President Barack Obama’s health care promises are being exposed by the details of the actual legislation: Costs will explode, not fall; taxes will have to soar to pay for it; and now we are learning that you won’t be able to "keep your health care plan," either.
The current House health bill will force drastic changes in almost all insurance coverage, including the employer plans that currently work best.
About 177 million people – or 62 percent of those under age 65 – get insurance today through their jobs, and while rising costs are a problem, according to every survey, most employees are happy with the coverage.
A major reason for this relative success is a 1974 federal law, the Employee Retirement Income Security Act (ERISA).
ERISA allows employers that self-insure – that is, those large enough to build their own risk pools and pay benefits directly – to offer uniform plans across state lines. This lets thousands of businesses avoid, for the most part, the costly federal and state regulations on covered treatments, pricing, rate-setting and so on.
Roughly 75 percent of employer-based coverage is governed by ERISA’s "freedom of purchase" rules.
The current House bill says that after a five-year grace period, all ERISA insurance offerings will have to win government approval – both the Department of Labor and a new "health choices commissioner" who will set federal standards for what is an acceptable health plan.
This czar can fine employers that don’t comply and even has "suspension of enrollment" powers for plans that he or she has vetoed, until "satisfied that the basis for such determination has been corrected and is not likely to recur."
In other words, the insurance coverage of 132 million people – the product of enormously complex business and health care decisions – will now be subject to bureaucratic nanomanagement.
If employers don’t meet some still-to-be-defined minimum package, they’ll have to renegotiate thousands of contracts nationwide to Washington’s specifications. The political incentives will, of course, demand an ever-more generous "minimum" benefit and less cost-sharing, much as many states have driven up prices in the individual insurance market with mandates.
ERISA’s pluralistic structure will gradually constrict toward a single national standard.
The new ERISA regime will be especially difficult to meet for businesses that operate with very slim profit margins or have large numbers of part-time or seasonal workers.
They may simply "cash out" and surrender 8 percent of their payroll under the employer-mandate tax.
A new analysis by the Lewin Group, prepared for the Heritage Foundation, finds that some 88.1 million people will be shifted out of private employer health insurance under the House bill. If those people preferred their prior plan, well, too bad, again. There will be no going back.
There’s more. The largest employers – though not all – may clear the minimum bar, at least at first. But in addition to the "health choices" administrative burden, the cost of labor will rise because the House guts another key section of ERISA.
Currently, lawsuits about employee benefits are barred under the law, allowing large employers to avoid the state tort lotteries in disputes over coverage. No longer. Democrats will now subject businesses to these liabilities in the name of health "reform."
So when Mr. Obama says that "If you like your health-care plan, you’ll be able to keep your health-care plan, period. No one will take it away, no matter what," he’s wrong. Period.
What he’s not telling the American people is that the government will so dramatically change the rules of the insurance market that employers will find it impossible to maintain their current coverage and many will drop it altogether. The more the House bill is inspected, the more it looks to be one of the worst pieces of legislation ever introduced in Congress.
Arvid "Dick" Tilmar is a partner in Diversified Insurance Services Inc. in Waukesha and is involved with the Wellness Council of Wisconsin and the Well City Milwaukee project.
