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Beware of the new argument from backers of health reform that people are seeing policies canceled due to “ordinary turnover in both individual and small group plans before there was an Obamacare law,” as one pundit put it recently.
Those arguments are incorrect. The law and its enactment are fueling the cancellations of millions of policies across the country. Here’s what’s going on.
The Federal Register on June 17, 2010, noted an estimate that says “a variety of studies indicate that between 40% and 67% of policies are in effect for less than one year,” referring to individual policies that turn over.
But the Register went on to say that “the percentage of individual market policies losing grandfather status in a given year exceeds the 40% to 67% range.” That means those policies will not be compliant with the Affordable Care Act (ACA) and therefore won’t be grandfathered because their cost-sharing items like co-payments are out of whack with the new law’s standards.
The cancellations that will result from those discrepancies, as has been reported, could affect 10 million people in the individual market. Moreover, anywhere from 60.8 million to 107.6 million people covered by employer plans could also see their policies cancelled or changed because they don’t comply with the new law, based on estimates from the Congressional Budget Office and the Federal Register.
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FOX News analyst John Escherich dug deep into the Federal Register and government analysis about the law. Here’s what he says: “The Administration knew that the grandfather rules they were writing, in combination with the standard and anticipated practices of insurance companies, would lead to millions upon millions of plans being canceled. And this was almost certainly the intention of the Administration all along. The law doesn’t ‘work’ as it is intended to if millions of people are allowed to stay on grandfathered, non-ACA compliant insurance plans. The cancellations and changes to insurance plans were a natural and anticipated result of the ACA."
To date there is no delay in the individual mandate tax. Yet there have been delays and/or cancellations for items like the following: the employer mandate; the cap on out of pocket expenses; half of the law’s deadlines; and income verification for tax credits.
What’s been doled out: more than 1,470 waivers for favored groups like unions; the preservation of subsidies for members of Congress in the exchanges; personal health insurance help for members of Congress, and more.
The irony is the law’s enactment was loaded with trade-offs just like the law itself is built on trade-offs, meaning, healthier people are paying more in their insurance policies to help cover the sick uninsured. Insurance is not as affordable now as the Affordable Care Act proponents will have you believe, as premiums, deductibles and co-payments are spiking higher across the country.
Phil Kerpen, president of American Commitment, nailed it when he said that the law enacts utopian benefits nobody can afford while uninsuring the insured. The health reform law mandates that people must buy coverage with essential benefits that they may not want or need, including maternity and newborn care or pediatric eyeglasses even if they are senior citizens.
Remember this: on the millions of policies getting canceled in the individual market President Barack Obama said: “Even if it's a small percentage of people. I mean, we're talkin' about 5% of the population.”