Over the last day or two, the major breaking story has really been a throwback: in 2010, the Obama administration promulgated rules governing what plans that pre-existed Obamacare would be “grandfathered” under that statute, and allowed to continue. In the context of announcing its rules, the administration predicted that because of their restrictiveness, many millions of Americans would lose their existing insurance coverage, whether they liked it or not. Further, it has been widely reported (as by CNN, here) that Republicans tried to reverse the administration’s “grandfather” rules so that those who liked their insurance would be allowed to keep it, but Senate Democrats voted them down.
Given the lies with which Obamacare was promoted–“If you like your health care plan, you can keep it”–this is of course a blockbuster story. So I spent some time today tracking down the original sources to verify it.
The Obamacare statute provided that plans pre-existing the law would be allowed to continue, but left the details to future administrative action. That came on June 17, 2010, when the Obama administration–specifically, the Departments of the Treasury, Labor and Health and Human Services–promulgated “Interim Final Rules for Group Health Plans and Health Insurance Coverage Relating to Status as a Grandfathered Health Plan Under the Patient Protection and Affordable Care Act.” You can read the rules here; scroll down to Part II.
The basic idea underlying the rules is that if the pre-existing plans remained unchanged, they could continue. If, however, there was any significant change in coverages, co-pays, and so on, then the plan would become subject to all of the requirements of Obamacare (even grandfathered plans are subject to a number of Obamacare requirements). The problem is that the health insurance market is constantly changing, and it is typical for plans to change, to some degree, from year to year. So the administration looked at historical data to estimate how many employer-sponsored and individual plans would likely lose their grandfather status once Obamacare was implemented. The administration’s methodology can certainly be questioned, but the results were as has been reported. This chart sums them up; click to enlarge:
The Obama administration projected low-end, mid-range and high-end estimates for how many plans would be terminated, in total and broken down between large and smaller employers. The bottom line is that the administration expected 51% of all employer plans to be terminated as a result of Obamacare. That is the mid-range estimate; the high-end estimate was 69%. So as of 2010, the Obama administration planned that most Americans with employer-sponsored health care plans would lose them, whether they liked those plans or not.
As for individual, as opposed to group plans, the Obama administration said that data were insufficient to predict how many would lose grandfather status, but in any given year the percentage of such policies losing such status would “exceed the 40 percent to 67 percent range.”
Those numbers starkly contradict Obama’s “if you like your insurance, you can keep it” assurances. But it is worth noting that the percentage of pre-Obamacare plans that would terminate within the first few years after the law was enacted isn’t the main point. The administration never intended to allow any American to keep a non-Obamacare insurance policy for any length of time. In the Federal Register, the administration candidly acknowledged:
The collective decisions of plan sponsors and issuers over time can be viewed as a one-way sorting process in which these parties decide whether, and when, to relinquish status as a grandfathered health plan.
The administration was prepared to be patient as the “one-way sorting process” ran its course, and all Americans lost the plans they had, whether they liked them or not.
That brings us to September 29, 2010, when Senate Republicans brought to the floor a resolution that would have disapproved of, and reversed, the administrative rules that the Obama administration promulgated on June 17. Wyoming’s Mike Enzi sponsored the resolution; the debate that followed is here. Enzi introduced his resolution:
Mr. President, the resolution we are debating today is about keeping a promise. The authors of the new health care law promised the American people that if they liked their current health insurance, they could keep it. On at least 47 separate occasions, President Obama promised: “If you like what you have, you can keep it.”
Unfortunately, the Obama administration has broken that promise. Earlier this year, the administration published a regulation that will fundamentally change the health insurance plans of millions of Americans. The reality of this new regulation is, if you like what you have, you can’t keep it. The new regulation implemented the grandfathered health plan section of the new health care law. It specified how existing health plans could avoid the most onerous new rules and redtape included in the 2,700 pages of the new health care law. …
Unfortunately, the regulation writers at the Departments of Treasury, Labor, and Health and Human Services broke all those promises. The regulation is crystal clear. Most businesses–the administration estimates between 39 and 69 percent–will not be able to keep the coverage they have.
Under the new regulation, once a business loses grandfathered status, they will have to comply with all of the new mandates in the law. This means these businesses will have to change their current plans and purchase more expensive ones that meet all of the new Federal minimum requirements. For the 80 percent of small businesses that will lose their grandfathered status because of this regulation, the net result is clear: They will pay more for their health insurance.
Does this give you a sense of deja vu, or what? The baleful consequences of Obamacare that we are now seeing–there are many more to come–were known and foreseen in 2010. The Democrats voted down the Republicans’ effort to preserve the health care plans that Americans already like on a party-line vote. The Democrats knew that Obama had been lying through his teeth, and they voted unanimously to sustain his lies.
Did the Democrats have a theory? Sure. They argued that if a health care plan changes significantly, then it isn’t the plan you originally bought. And it is common in a variety of contexts for something that is grandfathered to lose that status if it is changed significantly. But there are several problems with the Democrats’ theory: First, it was entirely different from the assurances Obama gave the American people. You may like your insurance perfectly well after a modest change; you may like it better. But that is irrelevant: if the Obama administration thinks your coverage has changed materially, you lose it. Period. Second, it isn’t true that plans lose their grandfathered status only if they are changed in a major way. For example, if there is any increase in the co-insurance rate, no matter how small, the plan terminates.
Even more significant is the fact that under the administration’s regulations, the plan may stay exactly the same, but if one insurance carrier replaces another, the plan loses its grandfathered status and terminates. The effect of this provision is to eliminate competition and make it less attractive, over time, to maintain pre-existing plans. The Republicans read several letters from business groups into the record, at least one of which pointed out the importance of this provision.
Finally, it should be noted that John McCain, now the bete noire of some activists, weighed in powerfully against the administration’s Obamacare rules. Among other things, he pointed out that they do not apply to unions. They can negotiate changes in the pre-Obamacare plans that cover their members without having them terminate. This is one of the weird features of gangster government: the administration passes terrible laws, and then excuses its friends from complying with them. Let’s turn the floor over to McCain:
Mr. ENZI: According to the administration, in small businesses, 80 percent of the people–unless this [Republican resolution] is passed–will lose the insurance they have and like, and in all businesses 69 percent will. Those are not my numbers; those are the administration’s numbers.
Mr. McCAIN: But isn’t it also true that is the case for small business and people and entrepreneurs all over America except the unions? Isn’t that true? Isn’t this a carve-out again, part of this sleaze that went into putting this bill together, part of the “Cornhusker kickback,” the “Louisiana purchase,” the buying of PhRMA–all that went into this–the “negotiations” that were going to take place on C-SPAN that the President said during the Presidential campaign that went from one sweetheart deal cut to another. Part of one of those sweetheart deals was the unions are exempt; is that correct?
Mr. ENZI. That is correct.
So it’s the usual toxic stew of lies, corruption and incompetence that we have come to expect from Barack Obama. But one last point should not go unmentioned: where has the press been in all of this? As of 2010, it was blindingly obvious–was baldly stated by the Obama administration itself–that under Obamacare, far from being permitted to keep your health care coverage if you like it, most Americans’ policies would speedily be terminated, and all would soon cease to exist. Given the dozens of misrepresentations by Barack Obama and other members of his administration, and given the entirely dishonest basis on which Obamacare was rammed through the Democratic Congress without a single Republican vote, and given that Republicans’ warnings were indisputably coming true–was there not a news story here? How can it be that three more years went by before our one-party media thought to mention what happened back in 2010? One can only imagine how the 2012 election might have been different if the electorate had understood that Obamacare was sold on a scaffold of lies.