On Thursday, Forbes contributor and former Mitt Romney health care adviser Avik Roy wrote a piece claiming that the Obama administration knew “93 million Americans will be unable to keep their health plans” under Obamacare and that many of them would actually be workers with employer-sponsored coverage. Fox News picked up the claim on Friday morning, and conservative columnists like Charles Krauthammer declared that the health law will disrupt employer coverage in addition to forcing insurers in the individual market to discontinue inadequate plans.
That’s contrary to President Obama’s claim that the majority of Americans who have employer plans will see few changes under the law. But it’s also not exactly true.
Roy’s argument is wrapped up in technical terms that make it sound like a wave of cancelled employer plans are on the horizon under Obamacare:
Section 1251 of the Affordable Care Act contains what’s called a “grandfather” provision that, in theory, allows people to keep their existing plans if they like them. But subsequent regulations from the Obama administration interpreted that provision so narrowly as to prevent most plans from gaining this protection.
“The Departments’ mid-range estimate is that 66 percent of small employer plans and 45 percent of large employer plans will relinquish their grandfather status by the end of 2013,” wrote the administration on page 34,552 of the Register. All in all, more than half of employer-sponsored plans will lose their “grandfather status” and become illegal. According to the Congressional Budget Office, 156 million Americans—more than half the population—was covered by employer-sponsored insurance in 2013.
Under the “grandfather clause,” a plan issued before the ACA was signed in 2010 could remain in place as long as employers or insurance companies didn’t drastically change its terms in a way that would harm the policy holder, like increasing out-of-pocket costs or dropping benefits. However, if a plan did change, it would lose its “grandfather status.” Then, any new plan issued in its place would be subject to Obamacare’s various requirements.
Roy suggests that these requirements are so onerous that an employer-sponsored plan that loses its “grandfathered” designation would be replaced with an entirely different — and the implication is, more expensive — insurance policy with frivolous benefits a worker may not want or need. That equates to millions of workers being “unable to keep their health plans,” in Roy’s view.
But according to Washington and Lee University law professor Tim Jost — widely regarded as one of the nation’s top academic experts on the Affordable Care Act — it’s misleading to suggest that millions of Americans with employer-sponsored health care are in for a rude awakening.
“With large employer plans, those requirements are really pretty minimal,” Jost told ThinkProgress in an interview over the phone. “When [these plans lose] grandfather status, they do have to comply with those ACA requirements, but it isn’t the same requirements that are in the non-group market, and it certainly doesn’t mean that coverage would be lost.”
Obamacare doesn’t require large employers’ plans to meet the same benefits levels as individual policies, which must cover ten “essential health benefits” categories such as prescription drug services and mental health care under the law. That’s because employer coverage tends to already provide far more robust benefits than individual plans.
“So it isn’t like all of a sudden people are going to wake up and find out I don’t have my employer coverage anymore,” said Jost. “It’s just there are going to be some minor changes in those plans that benefit enrollees, and that many employers probably already covered anyway.” These small changes might include things like covering workers’ dependent children, or adding preventative care services, according to Jost. Furthermore, small changes in benefits and rises in workers’ contributions towards their insurance premiums have been a regular part of employer coverage since long before Obamacare was passed.
Jost notes that small employers do have to comply with loftier benefit requirements, including the ten “essential health benefits.” But these smaller companies also are not mandated to provide coverage to their workers under Obamacare.