At this point, everyone generally accepts that the President’s purported one-year delay in forcing you to lose your individual health insurance policy (and, more importantly, corralling you into the Obamacare exchange) was political grandstanding amounting to almost no practical benefit. At last check, 19 states had rejected the so-called “fix.” For those that have adopted it, congratulations on delaying the inevitable.
The Obama administration has recently tried to reframe the narrative of this fiasco by focusing on the fact that only 5% of Americans purchase an individual health insurance policy. After all, why concern ourselves over the health plan of 14 or 15 million Americans when their sacrifices will benefit the much grander scope of universal utopia?
Yet, even on the employer-sponsored group health plan front, Avik Roy, AEI, and McClatchy (among others) have reported on the prolific number of employer plans expected to lose grandfathered status. Roy’s post at Forbes estimated that 93 million Americans are likely to be affected by an employer plan’s loss of grandfathered status by highlighting the tri-agency’s (HHS/DOL/IRS) own estimates from page 34,552 of the 75th volume of the Federal Register:
“Under this assumption, 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.”
If you’re reading along at home, might I suggest you now turn the page of the Federal Register…35,556 times. Because there’s another juicy nugget on page 70,118. (2010 was a busy year for the bureaucratic scriveners.)
Initial Rule Prohibited Change in Insurance Policies
To first set the scene, there are two different approaches employers can take in how they pay for your health benefits. The first approach is to pay a premium to an insurance company that will take on the financial risk and pay benefits pursuant to the terms of the insurance policy. The second approach is for the employer to self-fund the benefits, generally hiring a third-party administrator to handle claims but not assume the financial risk of paying the benefits.
The initial set of regulations provided that “[f]or fully insured group health plans, another change that would require a plan to relinquish grandfather status is a change in issuer.” In other words, employers were locked in with whatever insurance policy they had on March 23, 2010.
On the other hand, the rules said that changing the administrator of a self-funded plan was no biggie: “The Departments also considered whether a change in third party administrator by a self-insured plan should cause the plan to relinquish grandfather status. The Departments decided that such a change would not necessarily cause the plan to be so different from the plan in effect on March 23, 2010 that it should be required to relinquish grandfather status.”
Did that drastically different approach for insured and self-funded plans make sense? Nope.
Amended Rule Allows Change in Insurance Policy
Back to the nugget on page 70,118. It’s here that the administration implemented their administrative “fix” for employer plans, albeit with far less fanfare. Under the amended regulations addressing grandfathered plan status, the tri-agencies reversed course and decided that your employer can change insurance companies without losing grandfathered status.
“After reviewing the comments concerning this issue and further analyzing the statutory provision, the Departments have determined that it is appropriate to amend the interim final regulations to allow group health plans to change a health insurance policy or issuer providing health insurance coverage without ceasing to be a grandfathered health plan….”
So there you go. The audacity of hope, the fierce urgency of now, and the thrill up your leg for being able to change group insurance policies without losing grandfathered status.
The problem: It’s still close to impossible to maintain grandfathered status. Good luck finding another insurance policy that will exactly match the previous one, not to mention avoiding any other tiny changes that cause loss of grandfathered status. And even if the plan manages to stay grandfathered, it still has to conform to many of Obamacare’s most demanding mandates.
Which is why the government itself admitted on the same page 70,118 that the policy change would do little to allow you to keep your employer plan:
The Departments expect that this amendment will result in a small increase in the number of plans retaining their grandfathered status relative to the estimates made in the interim final regulations. The Departments did not produce a range of estimates for the number of affected entities given considerable uncertainty about the behavioral response to this amendment.
In other words, it’s a minor fix that gives the administration cover without truly addressing the problem. Sound familiar?
Why the Grandfathered Plan Rules Keep Changing
Our Constitution uses its first, most prominent provision in Article I, Section 1 to make it absolutely clear that only Congress has the power to create laws:
“All legislative powers herein granted shall be vested in a Congress of the United States, which shall consist of a Senate and House of Representatives.”
The nondelegation doctrine that flows from this provision states that “when Congress confers decisionmaking authority upon agencies Congress must ‘lay down by legislative act an intelligible principle to which the person or body authorized to [act] is directed to conform.’” (emphasis added) (Whitman v. American Trucking Associations, Inc., 531 U.S.457 (2001)).
Somehow, Congress didn’t see fit to meaningfully define the term “grandfathered health plan” in the unreadably long 2,700 pages of Obamacare. PPACA Section 1251(e) defines “grandfathered health plan” without really defining it:
(e) DEFINITION.—In this title, the term ‘‘grandfathered health plan’’ means any group health plan or health insurance coverage to which this section applies.
Does this give the executive agencies (HHS/DOL/IRS) an “intelligible principle” upon which to govern the grandfathered status of health plans under Obamacare? Not really. And the result is that the definition will change at the political whims of the executive branch, creating the resulting unstable and ever-shifting legal groundwork.
President Obama Can Actually Save Your Employer Plan, But He Won’t
As I’ve written previously, there is near absolute executive discretion in determining which plans are “grandfathered.” This means that President Obama can act at any moment to save your employer plan from loss of grandfathered status.
But he won’t, because the administration doesn’t want your employer plan to be different. They seek to preempt the field and create a conformity of coverage. They want you to be a part of the Obamacare system, and eventually in the Obamacare exchanges. They strive for a closed universe consisting of Bronze, Silver, Gold, Platinum.
In other words, the endgame is total control over your health coverage. The sooner your employer plan goes nongrandfathered, the sooner the Obama administration will be in a position to achieve that goal.
