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Obama Officials In 2010: 93 Million Americans Will Be Unable To Keep Their Health Plans Under Obamacare
From Forbes, 10-31-2013, by Avik Roy. Excerpt:
"It turns out that in an obscure report buried in a June 2010 edition of the Federal Register, administration officials predicted massive disruption of the private insurance market.
On Tuesday, White House spokesman Jay Carney attempted to minimize
the disruption issue, arguing that it only affected people who buy
insurance on their own. “That’s the universe we’re talking about, 5
percent of the population,” said Carney. “In some of the coverage of
this issue in the last several days, you would think that you were
talking about 75 percent or 80 percent or 60 percent of the American
population.” (5 percent of the population happens to be 15 million
people, no small number, but let’s leave that aside.)
By “coverage of this issue,” Carney was referring to two articles. The first, by Chad Terhune of the Los Angeles Times, described
a number of Californians who are seeing their existing plans terminated
and replaced with much more expensive ones. “I was all for Obamacare
until I found out I was paying for it,” said one.
The second article, by Lisa Myers and Hanna Rappleye of NBC News, unearthed the aforementioned commentary in the Federal Register,
and cited “four sources deeply involved in the Affordable Care Act” as
saying that “50 to 75 percent” of people who buy coverage on their own
are likely to receive cancellation notices due to Obamacare.
Mid-range estimate: 51% of employer-sponsored plans will get canceled
But Carney’s dismissal of the media’s concerns was wrong, on several fronts. Contrary to the reporting of NBC, the administration’s commentary in the Federal Register did not only refer to the individual market, but also the market for employer-sponsored health insurance.
Section 1251 of the Affordable Care Act contains what’s called a
“grandfather” provision that, in theory, allows people to keep their
existing plans if they like them. But subsequent regulations from the
Obama administration interpreted that provision so narrowly as to
prevent most plans from gaining this protection.
“The Departments’ mid-range estimate is that 66 percent of small
employer plans and 45 percent of large employer plans will relinquish
their grandfather status by the end of 2013,” wrote the administration
on page 34,552 of the Register. All in all, more than half of
employer-sponsored plans will lose their “grandfather status” and become
illegal. According to the Congressional Budget Office, 156 million
Americans—more than half the population—was covered by
employer-sponsored insurance in 2013.
Another 25 million people, according to the CBO, have “nongroup and
other” forms of insurance; that is to say, they participate in the
market for individually-purchased insurance. In this market, the
administration projected that “40 to 67 percent” of
individually-purchased plans would lose their Obamacare-sanctioned
“grandfather status” and become illegal, solely due to the fact that
there is a high turnover of participants and insurance arrangements in
this market. (Plans purchased after March 23, 2010 do not benefit from
the “grandfather” clause.) The real turnover rate would be higher,
because plans can lose their grandfather status for a number of other
reasons.
How many people are exposed to these problems? 60 percent of
Americans have private-sector health insurance—precisely the number that
Jay Carney dismissed. As to the number of people facing cancellations,
51 percent of the employer-based market plus 53.5 percent of the
non-group market (the middle of the administration’s range) amounts to
93 million Americans.
Will these canceled plans be replaced with better coverage?
President Obama’s famous promise that “you could keep your plan” was
not some naïve error or accident. He, and his allies, knew that previous
Democratic attempts at health reform had failed because Americans were
happy with the coverage they had, and opposed efforts to change the
existing system.
Now, supporters of the law are offering a different argument. “We
didn’t really mean it when we said you could keep your plan,” they say,
“but it doesn’t matter, because the coverage you’re going to get under
Obamacare will be better than the coverage you had before.”
But that’s not true. Obamacare forces insurers to offer services that
most Americans don’t need, don’t want, and won’t use, for a higher
price."
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