And this comes from the New Yorker Magazine of all places.
But wait a second says the head of HHS….no plans are getting cancelled:
House Energy and Commerce Chair Fred Upton (R-MI) pressed Sebelius on why the president had made that statement, given recent reports of individual policies being dropped prior to 2014, which is when the law’s major market reforms take effect.
“Mr. Chairman, there was no change,” Sebelius said. “The regulation involving grandfathered plans, which applied to both the employer market and the individual market, indicated that if a plan was in effect in March of 2010, stayed in effect without unduly burdening the consumer with reducing benefits and adding on huge costs, that plan would stay in effect and never have to comply with any regulations of the Affordable Care Act.”
“That’s what the grandfather clause said. The individual market which affects about 12 million Americans, about 5 percent of the market. People move in and out. They often have coverage for less than a year. A third of them have coverage for about six months. And if a plan was in place in March of 2010 and again did not impose additional burdens on the consumer, they still have it. It’s grandfathered in.”
There was no way any insurance company could keep its “grandfathered” status without completely going bankrupt. Wasn’t going happen, and Obama knew it.
Much derision has been heaped on White House consigliere Valerie Jarrett’s tweet last night claiming that “nothing in #Obamacare forces people out of their health plans. No change is required unless insurance companies change existing plans” (this is a “FACT,” she noted). There’s actually a little truth to this: Technically, individual-market plans that qualify as grandfathered under the ACA are exempt from some of the law’s mandates — but not all of them. As long as a grandfathered plan doesn’t undergo any “material changes” after 2010, it maintains its grandfathered status, so it doesn’t have to comply with all of the law’s strictures as other plans do on January 1. But those material changes are almost inevitable, in large part because of the ACA — meaning the plan will almost certainly be cancelled and replaced with a more expensive, more comprehensive plan, as millions of Americans have learned and continued to learn.
There are two, related liberal objections to the idea that the ACA has caused this disruption: One, from Jarrett and more pointedly from ThinkProgress’s Igor Volsky, is that this is because the evil insurance companies are changing their plans to charge you more, and Obamacare thus has to step in to solve the problem. The related complaint, is that, as Chuck Todd put it on Morning Joe this morning, “the insurance companies are taking advantage of this” to cancel plans, as if the ACA was coincidental to the material changes insurance companies were planning to make anyway. This isn’t true.
Volsky wrote, “If insurers make changes that significantly burden enrollees with lower benefits and increased costs they have to come into compliance with all consumer protections.” Indeed, insurers lose their grandfathered status if the plan has a “material change,” defined as “(1) eliminating or significantly reducing benefits; (2) raising co-insurance or co-payments; (3) raising deductibles; (4) reducing employer contributions; or, (5) adding or increasing an annual limit” (for a more detailed description of these limits, see here). Meanwhile, even these grandfathered plans have to comply with a number of new Obamacare mandates — most important, they have to accept applicants regardless of preexisting conditions and charge them the same premiums, they have to eliminate lifetime-spending caps, and they have to cover dependents under 26 for free (there are other rules that also apply to grandfathered group plans). How, exactly, were health insurers supposed to comply with these new mandates (and other ways the ACA is raising costs) without raising customers’ contributions in the way the law says means losing grandfathered status? Obviously, they could have chosen to raise premiums alone — but then customers who don’t expect to use a lot of health care would switch to plans with higher cost-sharing, which ruins an insurance pool.
In other words, the ACA did make it incredibly hard for insurers to continue plans for the millions of Americans who don’t want comprehensive insurance — financially, insurers almost certainly had to adjust them in such a way that they would lose grandfathered status. This isn’t “normal turnover in the insurance market” (though there is plenty of that in the individual market); there’s a reason why an exceptionally large number of Americans are getting cancellation notices this fall.
Meanwhile Sebelius testifys in Congress which can be best summed out thus:
Republicans questioning Sebelius’s actions while Democrats questioning why Republicans are daring to ask these questions.
What this all comes down to is the simple statement from our President: