The recent discovery that the federal government knew in 2010 that many people would not be able to keep their old health insurance under the Affordable Care Act has made nationwide news. But most of the discussion has focused on the market for individual and small group policies. A much bigger group of people — those of us with employer-provided insurance — are affected by the same “grandfathering” regulation that affects individual policies. And as I pointed out in an op-ed in The Hill yesterday, the Department of Health and Human Services’ 2010 analysis accompanying this regulation predicted that 39-69 percent of employer plans would no longer be grandfathered by 2013. (If you don’t believe me, you can download the grandfathering regulation and read the analysis yourself, on pages 34,550-34,553.)
Why has the effect on employer-provided policies received so little attention, even though it potentially affects a lot more people?
I suspect it’s a transparency issue.
If the employer makes changes to the plan that prevent it from being grandfathered, the new plan must include a number of new, costly coverages, such as childbirth, children’s vision care, psychological services, and substance abuse treatment. But employees do not receive letters in the mail saying that they can no longer continue their prior insurance plan because it does not comply with the ACA. Instead, the employer and the insurance company simply modify the plan, and the premiums change to reflect the cost of the new mandates.
Since employers usually pay most of the premium, employees do not see the full cost increase. Any increase in the employee’s share of the premiums is paid with pre-tax dollars, which further cushions the blow. And since we’re all conditioned to expect the cost of health insurance to go up every year, employees are not likely to ask how much of the premium increase occurred because of the new mandates versus other factors.
As a result, many employees may believe they’ve kept their old health insurance plan even if they haven’t!