In June 2010, less than three months after Obamacare was signed into law, Health & Human Services released initial regulations regarding “grandfathering” of insurance plans, defining which types of existing plans could continue to exist without meeting the new law’s standards.
By HHS’s own admission, most of the 17 million people in the individual market would be forced into transitioning to new ACA-compliant plans “sooner rather than later.”
“The 17 million people who are covered in the individual health insurance market, where switching of plans and substantial changes in coverage are common, will receive the new protections of the Affordable Care Act sooner rather than later,” a press release from the time showed. “Roughly 40 percent to two-thirds of people in individual market policies normally change plans within a year. In the short run, individuals whose plan changes and is no longer grandfathered will gain access to free preventive services, protections against restricted annual limits, and patient protections such as improved access to emergency rooms.”
By comparison, the prognosis for Big Business was much more favorable, according to another contemporaneous press release.
“The 133 million Americans with employer-sponsored health insurance through large employers (100 or more workers) —who make up the vast majority of those with private health insurance today—will not see major changes to their coverage as a result of this regulation,” the release said then. “This regulation affirms that most of these plans will remain grandfathered – more than three-quarters of firms in 2011…”
In November 2010, HHS modified the regulation to provide even further flexibility for larger companies, even allowing them to change insurance providers without losing grandfathered status, despite already giving them favorable treatment. According to the HHS fact-check:
“Previously, one of the ways an employer group health plan could lose its grandfather status was if the employer changed issuers – switching from one insurance company to another. The original regulation only allowed self-funded plans to change third-party administrators without necessarily losing their grandfathered plan status. Today’s amendment allows all group health plans to switch insurance companies and shop for the same coverage at a lower cost while maintaining their grandfathered status, so long as the structure of the coverage doesn’t violate one of the other rules for maintaining grandfathered plan status.”
By comparison, HHS regulations for individual insurance coverage ensured that relatively minor changes to these plans — for example, an increase in the deductible above a certain amount — would result in these plans losing grandfathered status. Whereas the regulations allowed businesses to swap out one insurance carrier for another, buyers in the individual insurance market could not even change plans with the same carrier without losing protected status.
During a White House meeting with President Obama in February 2010, then-House Minority Whip Eric Cantor challenged the President directly about his repeated claims that Americans would be able to keep their existing insurance plans if they desired. The President’s response was that they were not being forced to change, but that they would do so voluntarily in order to get a “better deal.”
“The eight to nine million Americans that you refer that might have to change their health insurance—keep in mind out of the 300 million Americans that we’re talking about—would be folks who the CBO—the Congressional Budget Office—estimates would find the deal in the exchange better, would be a better deal,” Obama said in response to a question from Cantor. “So yes, they would change coverage because they’ve got more choice and competition.”
Only four months later, President Obama’s administration would release the regulations, ensuring that most of the seventeen million people with individual coverage would lose their plans, whether they liked them or not.
