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President Barack Obama’s apology and administrative pivot to stop a wave of insurance plan cancellations has hardly quieted accusations that he misled millions of Americans when he said "If you like your plan, you can keep it."
Facing these criticisms, the Democratic leadership has rallied around the president. House Minority Leader Nancy Pelosi, D-Calif., said he actually took more blame for what happened than he might deserve.
"The law does not demand that all of these cancellations go out," Pelosi said on NBC’s Meet the Press.
We have looked at variations of this claim before, most recently when former Obama adviser Ezekiel Emanuel said, "The insurance companies are making that choice (to cancel or change policies), not the president." Our conclusions remain the same. While there’s an element of truth to the statement, it ignores the ways that the Affordable Care Act pushes insurance companies to change the plans they offer.
The Affordable Care Act sets certain standards for the services pretty much every plan must cover. There are 10 "essential health benefits" and the list includes emergency services, maternity care and mental health care.
If policyholders bought plans before Obama signed his reform into law on March 23, 2010, they’re considered "grandfathered." They can keep their plans, so long as those plans don’t change much.
We don’t have good information on how many cancellation notices are for plans that could continue if the insurance company wanted. But we do know two things.
First, it doesn’t take much for a plan to lose its grandfathered status. A hike in a co-pay of $5 plus the rate of medical inflation could tip a plan over the edge.
Second, once a plan is poised to lose its grandfathered status, it’s on the road to oblivion. The Health Insurance Portability and Accountability Act of 1996, known as HIPAA, says that if an insurer wants to end a policy, it needs to give policyholders 90 days notice as well as information about alternative coverage plans that insurer is offering. That’s essentially the message that many individual-market policyholders have been getting in the mail these days.
Pelosi’s spokesman, Drew Hammill, told PolitiFact that insurance companies have options.
"Except for these ‘grandfathered plans’ health insurers in the individual market have to adopt new consumer protections," Hammill said. "In some instances, insurers are doing this by cancelling current plans rather than simply upgrading them. Nothing in the law requires the cancellation of plans as the leader said today."
Some health policy experts told us that yes, in a technical sense, insurers are pulling the plug on these old, grandfathered policies. Timothy Jost, a Washington and Lee University law professor, said that "if a grandfathered plan is being terminated, it is the insurer’s decision -- nothing in the law requires it."
But other experts said that while this is technically true, it gives a distorted view of what’s going on.
The law places grandfathered plans in such a straitjacket -- unable to attract new individual policyholders and unable to adjust terms to market conditions -- that it’s only a matter of time before companies are driven to pull the plug. To ignore the government’s role in establishing the parameters for this highly regulated and highly competitive industry, they say, is substantially misleading.
"Insurance companies cannot continue to sell individual policies that don’t meet the requirements of the essential benefit package, either to individuals or to small businesses, as of Jan. 1," said Gail Wilensky, the head of Medicare and Medicaid under President George H.W. Bush. "But since the insurance companies are not allowed to continue to sell these plans that the person previously had bought and may have liked, they are effectively being forced to change their plan."
By all accounts, even the employers who are offering grandfathered plans to their employees are dwindling over time. The annual study of health insurance by the Kaiser Family Foundation and the Health Research & Educational Trust found that the percentage of workers enrolled in grandfathered plans has decreased from 56 percent in 2011 to 36 percent in 2013.
Another study, by the International Foundation of Employee Benefit Plans, found that of the one-quarter of organizations that still have a grandfathered plan, less than half expect to keep their grandfathered status beyond the next two years. In other words, the grandfathered plan is slowly but steadily becoming a dinosaur.
Pelosi said the Affordable Care Act doesn’t require insurance companies to send out the cancellation notices that people have been getting. While there’s some element of truth to this statement, one of the major thrusts of the law is it sets minimum standards. The law intentionally makes it difficult for companies to avoid these minimums and the industry has responded by moving away from sub-par plans. Pelosi’s statement ignores the factors in the law that push companies in a certain direction.
We rate the claim Mostly False.
NBC, Meet the Press, Nov. 17, 2013
Email interview with Drew Hammill, communications director for Rep. Nancy Pelosi, Nov. 17, 2013
PunditFact, Ezekiel Emanuel says insurance companies canceling policies, not Obama, Nov. 3, 2013
PolitiFact, Valerie Jarrett says 'nothing in Obamacare forces people out of their health plans.', Oct. 30, 2013
Kaiser Family Foundation/Health Research & Educational Trust, "2013 Employer Health Benefits Survey," Aug 20, 2013
International Foundation of Employee Benefit Plans, "2013 Employer-Sponsored Health Care: ACA’s Impact," 2013
Kaiser Health News, "FAQ: Grandfathered Health Plans," Aug. 28, 2013
Washington Post, "This is why Obamacare is canceling some people’s insurance plans," Oct. 29, 2013
Washington Post Fact Checker, "Obama’s pledge that ‘no one will take away’ your health plan," Oct. 30, 2013
Washington Post, Fact Checker: The White House effort to blame insurance companies for lost plans, Nov. 7, 2013
Email interview with Gail Wilensky, former head of Medicare and Medicaid under President George H.W. Bush, Oct. 30, 2013
Email interview with Timothy Jost, Washington and Lee University law professor, Oct. 30, 2013
U.S. Government Printing Office, "The Patient Protection and Affordable Care Act," March 23, 2010
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