Tag: insurance regulations

ObamaCare Regs Will Increase Premiums, Reduce Wages, Force Americans to Change Coverage

Today, the Obama administration issued new health insurance regulations as part of its effort to implement ObamaCare.  According to The New York Times:

the rules appear to fall short of the sweeping commitments President Obama made while trying to reassure the public in the fight over health legislation.

One of those commitments was that people who are satisfied with their health insurance will be able to keep their existing health plans. Of course, there is a tension between that goal and ObamaCare’s goal of requiring every American to purchase a minimum amount of health insurance coverage.

The new regulations explain how the government will interpret ObamaCare’s “grandfather” clause, which allows some health plans to continue as they exist today. If an insurer makes too many changes to its health plan, or if an employer or individual purchaser selects a different health plan, then the consumer loses the protection of ObamaCare’s grandfather clause. The consumer must then purchase the full array of coverage that ObamaCare requires, which can increase premiums significantly.

How many Americans will lose this protection?  Again, The Times:

About half of employer-sponsored health plans will see such changes by the end of 2013, the administration says in an economic analysis of the rules.

What are some of the ways that consumers can lose this protection?

If, for example, an employer is paying 60 percent of the cost of family coverage, it would run afoul of the rules if it cut its share to 50 percent.

An employer would also lose its exempt status if it increased co-payments for doctor’s visits to $45, from $30 — a 50 percent increase — while medical inflation was 8 percent…

An insurer loses its special protection…if, for example, it requires patients to pay 25 percent of the bill for surgery, rather than the 20 percent charged in the past…

If [insurers] want to retain their grandfathered status, they cannot reduce any annual dollar limit that was in place on March 23.

The upshot of these regulations is this:  Health premiums, which were going to keep rising anyway, will rise even higher as a result of ObamaCare.  If employers or consumers try to cope with those rising premiums by paring back the amount of coverage they purchase, they lose their “grandfather” protections, and ObamaCare forces them to purchase even more coverage.  Damned if you do, damned if you don’t.

The requirement that employers sustain their “contribution” to the cost of health benefits, meanwhile, will hide ObamaCare’s effect on health insurance premiums.  Health economists agree, almost universally, that the “employer contribution” is a fiction; employers merely deduct from the employee’s overall compensation package whatever they pay toward health benefits.  In other words, the employee pays for her health benefits, not the employer.  Forcing employers to maintain their current “contribution” essentially requires them to hide much of ObamaCare’s cost in the form of lower wages, which workers are less likely to associate with the law than rising premiums.