Keep Your Health Plan Under Overhaul? Probably Not, Gov't Analysis Concludes
Internal administration documents reveal that up to 51% of employers may have to relinquish their current health care coverage because of ObamaCare.
Small firms will be even likelier to lose existing plans.
The "midrange estimate is that 66% of small employer plans and 45% of large employer plans will relinquish their grandfathered status by the end of 2013," according to the document.
In the worst-case scenario, 69% of employers — 80% of smaller firms — would lose that status, exposing them to far more provisions under the new health law.
The 83-page document, a joint project of the departments of Health and Human Services, Labor and the IRS, examines the effects that ObamaCare's regulations would have on existing, or "grandfathered," employer-based health care plans.
Draft copies of the document were reportedly leaked to House Republicans during the week and began circulating Friday morning. Rep. Bill Posey, R-Fla., posted it on his Web site Friday afternoon.
"It's been passed around the staffs here on Capitol Hill. Congressman Posey thought it was important enough to share," said spokesman George Cecala.
In a statement, Posey said the document showed that the arguments in favor of ObamaCare were a "bait and switch."
"The president promised repeatedly that people who like their current plans can keep them, but now the details of their plan actually confirm what many suspected all along, most Americans will lose their current health care plan," Posey said.
A White House official told IBD: "This is a draft document, and we will be releasing the final regulation when it is complete. The president made a promise to the American people that if they liked their health care plan, they can keep it. The regulation, when finalized, will uphold that promise."
However, the source conceded: "It is difficult to predict how plans and employers will behave in the coming years, but if plans make changes that negatively impact consumers, then they will lose their grandfather status."
It's unclear how the document leaked out. An HHS spokeswoman confirmed that the department was working on a draft paper about grandfathered plans but said it hasn't been made public yet.
A House Republican staffer said the rumor was that the document had been erroneously posted on the Office of Management and Budget Web site earlier in the week and somebody spotted it before it was taken down. IBD has not been able to confirm this report.
Under the new health law, current employer-based health plans will be grandfathered — that is, they will not have to follow many Obama-Care provisions that take effect on Jan. 1, 2014. These include benefit mandates, caps on out-of-pocket expenses and limits on age-based premiums.
But they forfeit that grandfathered status if they make changes to the plans by 2014. If so, firms may have to adopt new plans or drop coverage and pay the penalty.
No Longer A Grandfather
But the term "grandfathered" is loosely defined by the new law; specifics have been left up to the bureaucracies. One key question is, how much flexibility would employers have in changing their coverage before it is no longer considered grandfathered?
Under the regulations in the document, a plan is no longer considered to be grandfathered if:
• It eliminates benefits related to diagnosis or treatment of a particular condition.
• It increases the percentage of a cost-sharing requirement (such as co-insurance) above its level as of March 23, 2010.
• It increases the fixed amount of cost-sharing such as deductibles or out-of-pocket limits by a total percentage measured from March 23, 2010, that is more than the sum of medical inflation plus 15 percentage points.
• It increases co-payments from March 23, 2010, by an amount that is the greater of: medical inflation plus 15 percentage points or medical inflation plus $5.
• The employer's share of the premium decreases more than 5 percentage points below what the share was on March 23, 2010.
Analyzing data on employer-provided plans from 2008 and 2009, the report stated: "Many employers who made changes between 2008 and 2009 that would have caused them to relinquish grandfather status did so based on exceeding one of the cost-sharing limits."
In total, 66% of small businesses and 47% of large businesses made a change in their health care plans last year that would have forfeited their grandfathered status.
"These rules will ensure that up to 69% of employees — and 80% of workers in small business — will lose their current plan within three years," said Rep. Phil Gingrey, R-Ga., a physician. "The reality is this: 58% of Americans want ObamaCare repealed because they fear they will lose their health care — and even their jobs — once this law is fully implemented."