You Can’t Always Keep What You Want

The Senate today rejected Republican attempts to repeal a new regulation that would limit employers’ ability to modify their existing health plans and still qualify for exemptions from some of health care reform’s new mandates.

At issue is the “grandfathering” rule issued June 14 by the Department of Health and Human Services. This rule implements a provision in the health care reform law that was supposed to fulfill President Barack Obama’s often-stated promise that if you like the insurance plan you have, you can keep it.

Many small-business groups contend the regulation violates that promise because their plans would lose their grandfathered status if they take steps to curb rising health insurance premiums, such as reducing benefits or raising deductibles beyond a certain amount. Once plans lose their grandfathered status, they will have to meet all of health care reform’s mandates, such as preventive care at no cost to employees. This expanded coverage will, of course, cost more.

HHS itself estimates that 39 percent to 80 percent of small businesses will lose their grandfathered status under its regulation.

So much for keeping your insurance plan if you like it.

“The Obama administration has broken that promise,” said Senator Mike Enzi, Republican of Wyoming, who sponsored a resolution that would repeal the regulation.

“Small business is really upset about this,” he said. “This new rule will significantly tie the hands of employers.”

The Senate, however, rejected the resolution today on a 59-40 party-line vote.

Democrats contended the grandfathering regulation doesn’t violate Obama’s promise. Employers can still make reasonable changes to their health plans, “but they can’t change the fundamental nature of a plan and still call it a grandfathered plan,” said Senator Tom Harkin, Democrat of Iowa.

Plans shouldn’t be able to make significant changes in benefits, deductibles, co-payments, or an employee’s share of premiums and still be grandfathered, he said.

These rules are necessary to protect consumers, he said. Otherwise, they “would be at the whims of the insurance company,” he said.

Most small business groups lobbied for repeal of the regulation.

“Rather than increasing options and lower costs, the interim final rule forces small employers to either pay more to maintain grandfathered coverage, shop for a new (and more expensive) plan, or possibly drop employer-sponsored coverage entirely,” read a letter to Enzi signed by 37 business groups that belong to the Small Business Coalition for Affordable Healthcare.

The Main Street Alliance, however, opposed the resolution repealing the grandfather regulation. The small-business owners who belong to this organization contend the regulation will ensure that small firms can obtain good insurance with strong consumer protections.

“Let’s be clear,” its letter to senators said, “Those who seek to block implementation of the new grandfather regulations are acting in the best interests of the insurance industry, not Main Street small businesses.”

That’s an allegation frequently made against the U.S. Chamber of Commerce, but look at the other 36 members of the Small Business Coalition for Affordable Healthcare. Is the National Federation of Independent Business a shill for the health care industry? For more than a decade, it pushed for legislation to allow national trade associations to sell insurance, a bill that insurers helped kill because they didn’t want the competition.

What about the American Council of Engineering Companies, the Furniture Dealers Association, the National Roofing Contractors Association, and the Service Station Dealers of America. Are they working against Main Street businesses? Of course not.

Democrats, and the organizations that support their legislation, should stop blaming all business opposition to health care reform on insurance companies. Most Americans get their insurance through their employers, and businesses can only provide this benefit if they can afford it. Congress needs to listen to the business community’s concerns on this issue, not dismiss them.
Kent Hoover is the Washington bureau chief for bizjournals.

Personal Note for the Pres:

I lost my “grandfather” status this month because I increased my deductible more than 18% on my personal health policy. All other elements of the policy remainded unchanged.

So why did I change the deductible? I was facing a 25% premium increase. By changeing the deductible I only incurred an increase of 6%.

Thanks for your concern Congressmen!