GOP bill would exempt all plans from health reform

Republicans argue that the proposal would allow more consumers to keep the coverage they like. Democrats, however, say it's a ploy to revoke the law.

By Charles Fiegl — Posted Sept. 22, 2011

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A bill drafted by House Republicans would exempt more health insurance plans from regulations under the health system reform law.

GOP lawmakers discussed legislation to block the Dept. of Health and Human Services from enforcing reform law provisions during a Sept. 15 Energy and Commerce health subcommittee hearing. A draft version of the bill circulated during the hearing would grant grandfathered status to all health plans operating before the reform law was enacted on March 23, 2010.


Rep. Joseph Pitts (R, Pa.)

Such legislation would prevent HHS from implementing new mandates regarding coverage and health plan administration, said Rep. Joseph Pitts (R, Pa.), the subcommittee's chair. "That way, consumers who really do like the coverage they have really get to keep it."

Rep. Frank Pallone Jr. (D, N.J.) disputed the notion that Americans have lost insurance coverage they enjoyed before the enactment of the reform law. The Republican proposal is just a ploy to repeal the statute, he said.

"The regulations on insurance companies that are consumer protections are all working," Pallone said. "They are all having a positive impact. There is no reason not to let the insurance companies continue down this path."

Plans in existence before the law do receive some relief from new reforms, said Steven Larsen, HHS deputy administrator and director of the department's Center for Consumer Information & Insurance Oversight. For instance, grandfathered plans are exempt from rules requiring preventive services coverage without patient cost sharing.

However, all plans must eliminate lifetime caps on health spending, extend coverage to dependent children until age 26 and follow medical-loss ratio requirements, which say plans must spend at least 80% of patient premiums on medical care or quality improvement.

"We are already seeing indications that the [medical-loss ratio] provision is causing insurance companies to more carefully evaluate their need for premium increases, slowing the rate of premium growth and in some cases decreasing premiums," Larsen said.

But medical-loss ratio rules are not being universally applied, Pitts said. HHS has granted waivers from the requirement to plans in Iowa, Kentucky, Maine, Nevada and New Hampshire. Other states, including Delaware and North Dakota, have applied for waivers but HHS denied their applications, he said.

HHS grandfathers plans as long as the insurers meet certain restrictions on raising costs or changing benefits, said Wendell Potter, a former health insurance executive who is now a senior analyst with the Center for Public Integrity, an investigative journalism organization. Because the GOP bill would grandfather every plan without these limits, he said the move could take away new benefits already enjoyed by patients.

"This means that people will be locked into plans that don't have the protections they are entitled to under the [reform law], like preventive services without co-payments," Potter said.

Current grandfathering restrictions are having a negative impact on employers providing coverage for workers, said Grace-Marie Turner, president of the Galen Institute, a think tank in Alexandria, Va., devoted to free-market health policy solutions. Companies have been backed into a corner when it comes to making benefits revisions, she said.

"Employers are very limited in their ability to adjust current benefits without losing their grandfathered status," she said. "This also means they are limited in what they can do to help keep costs down."

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