Will people be able to keep their own, current health insurance plans under the health care reform being considered in Congress?
Like so much else involved in health care reform, the answer depends on interpretation.
There's nothing in the health reform plans under consideration that directly eliminates employer-provided health insurance. Both the House version of health care reform — H.R. 3200, the America's Affordable Health Choices Act of 2009 — and the Senate version from the Health, Education, Labor and Pensions Committee envision the continuation of employer-provided, private insurance backed up by a government-run, "public option" health insurance plan.
"That's the intent, to build on employer-sponsored insurance," said Edwin Park, senior fellow with the Center on Budget and Policy Priorities. "If you're getting coverage now through your employer and your employer continues to offer, you'll get your coverage that way."
The Center on Budget and Policy Priorities examines and advocates for "fiscal policy and public programs that affect low- and moderate-income families and individuals." It is funded by a variety of sources with liberal leanings, including the George Soros-led Democracy Alliance. The center supports the principles of health care reform, but has not endorsed a specific reform proposal.
There's nothing in any version of health care reform legislation that eliminates private health insurance or compels employers to drop their employees' insurance in favor of a public plan.
But opponents of the proposed legislation claim that will be the likely effect.
Critics say the very existence of a government-run, public health insurance option will drive private insurers out of the market and prompt employers to drop their employees' health coverage, forcing them into the public plan.
Under health reform, employers above a minimum number of employees will be required to provide health insurance or face a penalty. The amount of the penalty will depend on the size of the business.
Under the House plan, H.R. 3200, most employers — those whose annual payroll totals $400,000 or more — would pay a penalty of 8 percent of their total annual wages. Smaller employers would pay less — 6 percent for an annual payroll between $350,000 and $400,000, 4 percent for a payroll of $300,000 to $350,000 and 2 percent for a payroll of $250,000 to $300,000. Employers with a yearly payroll below $250,000 would be exempt.
Pay or play?
This scheme will force employers to make a calculation: What will be my penalty for dropping health coverage vs. what does my health insurance coverage cost me now?
Employers who find the penalty is less than the cost of providing insurance may well opt to send their employees into the public insurance pool.
"If you give people a public option, private businesses will say, 'Why should I continue to provide insurance? I'll pay the penalty and let them go over to the public plan,'" said Robert J. Cuomo, dean of the Girard School of Business and International Commerce at Merrimack College. "You're going to wipe out the private insurance sector. Now what you're left with is a government monopoly."
Writing for the Heartland Institute, policy analyst Peter Ferrara argues that cost controls used by the government health plan will put further pressures on private insurers, driving them out of business.
The Chicago-based Heartland Institute is a libertarian-conservative oriented think-tank that advocates for free-market policies.
"The principal reason a government health plan would drive private plans out of business is that the government would have the power to dictate what it would pay doctors and hospitals," Ferrara wrote this month in a paper titled "The Obama Health Plan: Rationing, Higher Taxes, and Lower Quality Care."
He notes that Medicare routinely pays providers 20 percent to 30 percent below the market rates for health services.
Private insurers would be unable to compete with these lower reimbursement rates, Ferrara says, noting that providers already demand higher payment from private insurers to subsidize their losses on treatment of Medicare patients.
Ferrara writes that once the reform is fully implemented, almost 60 percent of those who currently have private insurance coverage, either individually or through their employer, would lose their coverage and be enrolled in the public option plan.
But Park of the Center on Budget and Policy Priorities disagrees with such a bleak scenario.
"If you look at all the economic modeling, the surveys of employers, medium to large employers are likely to continue to offer insurance," Park said. "They'll want to have control over what happens with their plans, to use their health plans as recruiting tools."
Those likely to drop coverage in favor of the government-run plan are smaller employers with a high percentage of low- to moderate-income workers. These small-company plans tend to be more expensive and offer a limited range of benefits. The public plan, with its subsidies for low- and moderate-income individuals, may be a better deal, Park says.
Park agrees that, absolutely, some workers will be shifted out of their existing health insurance plans and into the government-run public plan.
But Park says the total number of people covered under employer-sponsored plans will actually increase under the House reform, according to a Congressional Budget Office analysis. That's because employers who do not provide insurance now will be forced to do so or pay the penalty.
And finally, Park notes that many of the problems with reform that critics cite are happening already with private insurance. It's easy for an individual to lose his or her employer-sponsored insurance right now, Park says.
"Right now, an employer can decide not to offer insurance or an employer can shut down," he said. "There's a lot of talk about rationing and bureaucrats controlling health care under reform. Right now, you have insurers denying coverage and negotiating with providers (for better rates). Those kinds of things happen all the time."
So the answer to the question "Will I be able to keep my current health insurance?" is this:
If like most Americans you get your insurance through your employer, the decision won't be in your hands. It will be up to your employer and the business decisions he or she makes — just as it is now.
