Senate Rejects Effort to Overturn Grandfathered Health Plans Regulations

rejected3.JPGOn Wednesday, the Senate voted 40-59 to defeat a motion to begin debate on a resolution of disapproval (S.J. Res. 39) introduced on September 21 by Sen. Mike Enzi (R-WY) that sought to repeal the health care plan grandfathering regulations that exempt certain plans from having to comply with some of the new requirements imposed by the Patient Protection and Affordable Care Act (“Affordable Care Act”). A new internal and external claims review process and the prohibition on discrimination in favor of highly-compensated employees by fully-insured plans are among the requirements that apply to non-grandfathered health plans.

The statute was silent about changes to plan design that would cause plans in existence on March 23, 2010, the date the Affordable Care Act was signed into law, to lose grandfathered status. However, the Interim final regulations identified a list of changes that would cause a plan to lose such status, including increasing cost-sharing requirements above a certain threshold. The limits on plan flexibility have raised concerns about the ability to maintain grandfathered status in the midst of rising health care costs. In a statement, Enzi claimed that “[a]n estimated 80 percent of small businesses are expected to lose their grandfathered status based upon the regulations the Administration wrote. That means the small firms that do offer health insurance won’t be able to afford what they now provide.”

The White House rejected this argument in its statement of policy (pdf) issued on September 29:

By dismantling the Interim Final Rule that set out the conditions under which health plans can qualify for "grandfather" status, the resolution would limit individuals’ and businesses’ choice to keep the plan they had in place when the Affordable Care Act was enacted. Adoption of the joint resolution would result in significant uncertainty as to what kind of changes may be made to coverage without a loss of grandfather status. If S.J. Res. 39 were approved, it could be argued that any change in coverage could be made while retaining grandfather status, creating confusion about which plans are actually grandfathered and stripping consumers of additional benefits and protections.

This entry was written by Ilyse Schuman.

Photo credit:  MBPHOTO, Inc.

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.