If You Like Your Health Plan, You Probably Shouldn't Be Able To Keep It
- Many people with existing individual-market coverage are getting notices that their plans are canceled effective December 31, often because their plans do not meet essential coverage requirements under the ACA;
- Though there does not appear to be a sea change in employer practices, some employers are dropping coverage for dependents, retirees and certain employees, with the expectation that they will instead get covered through the exchanges or other sources; and
- Starting in 2o18, employers (especially public employers) will be pushed to slim down gold-plated health plans to avoid getting hit with the "Cadillac tax" on high-cost plans.
But here's the thing: One of the key reasons that America needed health care reform is that a lot of existing health plans were bad. There are a lot of health plans that Americans shouldn't be able to keep.
Some old plans were bad because they had big holes in coverage, like plans with annual and lifetime benefit limits that could leave beneficiaries destitute if they got hit with major illnesses. Other plans were bad because they covered too much, encouraging beneficiaries to consume needless care because they had little or no financial responsibility at the margin.
You might say "if people liked these plans, why not let them keep them?" Well, in the case of gold-plated plans, the problem is that the tax exclusion for employer provided health insurance allows these plans' beneficiaries to effectively shift up to one-third of their health care costs to taxpayers. You should be able to get a very generous health plan, but not with a generous taxpayer subsidy.
In the case of plans with coverage gaps, catastrophic health events can leave these plans' beneficiaries in bankruptcy or getting care they'll never be able to pay for, turning hospitals and taxpayers into insurers of last resort.
America doesn't have a free-market health care system and hasn't for decades. With taxpayer subsidies so embedded in everybody's plan purchasing decisions, taxpayers have a legitimate interest in ensuring that health plans serve the public interest, not just private interests.
If anything, the biggest problem with the ACA is that too many people are getting to keep their existing health plans. Our system of employer-based coverage distorts both the health care and labor markets, which is why health policy wonks left, right and center tend to want to move away from it.
The ACA twists itself in knots in its attempts to get employers to continue to offer insurance coverage, including by imposing an employer mandate that will discourage job creation; letting the employer-based market wither away would have been better policy, even though it would have led to more people having to change plans.
"If you like your health plan, you can keep it" was never a reasonable promise; health reform that addressed America's combination of high cost, middling outcomes and spotty coverage was necessarily going to have to change a lot of people's health plans. So yes, that statement is proving false - and it's a good thing.