Draft ObamaCare Regs Vindicate IBD's 2009 'Individual Private Medical Insurance Is Illegal' Claim

In mid-July of last year, the good folks on the editorial board at Investors Business Daily made the following observations about the version of ObamaCare then under consideration by the House:

... Right there on Page 16 is a provision making individual private medical insurance illegal.

... the "Limitation On New Enrollment" section of the bill clearly states:

"Except as provided in this paragraph, the individual health insurance issuer offering such coverage does not enroll any individual in such coverage if the first effective date of coverage is on or after the first day" of the year the legislation becomes law.

So ... Those who currently have private individual coverage won't be able to change it. Nor will those who leave a company to work for themselves be free to buy individual plans from private carriers.

The leaked Treasury draft documents (83-page PDF) referred to in an earlier post this morning about employer coverage (at NewsBusters; at BizzyBlog) go beyond vindicating IBD by applying the same prohibitions to group coverage, as the following language found at Page 14 of the document shows:

Therefore, effective March 23:

• Individuals seeking new or alternative coverage can only buy policies that "comply with Affordable Care Act provisions from which grandfathered health plans are exempted."
• Groups seeking new or alternative coverage (obviously including new groups) are in the same boat.
• As shown earlier this morning, any changes beyond trivial to existing group or individual policies will cause those policies to lose their grandfathered status, forcing those plans to "comply with Affordable Care Act provisions."

Thus, those looking to purchase new policies or who make even minor changes to existing policies that lead to de-grandfathering will have three choices:

• ObamaCare's specified minimum coverage levels, which are far higher and far more expensive than typical private plans.
• Coverage that is more generous and therefore even more expensive than ObamaCare's specified minimum -- but not too generous. As commenter Gary Hall at the previous NewsBusters post noted, if one has coverage that is considered overly generous, it will run the risk of being considered a "Cadillac" plan subject to a 60% excise tax. By 2018, when that tax takes effect, the distance between ObamaCare's high-threshold minimum coverage and where the "Cadillac tax" kicks in may not be very great. A majority of large-employer plans and plans at many small professional enterprises may end up being subject to the tax.
• Paying penalties as individuals for not buying insurance or as employers for not covering employees.

In other words, individuals can't freely engage in commercial transactions with insurance providers to buy new policies with provisions tailored to their or their employees' particular needs and circumstances. Entering into a contract that would do so is now illegal, as IBD observed last July.

In an editorial five days after its original, IBD stuck to its guns in the face of withering attacks from the establishment media outlets, "backed up" by the likes of FactCheck.org. Their common complaint was, "Well, they will still be able to buy individual insurance through the state-run 'exchanges.'" But it was clear then and true now that they will only be able to buy coverage there that is at or above ObamaCare's specified minimums, and in one so-called "marketplace." In reality, the "exchanges" are the roach motels of health insurance; once you're forced in, you can never get out.

It turns out that IBD was absolutely correct last year. For affected individuals and even groups, there is no real "market" for health insurance. There is only ObamaCare, or something even more expensive. Absent repeal, anything else is outlawed.

Cross-posted at BizzyBlog.com.