House Majority Leader Eric Cantor has identified the Affordable Care Act’s so-called grandfather rules — that exempt health insurance plans in existence before the law went into effect from many of the new benefits standards and consumer protections that new plans now have to abide by — as one of 10 job destroying regulations Republicans will try to repeal as they “continue to focus on the jobs crisis”:
Grandfathered Health Plans (November/December): We all remember when President Obama promised Americans that if they liked their health care plan they could keep it. Now, the Obama Administration has been issuing further restrictions against those previously protected plans. The result, by the Administration’s own estimates, will be a loss of 49 to 80 percent of small employer plans, 34 to 64 percent of large employer plans, and 40 to 67 percent of individual insurance plans. Meanwhile, employers losing their grandfathered status will face steep penalties, increasing their costs and negatively affecting wages and job growth. The Energy and Commerce, Ways and Means, and Education and Workforce committees will soon be working on legislation to repeal these ObamaCare restrictions.
Conservatives love to use Obama’s “keep your coverage” statement against him, but realistically employers change their health care plans all the time — they did before reform and will continue to do so after. What the administration has tried to do is discourage employers and insurers from avoiding the standards in the law and dramatically changing their plans: cutting benefits, raising co-pays, or lowering the employer contribution.
Employers can make some changes — but they don’t have a blank check to increase costs and reduce benefits. In fact, HHS has loosened these regulations, not tightened them. On Nov. 15, 2010, the Department of Health and Human Services accepted employers’ concerns and updated the rules to allow more plans to keep their grandfather status. Under the original regulation, for instance, some group insurance plans would have been penalized for making small administrative changes, but the updated standards allowed “plans to switch insurance companies and shop for the same coverage at a lower cost while maintaining their grandfathered status.”
Eventually, most plans will lose these protections — and that’s a good thing. The whole point of grandfather rules is to serve as a bridge to gradually move everyone into plans that are required to meet a basic floor of standards. The GOP’s effort to repeal the rules would allow carriers and employers to drastically change their plans and deny insured beneficiaries the benefit of the law’s new consumer protections.