NCPA - National Center for Policy Analysis


June 14, 2010

Over and over in the health care debate, President Barack Obama said people who like their current coverage would be able to keep it.  But an early draft of an administration regulation estimates that many employers will be forced to make changes to their health plans under the new law.  In just three years, a majority of workers -- 51 percent -- will be in plans subject to new federal requirements, according to the draft. 

Employers say it's more evidence that the law will drive up costs.  Republicans say Obama broke his promise: 

  • The types of changes that employers would be forced to make include offering preventive care without copayments and instituting an appeals process for disputed claims that follow new federal guidelines.
  • The law already requires all health plans to extend coverage to young adult children until they turn 26.
  • Such changes also nudge costs up.  

"What we are getting here is a clear indication that most plans will have to change," said James Gelfand, health policy director for the U.S. Chamber of Commerce.  "From an employer's point of view that's a bad thing.  These changes, whether or not they're good for consumers, are most certainly accompanied by a cost." 

The main issue in the 83-page regulation is how to deal with what the government calls "grandfathered" health plans, says the Associated Press (AP): 

  • Those are plans that predated the health care law and are exempt from many, but not all, of its consumer protections.
  • Lawmakers created the special category to deliver on Obama's promise that people can keep the coverage they have if they like it.  

But health plans change frequently, says the AP: 

  • Premiums and copayments keep rising.
  • Coverage is expanded for some services and restricted for others.
  • Lawmakers asked regulators to spell out how much an employer can change a plan and still claim it to be grandfathered, exempting it from closer federal regulation.  

Employers say the draft rules are too inflexible: Plans can lose their protected status by increasing copayments and deductibles above certain limits.  Gelfand said medical inflation alone would push many employers over the line. 

How employers react to the final rules will be critical.  If major companies start dropping health care benefits, opting instead to pay the government a penalty, Democrats would face a political backlash, says the AP.

Source: Ricardo Alonso-Zaldivar, "Health overhaul to force changes in employer plans," Associated Press/Breitbart, June 11, 2010. 

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