Can You Really Keep Your Health Care Plan? The Limits of Grandfathering under the Affordable Care Act

I. Introduction II. Background III. The Rhetoric: You Can Keep Your Health Plan IV. Deregulation of Employer Health Insurance: ERISA V. The Reality: It Depends on What You Consider "Your Plan" A. ACA Requirements Applicable to Grandfathered Plans B. ACA Exemptions for Grandfathered Plans C. Effect of Requirements and Exemptions on Grandfathered Plans VI. Reregulation of Employer Health Insurance: Grandfather Regulations A. Implementing Regulations B. Other ACA Constraints C. Predicted Impact on Small and Large Firms 1. Small Firms 2. Large Firms VII. Conclusion I. INTRODUCTION Recent reform of the American health care system has been bait-and-switch. The bait is populist rhetoric; the switch is reregulation. The Obama Administration (the Administration) promises us one thing but gives us something else. Administration experts assure us that what we are getting is what we should prefer, if we could be trusted to make good decisions for ourselves. Amid the comprehensive federal health reform debate culminating in passage of the Patient Protection and Affordable Care Act of 2010 (ACA or Affordable Care Act), (1) President Obama promised, "if you like your health plan, you can keep your health plan." (2) If you were already happy with your current health care plan, nothing would have to change. (3) The Affordable Care Act codified that promise as the "grandfather rule." (4) This Article examines the validity of the promise, concluding that, in fact, our plans will change and will have to comply with ACA's extensive new federal health insurance regulatory regime. It may well be that we will neither notice nor object to the changes. Nevertheless, the reality is different than the rhetoric. This Article describes the operation of the Affordable Care Act's grandfather rule as one example of the Obama Administration's decidedly paternalistic approach to reregulation, despite sounding populist themes. (5) For a presidential candidate who touted his community organizer roots, (6) the Administration's methodology is notably top-down and expert-driven. Rather than convince the electorate of the merits of sometimes controversial reforms, the Administration has shown a preference for proceeding through the executive branch rulemaking process. Through this approach, the Administration leaves politically popular promises apparently undisturbed while otherwise bringing about the desired changes through less transparent, more expedited channels. The trend is especially evident in the context of federal health reform. Before returning to ACA's grandfather rule, consider two additional examples of regulatory paternalism amid health reform: first, the "death panels" controversy, which arose from a House proposal to provide Medicare coverage for end-of-life counseling between patients and doctors. (7) Popular protest over the grossly misperceived provision as authorizing government panels of experts to make end-of-life decisions for patients resulted in Congress striking it from the Bill. (8) Then, several months after the Affordable Care Act passed, the very same Medicare end-of-life counseling provision reappeared deep within pages of regulatory rulemaking, backed by studies published in British and American medical journals and unnamed "physicians, health care providers, and others." (9) After the media brought the rule to light, (10) the end-of-life counseling provision was quickly excised by regulatory amendment. (11) Although that particular attempt to bypass the political process was thwarted, the sequence of events reveals the administration's apparent deference to popular opinion followed by executive branch rulemaking to achieve reregulatory objectives. Another example of regulatory bait-and-switch involves the Affordable Care Act's provision for state innovation waivers. As strong protest over the individual health insurance mandate and other state-based objections mounted in the year after ACA's enactment, (12) President Obama highlighted the possibility of state waivers from his hard-fought signature legislation. …