23 Jul 2009

Does the New Health Bill Make It Illegal for Private Insurers to Add New Clients?

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One of the most shocking talking points floating around right-wing talk radio goes something like this: “Obama keeps saying that if you like your insurance, you can keep it, and that his plan won’t interfere with existing plans. But that’s a lie! Just look at page 16 of the health care bill online. You can read for yourself that it makes it illegal for private insurers to add new clients once the bill goes into effect. From that point on, if you lose your job or otherwise drop your private health insurance, you’ll have to sign up for the so-called ‘public option.'”

Is that true? Not really, but it’s true that the language on page 16 is ominous. (And of course in this post, I’m taking the bill’s language at face value. Obviously I agree that the grand plan is to get as many people dependent on the government for their health care.)

Here’s the actual text of the health care bill [.pdf]. If you turn to page 16, there is indeed some scary language about private plans needing to have been in effect before the first year in which the “reform” kicks in. So if you are already convinced that Barack Obama is devil spawn, you would look at that and say, “Yep, it’s just like the guy on the radio warned me. I can’t believe the mainstream media is silent on this crime!”

However, let’s calm down for a second. The timing issues on page 16 are referring to those private plans that can be grandfathered in. Obviously, you can’t grandfather in someone’s private coverage, if the person signs up for the coverage after the start of the new regulation. (That would be soning or daughtering in the coverage.)

If you go back to page 14 and start reading from the “TITLE I” section, you’ll see what’s really going on. The health bill is coming up with all sorts of new requirements that any private plan must satisfy. If you agree that the government should ensure “universal coverage” (something with which I DON’T agree, of course!), then there needs to be a list of attributes the private coverage must satisfy. Otherwise, someone could set up a plan that charges $10 per month in premiums, and provides access to free aspirin whenever the person has a headache. Then that person could say, “See, I have health insurance! No need for me to sign up with the government plan.” So obviously that wouldn’t qualify as making sure everybody had health insurance.

Now just to allay people’s (justified) fears that these new conditions would render their current health insurance plan illegal, the bill specifically exempts all previous plans from these new conditions; coverage that existed before the bill goes into effect is grandfathered in. And the conditions for which plans qualify for such an exemption are listed on page 16.

So in conclusion, it’s not true that the ominous language on page 16 is saying private health insurers will be legally barred from accepting new clients after the health bill is signed into law. What is true is that many current plans may not qualify under the new regulations, and so private insurers won’t be able to offer the same plan to new customers once this monstrosity kicks in.

In general, the talk radio hosts’ warnings are correct; this bill will definitely hamstring the private provision of health insurance, not even counting the huge advantage the “public” plan will have because it can draw on tax revenues. But strictly speaking, the language on page 16 isn’t showing that anyone born after 2015 will necessarily have to sign up for ObamaCare. (I imagine that aspect will come in through a different mechanism…)

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