NCPA - National Center for Policy Analysis


July 21, 2009

One by one, President Obama's health care promises are being exposed by the details of the actual legislation, says the Wall Street Journal.

For example:

  • 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 reality is that the House health bill, which the Administration praised to the rafters, 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 known as the Employee Retirement Income Security Act (ERISA), says the Journal.

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.
  • It also gives them flexibility to design insurance to recruit and retain workers in a competitive labor market.
  • Roughly 75 percent of employer-based coverage is governed by ERISA's "freedom of purchase" rules.

Goodbye to all that, says the Journal:

  • The House bill says that after a five-year grace period all ERISA insurance offerings will have to win government approval -- both by the Department of Labor and a new "health choices commissioner" who will set federal standards for what is an acceptable health plan.  
  • This commissioner 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, says the Journal.

Source: Editorial, "Repealing Erisa," Wall Street Journal, July 20, 2009.

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