By Kathryn Nix – Imagine if Washington applied Obamacare’s regulatory approach to car sales. Forget choosing your ride based on your own needs and what you can afford. Instead, your wheels would be dictated by what Uncle Sam thought was best for you. For example, you might want—and be willing to pay for—a Mercedes, but Obamacare Motors would let you buy only a Daewoo.
That’s how Obamacare will affect choice in health care coverage. One provision bars insurance companies from putting a limit on how much they will pay in medical claims. This may sound like a consumer-friendly change, but in practice it threatens to abolish lower-cost coverage options.
Employers who can’t afford to offer their workers gold-plated Cadillac plans often provide limited-benefit plans that are quite adequate for the vast majority of consumers. Such policies are especially prevalent among part-time workers or those laboring in low-profit-margin retail or service sectors.
Politico writes that “the ban could in effect outlaw the plans or make them so restrictive that insurance companies would raise rates to the point they become unaffordable.” Increased prices would likely cause many low-wage workers with limited-benefit plans—of which there are 1.4 million—to go without coverage until 2014, when they will be eligible for taxpayer-funded subsidies to help them buy insurance in a government-run exchange.
Yes, you read that correctly. Obamacare could well force hundreds of thousands of currently insured low-income workers to “go bare” for the next three years, and then use tax money to start buying them coverage.
In a letter to Health and Human Services Secretary Kathleen Sebelius, close to three dozen employer groups explain that “while it surely was not the intent of Congress or the administration to increase the number of uninsured, this provision will likely produce exactly this result for some of the most vulnerable of our population, e.g. lower-wage, part-time, seasonal and temporary workers who can only obtain and afford limited-benefit medical insurance coverage.”
Last September 9, President Obama publicly vowed that insurers would “no longer be able to place some arbitrary cap on the amount of coverage you can receive in a given year or in a lifetime.” He failed to mention that caps are one way to provide low-cost insurance to those who might otherwise have none.
Just how hard this provision hits limited-benefit plans is yet to be determined. It will all depend on the regulations HHS conjures up. Hopefully, they will lean on the side of choice and competition, allowing Americans—not bureaucrats—to choose what plans best meet their needs.
Kathryn Nix authored this for Heritage