The Left: Obama knows best, or something

Is the health plan you chose before Obamacare good enough for you and your family?  For many Americans, the Obama administration doesn’t think so.

The line from the Leftists is, essentially, “Yeah, President Obama lied to you when he said you could keep your insurance, but it’s totes cool because he knows what’s best for you.” That’s ostensibly how the Los Angeles Times editorial board put it on Friday in their defense of Obamacare amid hundreds of thousands of cancellation letters that insurers are sending out to consumers.

“This fall, thousands of Americans are learning that they can’t keep their insurance policies next year because the coverage doesn’t meet the standards set in the 2010 healthcare law. The only alternative for many will be more comprehensive policies at a higher price,” wrote the Times editorial board. “The cancellations have caused a new wave of outrage against the law and President Obama, who repeatedly pledged that ‘if you like your healthcare plan, you can keep it.’”

“Obama clearly overpromised — not everyone can keep the plans they’ve signed up for since the new law passed,” they explained. “That’s because one laudable purpose of the Affordable Care Act was to eliminate threadbare health plans that covered too little and left policyholders vulnerable to bankruptcy in the event of a major illness or injury. [emphasis added]. The president should have stated more plainly that some plans wouldn’t pass muster.”

This statement largely echoes comments by President Obama, various administration officials, and some congressional Democrats. They act as though Americans were being swindled by insurance companies offering “threadbare” health insurance plans. In reality, however, many chose those plans because they are appropriate for their health expense risks.  Even if you accept that there’s an underinsurance problem, there were only about 30 million people were underinsured in 2012*, or 16.3% of all Americans who had health insurance coverage in that year, according to the Commonwealth Fund.

The 30 million Americans with insurance coverage who are considered to be “underinsured” are much, much less than the 93 million Americans whose health insurance plans will lose grandfathered status under Obamacare, according Avik Roy, a healthcare policy analyst at the Manhattan Institute.  The few plans that remain grandfathered will likely lose that status in the foreseeable future because of (1) the strict regulatory restrictions on staying grandfathered, and (2) the little-known fact that grandfathered plans are still required to comply with many of Obamacare’s mandates.

People covered under plans that lose grandfathered status will see a disruption in their coverage because non-grandfathered plans must meet Obamacare’s full requirements or terminate. Based on this, it would appear that the Obama Administration believes that 60% of Americans enrolled in private health insurance plans have inadequate health insurance that must be modified to meet federal mandates.

Being underinsured once meant that someone lacked sufficient coverage for major medical expenses related to sickness or injury. But now, under Obamacare’s minimum requirements, it means that anyone who doesn’t have a set of benefits deemed “essential health benefits” — for example, maternity and newborn care, pediatric services, and mental health and substance use disorder coverage — has inadequate coverage. Remy’s video at Reason applies this illogic to the pizza market, demonstrating in simple terms that mandating excessive health coverage is just as silly as mandating pizza toppings.

Michael Cannon, director of health policy studies at the Cato Institute, explained “an objective definition of ‘essential’ coverage is impossible” to determine.

“Like ‘medical necessity,’ the only way to determine whether health coverage is ‘essential’ is if the benefits exceed the costs,” wrote Cannon last year. “That is an inherently subjective question that no legislator or regulator, state or federal, can or should try to answer for a diverse population of consumers.”

Cannon’s point is one that HHS was quick to realize. PPACA Section 1302(b) sets forth ten categories of essential health benefits, with explicit instructions for Secretary Sebelius to define the scope of each of those categories (“the Secretary shall define the essential health benefits”).  Sebelius and her burgeoning bureaucracy decided instead to put that burden on each state to create essential health benefits “benchmark plans” that will decide which federally-required Obamacare benefits will be mandated in each state.  There’s a reason HHS went this route – because it’s essentially impossible to define what benefits are “essential.”

Why should a male have to purchase a health insurance policy that coverage maternity and newborn care when he, biologically, can’t have a child? Why should someone without children be forced to purchase a plan that covers pediatric services? Why should an individual without a family history of mental illness have to pay for mental health coverage? Even if they had a history of mental illness, shouldn’t it be their decision to purchase an insurance plan that covers it?

If someone lacks coverage for these things, they are, by the Obama Administration’s definition, “underinsured.” That doesn’t make any sense, whatsoever. What’s more, adding these purported “benefits” only increases the cost for consumers and taxpayers, given the subsidies available to those who make up to 400% of the federal poverty level ($94,200 for a family of four in 2013) to purchase coverage on the Obamacare exchange.

Not to mention the fact that this is all compulsory under the individual mandate, which only recognizes Obamacare-approved coverage as sufficient. You are required to maintain coverage that meets Obamacare’s standards, even if that coverage is not what meets you and your family’s needs. The federal government will now make that decision for you.

Furthermore, the purpose of insurance isn’t to pre-pay for anticipated or routine expenses. It’s to cover the risk of potentially financially disastrous events. How will we ever control health costs or have a functional medical system if our coverage is “fully insured” to the point where all the financial incentives are aligned to over-utilize and overwhelm health care providers?

Some who place their faith in big, centralized government would argue that the entire purpose of elections is to select people to go to Washington to make policy and laws by which Americans have to abide. But Obamacare isn’t about “what’s best” for Americans. It’s a one-size-fits-all approach to healthcare that allows regulators to have more control over consumers, rather allow them to decide for themselves what type of healthcare plan is best for them and their needs. It’s the product of a federal government more interested in augmenting its power to define your needs than preserving your individual liberty.

In the end, one need look no farther than Obamacare’s Cadillac tax to see through this argument that the reason you can’t keep the plan you like is because it underinsures. PPACA added a new Internal Revenue Code Section 4980I that imposes a 40% excise tax on your employer starting in 2018 for coverage that overinsures, referred to as Cadillac plans. If Obamacare is designed to protect Americans from so-called underinsurance, why would it penalize employers for offering plans that are too good?

The answer is because Obamacare is not designed to protect against underinsurance or prevent overinsurance. It’s designed to make sure your coverage is exactly the type that the federal government deems appropriate. Any health plan you like that doesn’t fit in this narrow Goldilocks range is pegged as too bad or too good. This ensures that the end result will eventually be uniformity with exactly the health coverage that the federal government deems just right.

Brian Gilmore, UL’s resident Obamacare expert, contributed to this post.

*The number of underinsured Americans did rise from 16 million in 2003 to the current number. But keep in mind that the country experienced deep recession that lasted from December 2007 to June 2009 and has seen only tepid economic growth, stagnant wages and job creation over the course of the last four years. In other words, the rise in the number of underinsured Americans isn’t a surprise, given the state of the economy.

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