Wingnut 102: How HR3200 Outlaws Private Health Insurance

by Bruce Webb

Did you know that the House Tri-Committee Bill HR3200 openly and brazenly outlaws new private individual health insurance plans after Year 1 (now set for 2013)? Well me neither, mainly because it is only not true but in total context absurd. Not quite as absurd as the idea that the Moon landings were faked, that walking into a court with a gold fringed flag means you have lost all protections under the Constitution, that you can make yourself exempt from Federal Income tax by declaration, or any of the other engrained notions floating around Wingnuttia. But since somehow Flat Earthers, and Young Earthers and Birthers never go away it is worth examining this particular theory before it goes even more viral, I have already seen it on multiple sites.

What is the origin of this? Well it is from some seemingly clear language in the text of the bill, the entirety of which can be found here: HR3200: America’s Affordable Health Choices Act. This language is not hidden deep within the bill, which is what you would expect if something sneaky was going on (which should have given these guys pause for thought), nope it is right up front on page 16 of the bill, indeed it is in the second section of the bill’s Title 1, that is ‘SEC. 102. PROTECTING THE CHOICE TO KEEP CURRENT COVERAGE’ The language itself:

(A) IN GENERAL.—Except as provided in this paragraph, the individual health insurance issuer offering such coverage does not enroll any individual in such coverage if the first effective date of coverage is on or after the first day of Y1.

Which for some is the “insane” smoking gun, no new individual insurance after 2013. To understand why this is just a profound misreading of the bill (if you don’t already) you can follow me below the fold as I try to explain.

First thing to need to understand that Congressional language is a little tortured to start with. For one thing it is nested, that is you have to work your way up from the language of any given paragraph to the higher level organization and purpose. Second as here you always have to look out for language indicating exceptions.

The top level of this section is titled ‘Protecting the Choice to Keep Current Coverage’ in keeping with Obama’s promise that if you like what you have you get to keep it. But this right is not totally unlimited, there are constraints that both keep employers from gaming the insurance pool and individual employees from evading the individual mandate by buying inadequate (but cheap) coverage. So the legislation sets out some terms and parameters. Right after the title we get sub-section (a) itself titled ‘Grandfathered Health Insurance Coverage Defined’. (Those of you not aware of the term ‘grandfathering’ is the principle that a property right once exercised can not arbitrarily taken away and in some cases is inheritable). Sub-section (a) lays out three limitations (1) Limitation on New Enrollment, (2) Limitation on Change in Terms or Conditions, (3) Restrictions on Premium Increases all of which taken together has led our conspiracy bugs to believe they are hiding a plan to strangle the individual insurance market out in favor of a public plan (which then I guess is free to destroy Tokyo unchecked.)

To understand why this is not so, or at least not so in the sense opponents would like to take it you need to back up and see what Sec 102 was opposing Grandfathered coverage AGAINST. Meaning that to fully understand Sec 102 you need to understand Sec 101 and in particular the meaning of ‘Qualified Health Benefit Plan’ as set out in Sec 101 (b). In order to offer new coverage under HR3200 private insurers simply need to offer a product that meets the new requirements. This is no different than requirements in past legislation that car manufacturers had to include such things as turn-signals, back up lights, seat belts in new model years, but in most cases grandfathered existing cars already on the road.

Backing up a little more. In order for a new plan for individual or group insurance to be offered it has to meet three tests under 101 (b):those of Sub-title B: Affordable Coverage, Sub-title C: Essential Benefits, and Sub-title D: Consumer Protection. If you meet those tests you are allowed to write new individual policies. Nothing is outlawed except the right to sell inadequate plans to new customers.

Now you don’t need to dig into the legislative language to see why this wingnut reading of Sec 102 had to be wrong. For example you could have just examined the CBO estimates of who would be covered by whom in the year 2019.
Insurance Coverage Specifications and associated text. If CBO estimates that in 2019 30 million people will bet getting insurance through the exchange and only 9 million of them covered by the pubilc options, who is left to write the other 21 million mostly individual policies? Private insurance. How can they do that if Sec 102 of the bill plainly makes writing any such coverage after 2013 illegal? Well they couldn’t. Which should suggests that the ‘simple’ reading of Sec. 102 that apparently sets up this paradox was not the correct reading, that in reading it that way that those readers just missed something. Something I suggest was Sec 101, the overall context of the unfolding debate, and CBO scoring.
While I am here. A good part of the progressive blogosphere is rending their clothes and gnashing their teeth because the current plans limit people with employer supplied insurance from resorting to the pubic plan. This too is a profound mis-understanding of the bill, though here from the other side.

For one thing current enrollees in employer plans are protected by the provisions of Sec 102 (b) which provides that they are not bound by a ‘unacceptable’ plans as defined, moreover employers are only given a five year grace period after Y 1 to upgrade their current plan to qualified plan standards. Additionally there are restrictions which keep your employer paid plan from costing the individual employee more than 11% of gross pay and which allow employee opt-out from being stuck in a lower cost plan just to meet that test. In fact I am not seeing in Title II or Title III anything that would keep an employee from choosing individual insurance from the exchange after Year 2 whether that coverage be private or through the public option. Nor am I seeing any ‘firewall’ keeping the employer out of the exchange, or in exchange for a fee amounting to 8% of payroll from simply dropping employer coverage at all.

Now it is more than possible that I am missing something here, and any help would be appreciated. But please if you can supply citations to the particular section of the bill containing the actual controlling language. Because while I can see restrictions that keep EMPLOYERS from shoving people against their will onto the public option, I am not seeing much to keep EMPLOYEES from freely choosing that.

Although even if there were such restrictions they would under some circumstances be defensible. What you don’t want is a situation where the employer sets up what is in effect two plans, one for favored employees and/or low cost insurance needs and another for less-favored employees and/or high cost insurance needs. There are some protections built in by salary, you can’t openly have two vastly divergent systems, but what you need is some protections against employers covertly and selectively pushing some people out the door. For example I would think it would be profoundly illegal to tie decisions on retention of probationary employees by the type of coverage they ‘freely’ chose. But employers know how to pass hints that suggest that people over 50 or who have lots of kids have problems passing probation if they insist on being on the employer plan, hint, hint, nudge, nudge. On my reading the bill attempts as best it can to limit this, but realistically it is hard to remove game playing from any complex system.
On a final note. Those who claim this plan is a blatant, open attempt to drive private insurance out of the market starting on Day 1 are totally off-base. On the other hand there are pretty good possibilities that that will be the effect by say year 20. Because the legislation is wittingly or not set up as a one-way valve, there are incentives in place to let some or all of your employees pass through that valve into the public option, while there is not much incentive to draw them back out. Which is the outcome that some of us dirty socialist DFHs are ultimately hoping for, Universal Single Payer through the back-door.

So people mis-reading Sec. 102 may well have identified the motive and the goal even as they mis-identify the actual mechanism.