Broken Promises: If You Like Your Plan You Can Keep It

VII. Key Issues: Regulation & Reform >> C. Health Reform >> Affordable Care Act (ACA) >> ACA Repeal >> Broken Promises >> If You Like Your Plan You Can Keep It (last updated 3.18.15)

Promise

Obama’s promise: “If you like your health care plan, you’ll be able to keep your health care plan, period. No one will take it away, no matter what” (June 15, 2009).  This was one of at least three dozen instances in which Barack Obama, as a candidate or president, made this pledge.  At least 33 Senators and 61 House members likewise are on record as having made similar promises.

Reality

Virtually all Americans will see changes in their health insurance coverage, whether they want them or not. These changes will increase the cost of coverage for most Americans. All told, of the 189 million Americans with private health insurance coverage, if the ACA is fully implemented, at least 129 million (68%) will not be able to keep their previous health care plan either because they already have or will lose that coverage by the end of 2014. This includes:

  • 9.2 to 15.4 million in the non-group market
  • 16.6 million in the small group market
  • 102.7 million in the large group market

However, due to a public outcry over cancelled plans in the non-group market, the administration permitted an extension for some plans through 2016 (see Components of ACA Delayed/Altered).  UMN economist Steve Parente estimates that “on average roughly 15% of plans offered in 2013 will not qualify for sale on the insurance exchanges once all extensions are completed. Depending on the state, as many as 60% of the plans sold in 2013 would not be permitted for sale.”

Mandatory Changes Affecting All Health Plans. Some rules apply to all health insurance plans, even those that are “grandfathered”: (1) Plans can no longer impose annual or lifetime limits on how much health care coverage people may receive; (2) they must offer dependent coverage for young adults until age 26; (3) plans cannot retroactively cancel coverage because of a mistake made by plan members when applying;[14] and (4) waiting periods for new employees cannot exceed 90 days.

Mandatory Changes Affecting All Non-Grandfathered Health Plans. Unless grandfathered, health plans will also be required to cover certain preventive care services at no cost.

Mandatory Changes Affecting Individual and Small Group Market. Other rules apply only to the individual and small-group markets (whether or not coverage is provided through the Obama-care health exchanges). Beginning in 2014, Obamacare will require all nongrandfathered health plans in the individual and small-group markets to cover essential health benefits (EHB), a broad range of services. These run the gamut from mental health care to preventive and wellness services. Many of these benefits were already routinely offered in employer health insurance plans, but others, such as dental care for children, were far less common. According to a study at HealthPocket.com, “less than 2 percent of the existing health plans in the individual market today provide all the Essential Health Benefits required under the Affordable Care Act.”
Higher premiums will result in any plans that formerly lacked these benefits. One of the most controversial of the “essential” health benefits is the contraception mandate—a threat to religious liberty sufficiently large that it has spawned at least 60 different lawsuitsAccording to the American Action Forum, “premium increases associated with coverage of the essential health benefits have ranged from 0.13 percent in Rhode Island to 33 percent in Maine, with most states expecting single-digit increases.”
Apart from telling individual and small-group plan members what benefits they must have, the law put a floor of 60 percent on the actuarial value of coverage, meaning that such plans had to be arranged to cover at least 60 percent of the expected costs for the average enrollee. This will result in further premium increases given that more than half the plans currently available on the individual market do not meet this 60 percent threshold. Indeed, 12 percent of individual and small-group plans have an actuarial value between 35 percent and 49 percent.
Premiums in the individual and small-group markets will escalate further owing to “modified community rating” (which prohibits insurers from charging their oldest subscribers more than three times the amount charged to any younger subscribers) and “guaranteed issue” (requiring insurers to take all comers, including those with preexisting conditions).

Premium Increases in Non-group Market. A large number of those who now buy in the individual market (19.4 million Americans) and small-group market (28.5 million) will face significant changes in benefits as well as higher premiums. People now buying their insurance in the individual market will see the greatest so-called “rate shock.” The American Action Forum recently compared premiums for the lowest-cost plan available in the nongroup market in January 2013 to the lowest cost bronze plan available on the exchange on October 1, 2013. On average, a healthy 30-year-old male nonsmoker will see his lowest-cost option increase in price by 260 percent. The amount varies by state, but an increase was observed in every state and in the District of Columbia, ranging from a low of 9 percent in Massachusetts to a high of 600 percent in Vermont. A Manhattan Institute analysis similarly concluded that 27-year-old males who purchase the least-expensive plan through the exchange will see their rates go up by an average of 97 percent (with only two states experiencing lower average premiums, Colorado and New Hampshire). For 27-year-old women, the average increase will be 55 percent (only four states would see lower average premiums, Colorado, New Hampshire, Ohio, and Rhode Island). For 40-year-olds the projected increases were 99 percent for men and 62 percent for women.
University of Minnesota health economist Steve Parente notes that “The law’s “reinsurance” program will also expire in 2017. Health insurers will no longer be able to bill the government for 80% of a patient’s health-care costs when they make more than $45,000 in annual claims. The multibillion-dollar risk corridors for insurance companies will also sunset in 2017—ending the taxpayer bailouts that kick in when insurance companies providing ACA plans lose money. Insurance companies will have neither option by 2017, leaving consumers to pick up the tab through premium payments. Federal subsidies will be unable to keep up with such dramatic rate spikes.”

Premium Increases in Small Group Market. The small-group market will also see higher prices. The National Journal’s independent assessment concluded that even after taking into account subsidies available on the exchanges, 66 percent of workers with single coverage and 57 percent of workers with family coverage will face higher premiums on the exchange compared to what they would pay for employer-sponsored coverage. Admittedly, these increases will be smaller for grandfathered plans, but only about half of small-group workers are enrolled in grand-fathered plans. Already this is a decline from 2011, and eventually all plans will lose their grandfather status.
Defenders of the ACA say the enhancements in benefits are worth the added premiums, but this is questionable. There was nothing stopping plans from including any of the benefits now being forcibly imposed under the ACA. That they did not do so voluntarily implies that the added premium costs associated with such plan enhancements were not worth the added cost to their customers. By definition, in forcing people to do what they would not do voluntarily, the ACA reduces the social welfare of a large number of Americans.
Yet the ACA also will cause some employers to drop coverage, knowing that their employees can obtain coverage through the exchanges. Estimates of how many will do so are all over the map, with CBO estimating only 9 million employees will lose their employer-sponsored coverage, the Medicare actuary projecting the figure will be 14 million, and former CBO director Douglas Holtz-Eakin calculating the total may be as high as 35 million. As well, Obamacare will slash payments to Medicare Advantage plans, culminating (according to the Medicare actuary) in about half of Medicare Advantage plan members losing their coverage and being forced back into the wasteful and inefficient Medicare fee-for-service system.

How Many Will Literally Lose Their Plans

  • Employer-based Coverage.  The various estimates shown are in reverse chronological order.
    • Steve Parente. University of Minnesota health economist estimates that over 5 million will lose employer-based coverage by the end of the decade.
    • Congressional Budget Office. In April 2014, CBO projected that 8 million fewer would have employer-based coverage in 2018 compared to  a hypothetical world without the ACA.
    • RAND Corporation. The RAND analysis conducted in 2012 before the June Supreme Court decision on the individual mandate shows that as of 2016, a net of 4.2 million more would have employer-based coverage under ACA compared to a hypothetical world without it. However, a total of 41 million with employer-based coverage would end up changing plans, with 3.5 million moving to Medicaid, 1.9 million moving to the individual exchange, 34.5 million obtaining coverage through the SHOP (small employer) exchange and 1.1 million becoming uninsured (Table 1).
    • Congressional Budget Office. In March 2012, CBO estimated a baseline estimate showing that a net of 3 million to 5 million fewer non-elderly people will obtain coverage through their employer each year from 2019 through 2022 than would have been the case before the law was passed. In this baseline estimate, CBO calculated that 3 million people will turn down their employer-offered plan to obtain it from another source, such as the exchanges or Medicaid. In many cases, they will do so because they consider the employer’s offering to be unaffordable or lacking too many features they need. CBO also calculated four alternative scenarios showing the impact of different assumptions on these baseline estimates. One scenario resulted in a net gain of 3 million people with employer-sponsored insurance. The other scenarios resulted in declines in employer-based coverage of 10 million, 12 million, and 20 million respectively.
    • American Action Forum. In August 2011, AAF calculated that the ACA “provides strong incentives for employers – with the agreement of their employees – to drop employer-sponsored health insurance for as many as 35 million Americans, perhaps leading to widespread turmoil in labor compensation and employee insurance coverage – and raising the gross taxpayer cost of the subsidies to roughly $1.4 trillion in the first 10 years.”
    • Urban Institute. In December 2010, Urban Institute calculated that if the ACA were fully implemented in 2010, there would be 500,000 fewer people with employer-based coverage than if ACA had not been enacted.
    • Lewin Group. In June 2010, the Lewin Group calculated that if the ACA were fully implemented in 2011, 17.2 million non-elderly would lose employer-based coverage because their employers dropped it, but there would be offsetting gains in employer-based coverage of 14.4 million leaving a net of 2.8 million fewer people with employer-based coverage than if ACA had not been enacted (Figure 8).  However, the total number who would lose their current employer-based coverage would be 23.9 million, including 6.8 million who would shift to obtaining such coverage through the SHOP exchanges. Of the remaining 17.2 million, 12.5 million would obtain coverage through the individual exchange, 3.7 million would end up on Medicaid, and 1.0 million would become uninsured (Figure 9).
    • Centers for Medicare and Medicaid Services, Office of the Actuary. The Medicare actuary estimates that 14 million will lose coverage due to employers dropping their plans (p. 7), but the net change in employer-based coverage would range from a temporary increase of 0.5 million in the years 2010-2013, growing to 2.5 million by 2015 but subsequently declining by 2.4 million by 2018 (Table 2).
  • Non-Group Coverage. The various estimates shown are in reverse chronological order.
    • Rove, Karl. The Obamacare Debate is Far From Over. “A Dec. 26 Associated Press survey found 4.7 million policies were canceled last year as out-of-compliance with ObamaCare’s mandates. Fox News took the AP’s work and has continued updating it. As of March 6, Fox reported that the number of cancellations had grown to 6.3 million. That figure did not include policies canceled in 11 states—Arizona, Arkansas, Massachusetts, Missouri, Ohio, Oklahoma, Rhode Island, Texas, Utah, Vermont and Wisconsin—which represent 24% of the nation’s population. If policies were voided in those states (which did not collect the data) at the same rate as the rest of the country, the total of canceled policies could be around 9.3 million nationally.” (Wall Street Journal, 4.10.14)
    • RAND Corporation. The 2012 RAND analysis cited above showed that of 17.7 who would have non-group coverage in 2016 without ACA, only 0.2 million would retain non-group coverage under ACA. Most (14.1 million) would switch to individual exchange coverage, another 1.9 million would obtain SHOP (small group) exchange coverage, 0.3 million would obtain employer-based coverage, 0.6 million would end up on Medicaid and 0.6 million would become uninsured (Table 1).
    • Congressional Budget Office. In March 2012, CBO developed a baseline estimate showing that 1 to 3 million fewer non-elderly people will obtain non-group coverage each year from 2019 through 2022 than would have been the case had the law never passed.
    • Lewin Group. In June 2010, the Lewin Group calculated that if the ACA were fully implemented in 2011, 6.7 million of the 14.3 million non-elderly who would have had non-group without the ACA would retain non-group coverage outside the exchanges. The rest would move to the individual exchanges (4.1 million), the SHOP exchanges (0.4 million), employer-based coverage outside the exchanges (2.1 million), Medicaid (0.7 million) or become uninsured (0.2 million)  (Figure 9).

Media Coverage

PolitiFact has designated President Obama’s promise that “If you like your health care plan, you can keep it” as their “Lie of the Year” for 2013. However, between 2008 and 2013, it has several times been more ambiguous in its treatment of this claim:

  • In an October 7, 2008 debate, candidate Obama stated “if you’ve got a health care plan that you like, you can keep it.” Politifact rated this statement as True on grounds that “Obama is accurately describing his health care plan here. He advocates a program that seeks to build on the current system, rather than dismantling it and starting over.”
  • In an August 11, 2009 town hall meeting, President Obama stated: “If you like your health care plan, you can keep your health care plan.”  Politifact rated this statement as Half True on grounds that “It’s not realistic for Obama to make blanket statements that ‘you’ will be able to ‘keep your health care plan.'”
  • PolitiFact appears to have been less than neutral in assessing related claims made by Republicans:

    • In a March 23, 2012 op-ed in the Orlando Sentinel, RNC chairman Reince Preibus stated that “as many as 20 million Americans could lose their employer-based insurance thanks to Obamacare.”  He subsequently indicated this figure was based on a March  2012 Congressional Budget Office analysis showing that up to 20 million figure might lose their employer-based coverage, a claim confirmed by PolitifactPolitifact rated this as Half True on grounds that his claim is partially accurate but leaves out important details and takes things out of context.
    • On June 28, 2012, Republican presidential candidate Mitt Romney stated: “Obamacare … means that for up to 20 million Americans, they will lose the insurance they currently have, the insurance that they like and they want to keep.”  Even while referencing their March 2012 assessment of the virtually identical claim by Reince Preibus, Politifact rated this statement as False on arguing “That number is cherry-picked, and he’s wrong to describe it as only including people who “like” their coverage, since many of those 20 million will be leaving employer coverage voluntarily for better options.” It offered no explanation for why it had changed its rating to False the same statement made in March was deemed Half True.

    • In the October 3, 2012 presidential debate, candidate Romney stated: “Right now, the (Congressional Budget Office) says up to 20 million people will lose their insurance as Obamacare goes into effect next year.” Politifact again assigned this a False rating using the same rationale as provided in June.

Commentary

  • The Selling of Obamacare: The President’s Claim that No Consumers Would Lose their Policies was Unbelievable. “It’s as though two completely separate conversations have been going on. From day one, the health policy community has correctly seen the Affordable Care Act as an attempt to completely change the health care system. This isn’t even controversial. It’s accepted by all as an undisputed fact. However, no one has ever said this to the American people…Then over the past week or so, the general public woke up to some stunning revelations. It now appears that as many as 10 million people will lose their individual health insurance policies as of January 1.” Goodman, John. (Psychology Today, 11.5.13)
  • Why Health Insurance Cancellations Shouldn’t Be a Surprise. “It was always known that the ACA would outlaw millions of existing individual or non-group health insurance policies.  From a policy wonk perspective, that was a no-brainer.  It was self-evident in the law in March 2010 and confirmed in subsequent rules and analyses…What’s frustrating is how it took three and a half years, the failed launch of the federal exchange, and the news media starting to question the administration’s core talking points for anyone to focus on this. Whether you like or dislike the ACA policies, the 19.4 million Americans in the various parts of individual market deserved a heads up.” (ProPublica, 11.5.13)
  • Barney Frank ‘Appalled’ By Obama Administration: ‘They Just Lied To People.’ “President Barack Obama made a major political mistake by lying about the details of his health care plan, according to former House Financial Services Committee Chairman Barney Frank (D-Mass.).’The rollout was so bad, and I was appalled — I don’t understand how the president could have sat there and not been checking on that on a weekly basis,’ Frank told HuffPost during a July interview. ‘But frankly, he should never have said as much as he did, that if you like your current health care plan, you can keep it. That wasn’t true. And you shouldn’t lie to people. And they just lied to people.’…’He should have said, “Look, in some cases the health care plans that you’ve got are really inadequate, and in your own interests, we’re going to change them,”‘ Frank said. ‘But that’s not what he said.'” (Huffington Post, 8.1.14)

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