Why You Can’t Keep The Exact Coverage You Have, Even If You Like It

obama_hc_forumThe problem with President Obama’s statement that “if you like the coverage you have you can keep it” is that it lends itself to a very literal interpretation — the suggestion that health care plans won’t change, rather than the correct interpretation that health reform won’t force you to enroll in a new plan. And now, it’s opening the door for critics and the media to argue that the new grandfather regulations undermine the administration’s claims.

In reality, insurers and self insured employers make policy adjustments all the time and over the last few years they’ve been slowly shifting the risks and costs of coverage to the individual. For instance, just yesterday, a report from Pricewaterhouse Coopers predicted that with medical costs increasing by 9% in 2011, individuals will bear even more medical costs in the form of greater coinsurance and deductibles. The group surveyed 700 companies and found:

– Employers will use more coinsurance at the point of care, moving away from co-payments, which will result in employees paying more out-of-pocket to health providers.

– More employers are dropping health benefits for retirees.

– For the first time, the majority of U.S. workers are expected to have a deductible of $400 or more next year.

The new grandfathered rules wouldn’t prevent plans from changing. They would only discourage employers and insurers from stiffing beneficiaries with very higher costs and insufficient benefits or increasing costs and reducing benefits too quickly. To argue that grandfathering would force people out of their plans assumes that market forces aren’t already pushing people out of existing coverage or leading to significant cost increases and benefit reductions. The grandfathering rules aim to prevent the worst of these changes.