20 Million More Americans Could Lose Insurance Thanks to Obamacare
Posted on February 24, 2014
The same failed Obamacare promise that plunged the individual health-care market into chaos last year is now hitting small group plans and could result in lost coverage for 20 million Americans.
Obamacare’s employer mandate does not apply to businesses with fewer than 50 employees, but many of those those companies are still receiving notices from their insurance providers informing them their previous plans are being canceled because they don’t contain all the provisions required under the new law.
Much like individual policyholders last year, small group plan holders are discovering their plans don’t qualify for being grandfathered, despite the famed assurance that if they liked their plans they could keep them.
“If you had your plan prior to March 2010 when Obamacare became law, it was supposed to be grandfathered in. You were supposed to keep it, but the Department of Labor came out with these grandfather regulations. It’s almost like telling a guy you can keep walking on the beach as long as you don’t get any sand on your feet. It’s almost impossible not to violate,” said National Center for Public Policy Research health-care analyst Dr. David Hogberg.
“If one of your co-pays goes up $10 over one year, your plan is no longer grandfathered. If the co-insurance you pay for a procedure was at 15 percent and they moved it up to 16 percent, it is no longer grandfathered,” he said.
Hogberg points to Labor Department statistics that admit 66 percent of small group plans will fail to be grandfathered because of those types of technicalities. With 31 million people employed by firms with less than 50 employees, some 20 million Americans are facing cancellation of their policies.
“ It was obvious from the start that these regulations were going to result in loads of people losing their health insurance, but the president kept making that promise that if you like your insurance you can keep it, when he should have known better and I kind of suspect that he did know better,” Hogberg said.
The issue is not just theoretical for Hogberg, whose employer has fewer than 50 workers. In January, the National Center for Public Policy Research was informed by Kaiser Permanente that the policy the organization used since 1996 no longer met federal standards and had to be canceled. Hogberg said the plan Kaiser now recommends requires a six percent hike in premiums, which is a much better deal than other small firms are seeing.
Hogberg said his boss noted the cancellation would provide most small employers plenty of incentive to scrap insurance altogether and force employees onto health-care exchanges. He said it’s hard to estimate how many businesses would actually do that.
Another concern for Hogberg is how the story seems to be slipping below the radar for a mainstream media that were all over the headaches caused by individual policies getting canceled. He said it’s probably because of how enrollment periods are defined for different groups.
“Individual policies are mostly renewed in January of each year, and so these cancellation letters had to all be sent out over a period of a few months. Small group plans are renewed practically every month,” Hogberg said. “I think that’s one reason why the media might not be giving small group cancellations quite the same coverage because it’s happening over a more protracted period of time. The number of cancellations doesn’t escalate very quickly, so at this point it’s not making a huge media story.”
However, the number of Americans set to lose their small group plan coverage is much greater than those affected by the individual market, whether their employers end up finding another plan or dropping coverage and forcing employees to find insurance on the exchanges. As a result, Hogberg predicts this will be another black eye for Obamacare.
“I think this is another reason why Obamacare is in such trouble. First of all, the law shouldn’t be forcing people to lose their insurance to begin with. But if that’s going to happen, if many people are going to lose the plans that they like, I suspect most people would at least prefer to get a new plan that’s better than the old one,” Hogberg said.
“So far, I really don’t see much evidence that that’s happening and quite a bit of evidence that it’s not. People are paying higher premiums and higher out-of-pocket costs. Networks of doctors and hospitals are more restrictive, ” he said. “I suspect the Obama administration and other Obamacare supporters are kind of in denial about that. Maybe that denial will end come November, but who knows?”
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