At least half of Americans with either employer-sponsored or
self-obtained health insurance can’t keep the plans they had back in
2010, because of changes wrought by Obamacare, a critic charges.
Here’s why it’s hard to tell if that’s true.
By Mark Trumbull
WASHINGTON — Embroiled in controversy over the veracity of his pledge
that if Americans like their existing health insurance they can keep
it, President Obama has responded in the main by saying that the “vast
majority” of health plans aren’t changing.
The White House argument is this: The employer-based plans that cover
most working Americans (and 49 percent of the total population) are
remaining in place, even as the Affordable Care Act moves toward full
So, if that’s true, then only a small slice of Americans — the 5
percent who buy coverage in the individual marketplace — are sometimes
seeing big changes in their insurance.
But critics of the Obama administration say this isn’t the case.
Employer-sponsored insurance is also changing at least in part because
of Obamacare, some contend.
Sean Hackbarth, who writes a policy blog for the U.S. Chamber of
Commerce, says the Obama administration itself knew that
employer-provided health plans would widely lose their “grandfathered”
status and be subject to a range of Affordable Care Act provisions —
just as happened with plans sold on the individual market.
In 2010, he points out, the administration estimated that 51 percent
of employer plans would relinquish their grandfathered status by 2013.
Drawing on the same administration estimates, Avik Roy of the
conservative Manhattan Institute wrote a commentary in Forbes last
week under the headline: “Obama Officials In 2010: 93 Million
Americans Will Be Unable To Keep Their Health Plans Under Obamacare.”
That’s 93 million who can’t keep their plans, out of some 181 million
who have either employer-provided insurance or individual insurance in
2013, Mr. Roy argued.
Well, not so fast. Determining whether Mr. Obama is breaking his “you
can keep it” pledge when it comes to employer plans involves more than
tallying numbers of people who have or don’t have “grandfathered”
Yes, a lot of US health insurance plans are changing — for both
employer-provided and individual coverage. But this evolution (and the
resulting loss of grandfathered status under the law) isn’t all being
forced by Obamacare.
In fact, there was a lot of evolution — and no guarantee of being able
to “keep” one’s plan — in both employer and individual insurance
marketplaces before the Affordable Care Act (ACA) came along.
According to journalists at the fact-checking website PolitiFact, the
consulting firm Mercer found that “in each of the years from 2005 to
2008, roughly a quarter of companies said they made changes to their
plans that would result in employees paying a greater share of the
cost. In 2009 and 2010, it rose to one-third.”
In that context, the debate is partly a semantic one.
Arguably, Obama looks untruthful for appearing to promise repeatedly
something he could never hope to deliver on — that the realm of
insurance outside the sphere of his law would remain static, so that
people could hang onto 2009 plans forever. But, on the other side of
the debate, it may also be naive for anyone to take such an
unrealistic promise so literally.
Still, with several million Americans likely to receive cancellation
letters for their individual insurance policies, Obama’s “you can keep
it” phrasing is getting much greater scrutiny. Many of those people
face a big jump in insurance costs, because the ACA demands that
insurers cover a wider range of “essential” medical benefits.
Obama has been put on the defensive. He added a big caveat to his
“keep it” pledge on Monday. Referring to plans on the individual
market, the president said, “what we said was you could keep it if it
hasn’t changed since the law was passed. So we wrote into the
Affordable Care Act you’re grandfathered in on that plan.”
Because so many plans have in fact changed since 2010, millions of
Americans do not have the choice of keeping the plans they had in
2009. On the employer side, only 36 percent of plans are grandfathered
as of this year, according to the Kaiser Family Foundation, which
tracks changes in health-care markets.
Some health policy experts, interpreting Obama’s words less literally,
say his “you can keep it” pledge is largely true when it comes to
Such plans may evolve from year to year, with benefit tweaks or
changes in cost-sharing formulas — or an employer may swap one
insurance company for another. But the typical employer plan won’t
change much for next year.
“You probably can find a plan similar to what you had before,” says
Gary Claxton of the Kaiser Family Foundation.
That said, Obamacare will affect employer-provided coverage over time
— although experts differ over how big the changes will be. Some
—The mandate that employers with 50 or more full-time workers must
provide health coverage (or pay a penalty) could prod some of them to
shift to a labor force that has more part-time workers, to avoid that
requirement. There’s at least some anecdotal evidence this is already
happening. The employer mandate has been delayed, but is set to take
effect in 2015.
Trader Joe’s recently announced that it would no longer offer health
benefits for part-time workers, opting instead to let them shop for
insurance on Obamacare exchanges. This change could yet end up as a
better deal for most of those workers, Mr. Claxton says. That’s
because Obamacare subsidies insurance for lower-income households, and
Trader Joe’s will provide a health stipend to its part-time workers.
—As of 2018, per Obamacare, employers will face a new tax on
“Cadillac” health plans. That could nudge employers to scale back the
generosity of their plans and to shift more costs to employees.
—The ACA could cause employers to shift more rapidly toward so-called
private exchanges. These marketplaces are distinct from the public
exchanges mandated by Obamacare, but both are venues where people shop
online from a portfolio of health plans. Paul Howard of the Manhattan
Institute has recently argued that the health-reform law is serving to
promote the insurance-exchange concept. It’s hard to separate, though,
how much the shift is being fueled by Obamacare and how much by
broader pressures on employers to manage health costs.
—Obamacare places some new requirements on employer-provided health
plans. The rules don’t necessarily mean big changes for employer
plans. (Large employers don’t have to offer the same package of
“essential benefits” that insurers must offer to individuals in the
Obamacare exchanges.) But, for instance, in 2014 employers face a cap
on the share of the cost that employees pick up for their insurance
plan, so that an employee’s “maximum out-of-pocket” expense would be
$6,350 for the year, or $12,700 per family. That cap applies only to
plans that aren’t grandfathered.