Thursday, October 31, 2013

No, 93 million Americans will not lose their health plans under Obamacare

Avik Roy is within his conservative pundit rights in spotlighting the grievances of the estimated 3 percent of the population who may be subject to higher health insurance premiums when the ACA takes full effect in 2014 than they currently pay for plans in the existing individual market.  He descends into partisan hackery, however, in suggesting that tens of millions more will "lose" their coverage as employers' "grandfathered" plans fall by the wayside, as they are bound to do -- and that therefore, "93 million Americans will be unable to keep their health plans under Obamacare."

Roy purports to find a nuclear bomb in interim final regulations for group health plans issued in the Federal Register in 2010:
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.
First, Roy's numbers are wrong. He suggests that half of those in employer-provided plans will be subject to grandfathering:
As to the number of people facing cancellations, 51 percent of the employer-based market [156 million] plus 53.5 percent of the non-group market (the middle of the administration’s range) amounts to 93 million Americans.
A Kaiser Health News FAQ, however, gives the true range of those potentially subject to a termination of grandfathering in the employer market as of now:
More than a third [36%] of all Americans who get insurance through their jobs are enrolled in [grandfathered] plans, although that number is expected to decline every year.
Moreover, not every plan that loses grandfathered status is "cancelled," as an SHRM FAQ explains:
Q12: What happens if a plan loses grandfathered status?

The plan must comply with all of the requirements that apply to nongrandfathered plans as of the effective date of the change that caused the loss of status.

More broadly, there's conceptual sleight-of-hand in Roy's switch of a verb in his gloss of the Federal Register passage he cites. Employer plans do not "lose" their grandfather status -- employers "relinquish" that status as they alter the plans, or provide new ones, to comply fully with the law's coverage requirements. Nor do existing plans "become illegal" -- they are phased out or amended as employers move to compliance.
Grandfathering was intended to smooth the transition to ACA compliance. The Federal Register guidance Roy cites envisions plans balancing year-by-year tradeoffs as they move from grandfathered status to full compliance:
Decisions about the value of retaining or relinquishing status as a grandfathered health plan are complex, and the wide array of factors affecting issuers, plan sponsors, and enrollees poses difficult challenges for the Departments as they try to estimate how large the presence of grandfathered health plans will be in the future and  what the economic effects of their presence will be. As one example, these interim final regulations limit the extent to which plan sponsors and issuers can increase cost sharing and still remain grandfathered. The increases that are allowed provide plans and issuers with substantial flexibility in attempting to control expenditure increases. However, there are likely to be some plans and issuers that would, in the absence of these regulations, choose to make even larger increases in cost sharing than are specified here. Such plans will need to decide whether the benefits of maintaining grandfather status outweigh those expected from increasing cost sharing above the levels permitted in the interim final regulations (p. 13 of pdf). 
There is no evidence that large numbers of employers will drop coverage rather than comply with the law. The jury is out as to whether employee premiums and cost-sharing will rise more quickly as a result of full implementation, though overall healthcare inflation has actually been slowing for several years. Perhaps that's why, after citing the Federal Register's grandfathering forecast for employer plans, Roy segues immediately to the alleged plight of those currently in the individual market.

UPDATE, 11/2/13: ThinkProgress's Sy Mukherjee is also on this -- and spoke to Timothy Jost about the impact of ACA requirements on employers:
But according to Washington and Lee University law professor Tim Jost — widely regarded as one of the nation’s top academic experts on the Affordable Care Act — it’s misleading to suggest that millions of Americans with employer-sponsored health care are in for a rude awakening.

“With large employer plans, those requirements are really pretty minimal,” Jost told ThinkProgress in an interview over the phone. “When [these plans lose] grandfather status, they do have to comply with those ACA requirements, but it isn’t the same requirements that are in the non-group market, and it certainly doesn’t mean that coverage would be lost.”
Click through for more detail from Jost.

"Government-run healthcare," Singapore style
In which Ezra Klein makes Avik Roy acknowledge why U.S. healthcare costs are so high

No comments:

Post a Comment