Could 93 Million Americans Lose Their Insurance?

In Lying about Lies, Cato Institute’s Michael Tanner digs into the lies, deception and horrible consequences of America’s job killer—Obamacare. Tanner’s story is not a pretty one.

The Obama administration continues to suggest that it’s not the health-care law that is causing people to lose their current plan, but rather unscrupulous insurance companies, which are canceling plans for reasons unrelated to Obamacare.

That’s nonsense. The genesis of the cancellations start with the law’s individual and employer mandates. If the government is going to require you to buy or provide insurance, then it must define what is and is not insurance. This is only logical. If a person could theoretically pay $1 for an insurance plan with a $10 million deductible, it would defeat the whole purpose of the mandate.

Many of the benefits that Obamacare requires are already included in nearly all insurance plans, such as outpatient care, emergency-room treatment, hospitalization, and laboratory tests. Others, however, are less common: maternity and newborn care, mental-health and substance-abuse treatment, prescription drugs, rehabilitative and habilitative services, a wide variety of preventative and wellness services, chronic-disease management, pediatric services, and dental and vision care for children.

It is true that, as the president says, those individuals and businesses who had insurance prior to March 23, 2010, are “grandfathered in,” meaning they theoretically do not have to change their current insurance to meet the new minimum benefit. However, if there has been any “substantial change,” whether instigated by insurers by or the purchaser, to the plan after March 2010, or there is any such change in the future, the plan loses its grandfathered status and can no longer be sold by the insurer.

The law did not specify what would be considered a substantial change, but the Department of Health and Human Services subsequently issued regulations defining substantial change as cutting or reducing benefits, raising co-pays by more than $5 (or the rate of medical inflation), increasing deductibles over a certain threshold, lowering employer contributions, or raising coinsurance charges.

Such minor changes are a normal part of the insurance-renewal process. Previously, they would have gone essentially unnoticed by consumers. Today, they force a wholesale redesign of the policy. Insurers may be technically responsible for the cancellations, but their hands are forced by the law.