Fox's Megyn Kelly misrepresented a recent Justice Department memo to make it appear as though employer-provided health plans would be forced to change under the Affordable Care Act. But group plans that existed before the passage of the law remain unaffected unless insurers and employers choose to substantially alter them.
The Affordable Care Act exempted insurance plans that existed before March 23, 2010 from many of its regulations, allowing insurers to continue offering those plans on the condition that they did not significantly change either the benefits offered or the overall cost. Those policies are known as "grandfathered plans."
On the November 18 edition of Fox News' The Kelly File, host Megyn Kelly highlighted language from an October 2013 Department of Justice brief which estimated that most plans would lose their grandfathered status over time. Kelly claimed the memo contradicted President Obama's assertion that the vast majority of insurance cancellations were in the individual market, as opposed to employer provided plans. Kelly hosted Andrew McCarthy who used the brief to call the ACA "a massive fraudulent scheme" in a National Review Online post. During the segment, McCarthy claimed the brief predicted that consumers in the group market would "lose their coverage."
But the brief does not say that people who are insured in group plans, such as employer-sponsored insurance, will lose their coverage. Rather, it points out that group health plans could merely lose grandfather status if they're changed. As the Kaiser Family Foundation explained in their 2012 Employer Benefits Survey, under the ACA insurance plans do not lose grandfathered status unless the insurer makes "significant changes that reduce benefits or employee costs." In fact, according to the Kaiser survey, the primary reason firms chose not to grandfather a health plan was to maintain flexibility in making future plan choices.
In a Huffington Post blog, Bob Semro, a policy analyst at the Bell Policy Center, explained that grandfathered plans "could continue to be available to policyholders as long as the insurance company chose to offer it" and pointed out that "insurance carriers have many motivations to discontinue older plans":
Under the ACA, a grandfathered plan can lose its status if out-of-pocket costs increase above the rate of medical inflation plus 15 percent, co-insurance rates increase, annual benefit limits decrease, employer contributions decrease by more than 5 percent, or the plan eliminates coverage for a previously covered condition.
With the exception of those provisions, designed to protect consumers, a grandfathered plan could continue to be available to policyholders as long as the insurance company chose to offer it.
And that is the key. Insurance companies are not required to offer these plans forever, and the ACA cannot force them to do so - in the same way that the ACA cannot force insurance companies to keep the same doctors and hospitals in their provider networks. And insurance carriers have many motivations to discontinue older plans.
In a post on Kaiser Family Foundation's (KFF) Policy Insights blog, KFF senior vice president Larry Levitt pointed out that "the effects throughout the insurance market are likely to be quite modest in either case" and that the loss of grandfathered status will allow insurance holders to access greater protections:
Many of the ACA's provisions apply regardless of grandfathered status. For example, all plans have to allow dependents up to age 26 to enroll (though only non-grandfathered plans are required to enroll dependents who have access to their own employer coverage). And lifetime limits on coverage are now prohibited. But here are some of the key provisions that do not apply to grandfathered plans:
- A requirement that plans provide preventive services with no patient cost-sharing.
- State or federal review of insurance premium increases of 10 percent or more for non-group and small business plans.
- A rule allowing consumers to appeal denials of claims to a third-party reviewer.
- Starting in 2014, the requirement to provide the minimum "essential health benefits." (Note that this requirement does not apply to large employers, whether or not they have grandfathered status.)
Levitt also pointed out that the only provision "that grandfathered plans are exempt from that is likely to have a material effect on costs is the preventive services requirement" and that according to projections, the addition of this requirement would only increase premiums "by about 1 percent."