot Significantly Cut or Reduce Benefits.
* Cannot Raise Co-Insurance Charges.
* Cannot Significantly Raise Co-Payment Charges.
* Cannot Significantly Raise Deductibles.
* Cannot Significantly Lower Employer Contributions.
* Cannot Add or Tighten an Annual Limit on What the Insurer Pays.
* Cannot Change Insurance Companies
"Keeping the insurance you have" - Don't believe it!
Comment by Don McCanne, MD
Quote of the Day
July 11, 2008
Pause for a minute. Think back to the insurance you had twenty years ago. Remember? Now do you still have precisely that same coverage? Unless you are over 85 and have been in the traditional Medicare program for the past twenty years, it is highly likely that you do not.
So why do you no longer have the better coverage that you had twenty years ago? You may have changed jobs, likely more than once, and lost the coverage that your prior employer provided. Your employer may have changed plans because of ever-increasing insurance premiums. Frequently your insurer introduces plan innovations such as larger deductibles, a change from fixed-dollar copayments to higher coinsurance percentages, tiering of your cost sharing for services and products, reduction in the benefits covered, dollar caps on payouts, and other innovations all designed to keep premiums competitive in a market of rapidly rising health care costs. You may have lost coverage when your age disqualified you from participating in your parents' plan. You may have found that health benefit programs have been declining as an incentive offered by new employers. Your children may have lost coverage under the Children's Health Insurance Program when your income, though modest, disqualified your family from the program. Your union may not have been able to negotiate the continuation of the high-quality coverage that you previously held. Your employer may have reduced or eliminated the retirement coverage that you were promised but not guaranteed. Your employer may have filed for bankruptcy without setting aside the legacy costs of their pensions and retiree health benefit programs. You may have decided to start your own small business and found that you could not qualify for coverage because of your medical history, even if relatively benign, or maybe your small business margins are so narrow that you can't afford the premiums. You may have been covered previously by a small business owner whose entire group plan was cancelled at renewal because one employee developed diabetes, or another became HIV infected. Your COBRA coverage may have lapsed and you found that the individual insurance market offered you no realistic options. You may have retired before Medicare eligibility, only to find that premiums were truly unaffordable or coverage was not even available because of preexisting medical problems.
By Don McCanne, MD
The opponents of reform, especially the Republicans in Congress, are making a big deal out of the fact that the Affordable Care Act breaks President Obama's promise that you will be able to keep the insurance plan you have. The Obama administration is countering by publicizing the new regulations that will allow plans in place on March 23, 2010 to be grandfathered, supposedly assuring that you will be able to keep your plan if you had it on that date.
Actually, this is a silly debate. As explained in my comment two years ago, except for those individuals on Medicare or other financially sound retiree programs, almost no one gets to keep the insurance he or she has. Rather than stabilizing existing coverage, the regulations that would grandfather plans make it less likely, in an environment of increasing health care costs, that existing plans would continue to be offered without significant changes.
In an effort to make the insurance plans more affordable, further adjustments in deductibles and coinsurance are almost inevitable, and the ever-changing insurance marketplace will surely result in changes in insurance companies selected. Insurance price shoppers, who are mostly healthy, will be much more sensitive to size of the premiums than they would be to cost sharing; this is precisely what has happened throughout the individual market. These pressures would accelerate the decline in grandfathered plans.
This HHS report predicts an end to the individual market and a sharp decline in the small employer market. They claim that the large employer market will not see much change, but other studies have shown that large employers are already switching to plans with larger deductibles and other cost sharing simply to keep premiums affordable, and many are switching the insurers that they are using, thereby losing their eligibility for the grandfathered status. Besides, for the reasons mentioned in the July, 2008 comment above, almost no one will end up staying indefinitely in the same employer sponsored plan anyway.
"Keeping the insurance you have" was only a slogan used to market the reform proposal. It wasn't a serious long term strategy. Instead of wasting time in another political dogfight - this time over grandfathering - we should move forward with supporting policies that will work for everyone - like a single payer national health program.