It’s open enrollment season for health insurance, that special time in the fall when you choose a health insurance plan for the next year. This time around, even more of your neighbors will be making changes to their health plans, as some 50,000 North Carolinians as are seeing their so-called “grandfathered plans” go away.
What is a grandfathered plan?
A better ask is, “What was a grandfathered plan?” because they are gone now in North Carolina. When President Obama was selling the Affordable Care Act (aka Obamacare) to the American people and congressional leaders, one of his often repeated points was, “If you like your plan, you can keep it.” As many Americans have since learned, this was not true. The ACA placed new mandates on what benefits must be included in a health plan. So if you bought a new plan after March 23, 2010, you had to buy an ACA-compliant plan.
But there was some hope for those who liked their old plans. The law did allow for regulators to permit insurers to continue some existing plans for members who were already enrolled in plans prior to March 23, 2010 (“grandfathered plans”). As long as you made no changes to your health insurance, you got to “keep your plan.” So a small, but significant, number of people ended up keeping their plans, which were exempt from many of the new ACA mandates. As we’ve discussed, mandates drive up costs, so the result was that grandfathered plans were cheaper than ACA plans. Grandfathered plans are — or more correctly, were — exempt from the following mandates (via healthcare.gov):
- Offer free preventive care
- Guarantee your right to appeal a coverage decision
- Protect your choice of doctors and access to emergency care
- [The insurer to] be held accountable through Rate Review for excessive premium increases
- End yearly limits on coverage
- [Guaranteed coverage for customers with a] pre-existing health condition
Grandfathered plans were also free from these mandated “Essential Health Benefits.”
- Ambulatory patient services (outpatient care you get without being admitted to a hospital)
- Emergency services
- Hospitalization (like surgery and overnight stays)
- Pregnancy, maternity, and newborn care (both before and after birth)
- Mental health and substance use disorder services, including behavioral health treatment (this includes counseling and psychotherapy)
- Prescription drugs
- Rehabilitative and habilitative services and devices (services and devices to help people with injuries, disabilities, or chronic conditions gain or recover mental and physical skills)
- Laboratory services
- Preventive and wellness services and chronic disease management
- Pediatric services, including oral and vision care (but adult dental and vision coverage aren’t essential health benefits)
Where did my grandfathered plan go?
While federal regulators allowed health plans to continue grandfathered plans, it did not force them to do so. Ultimately, the plans offered by an insurer are done so at the discretion of the insurer. Blue Cross and Blue Shield of NC, the largest insurer in the state, had offered grandfathered plans since the implementation of the ACA, but has elected to discontinue them as of 2018.
Other insurers offered no grandfathered plans in North Carolina from the beginning of the implementation of the ACA.
In a blog post back in August, Gary Bolt, a VP in Sales and Marketing for Blue Cross, explained that the number of enrollees in grandfathered plans had dwindled from 330,000 in 2010 to about 50,000. People leave grandfathered plans for all sorts of reasons: a new job, a better option, moving out of state, death, age into Medicare… but federal rules say no one can join a grandfathered plan.
That means that no young healthy people were allowed to buy those plans. So as those 50,000 people turned 7 years older, statistically sicker and more expensive, there were no new young, healthy people coming into the pool to balance the costs.
According to Bolt:
“…the cost to continue to offer the plan becomes disproportionate. We’d need to raise rates for these customers a significant amount to keep offering these plans in 2018. When we considered all of these factors, we determined that Dec. 31, 2017, is the right date to discontinue our grandfathered plans.”
What’s the impact?
Many of those 50,000 previously grandfathered North Carolinians are seeing a large increase in their healthcare costs. They are experiencing first-hand the difference between health insurance before Obamacare and health insurance after Obamacare. The question is, is the cost more or less than if the grandfathered plans had been continued?
It's hard to say. As Bolt said, to continue the grandfathered plans would have necessitated a significant rise in rates. Remember, even though grandfathered plans are subject to fewer mandates, today they have a smaller, older, sicker risk pool. Still, that’s a small comfort to those who are seeing their rates increase as much as 100% or more now that they have to give up their grandfathered plans.
What can we do?
As someone in Washington, D.C., recently said, “Health care is complicated.” Healthcare costs are going up because of rising hospital prices, skyrocketing drug costs, expensive new technologies… the list goes on. Premiums are going up too – because they represent not only these rising healthcare costs, but also all of the other mandated requirements of the ACA: free preventive care, no annual dollar limits on coverage, guaranteed coverage for individuals (even if they are already sick)... the list goes on here, too. All of this costs money – and your insurance premium represents those costs spread out among the population in a given insurance pool.
And this is the debate going on right now – how to make sure you have health insurance that is affordable AND covers everything you need it to cover. The NC Coalition for Fiscal Health is dedicated to shining a light on everything that is causing your healthcare costs to increase and promoting ideas that will help control or decrease costs. Be informed, be active, join us.