Five Reasons You May Not Get To Keep Your Health Plan, Even If You Like It

The White House remains committed to defending President Obama's promise that "If you like your health care plan, you can keep your health care plan." Obama devoted a significant section of his Wednesday speech in Boston to the proposition. On Monday, his top adviser Valerie Jarrett tweeted this:

The administration's conceit is as follows: The law allows people to stay on any insurance plan they were already on as of March 23, 2010. These are the "grandfathered" plans. Only plans that changed their terms after that date have to be canceled if they don't meet various Obamacare requirements.

This is a very thin defense. Here are several ways Obamacare is (entirely foreseeably) changing people's health coverage in ways they might not like:

1. Plans can lose their grandfathered status because they had modest changes to co-payments, deductibles or other provisions after March 23, 2010. Individuals also can't keep non-compliant plans they signed up for after that date. These two phenomena are the reason so many people with individual market health plans are getting cancellation notices. It was not obvious that the president's promise included a "so long as you were on that plan as of March 2010 and its terms didn't change" caveat.
2. Insurers are allowed to continue to offer grandfathered health plans, but that doesn't mean they have to. Under Obamacare, they may not want to. Kaiser Health News reported earlier this month that some insurers are canceling "guaranteed issue" plans that were marketed to people with higher health costs. Insurers will be better off financially moving these participants into plans in the Obamacare exchanges, where they will be pooled with healthier, lower-cost insureds.
3. The ACA is inducing firms to drop group health coverage for some people. For example, Trader Joe's is ending coverage for part-time workers, and IBM is ending coverage for retirees. They're making these moves because their workers and retirees now have access to coverage through the Obamacare exchanges. These people aren't necessarily getting screwed (some will be better off financially, especially if they have low incomes) but they can't keep their existing health coverage, even if they like it.
4. Starting in 2018, the ACA will impose a "Cadillac Tax" on employer-provided health plans that cost more than $27,500 for family coverage, such as the Goldman Sachs plan that Sen. Ted Cruz (R-Texas) gets through his investment banker wife. This provision is designed to induce firms to reduce the generosity of high-cost plans; people like Cruz with high-end plans may not be able to keep them.
5. The ACA cuts funding for Medicare Advantage, a program that provides private insurance plans to people over 65. The generosity of these plans is widely expected to decline, though effects so far have been modest.

Most of these changes are not happening because of direct government action. The ACA doesn't tell employers they have to drop coverage for part-time workers or slim down their high-cost health plans. It just gives them strong financial incentives to do so.

In general, liberals tend to understand that direct state power is not the only kind of coercive power. In general, they would not find, "I didn't do that to you, I just changed the law in a way that gave a company a strong incentive to do that to you" to be a convincing argument. So I'm not sure why at least some people on the left seem to be buying the White House line on this.

Stepping back, not only was, "If you like your health plan, you can keep it" a lie, it would have been insane if it were true. There is no good way to reform the U.S. health care system without making anybody change health plans.

Our health care system is characterized by astronomical costs, average outcomes, and spotty coverage. Some people have health plans that obscure the real cost of care and drive them to overconsume. Others have plans with big gaps in coverage that could leave them untreated or bankrupt in the case of illness. How could you possibly design health reform around letting people keep both of these kinds of plans?

Obamacare does a good job at getting rid of the too-skimpy plans and does a little bit to discourage overly generous ones. A better reform would have forced more people off the plans they have now. For now, some people will lose health plans they wanted to keep, but not as many as I'd like.