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Parties Scramble to Frame Perceptions of the 'Grandfather' Reg

By John Reichard, CQ HealthBeat Editor

June 14, 2010 -- Aha! Republicans proclaim. Even the White House admits that health plans will face so many changes under the overhaul law that half or more of existing employer plans will lose their "grandfather" status as of 2013.

So much for President Obama's promise to the American people that you'll be able to keep the coverage you have, Republicans scoff.

So what! Democrats retort. If plans do lose their grandfather status, the changes involved will help people, not hurt them, by giving them new consumer protections.

If consumers are left scratching their heads, it's not unusual in a post-enactment debate where every new development has the parties fighting to frame public perceptions of the law.

The result may be confusion more often than clarity—but don't look for the exchanges between the parties to stop any time soon. Both are sure to keep cranking out messages about virtually every wonky development under the law, hoping that by election time this fall, they'll find the right words to fix public perceptions.

To Health and Human Services Secretary Kathleen Sebelius, the grandfather reg announced Monday is all about holding down cost shifts to consumers as health plans encounter rising costs. Deductibles, co-payments, and co-insurance—the percentage of charges the consumer pays—can only rise so much under the reg without a plan losing its grandfathered status.

And if plans cut benefits, saying they will no longer cover care for diabetes or HIV/AIDS, for example, they also will lose grandfather status.

What then? Plans will have to comply with mandates such as coverage of recommended preventive care with no cost-sharing and guaranteed access to pediatricians and obstetricians and gynecologists.

But how are plans supposed to keep afloat as their own costs rise? One thing they can do without losing grandfather status, at least to some degree, is raise premiums — and one thing the public clearly understands and doesn't like is rising premiums.

A PricewaterhouseCoopers survey released Monday said employers can expect health costs to rise 9 percent in 2011 after rising a predicted 9.5 percent this year. Premium increases next year could cause consumers to lose confidence in the law, never mind that increases would have been much greater had it never passed, according to the Congressional Budget Office.

Asked what impact those price hikes might have on public opinion of the law, Sebelius said in a news conference Monday on the reg that the survey did not attribute the expected increases to the law.

"I know that there are a lot of folks who will be disappointed that there isn't immediate cost relief, but I think [the survey] . . . argues the case that we could absolutely not afford to do nothing." She suggested that the law will help get a handle on those costs by driving changes toward a payment system that emphasizes quality and efficiency.

Meanwhile, Sen. Charles E. Grassley of Iowa, the top Republican on the Finance Committee, suggested Monday that the regs are just more evidence that the overhaul law isn't what it's cracked up to be.

"Today's new rules from the federal government on 'grandfathering,' which were crafted without any opportunity for public input, are just more proof that despite all of the promises made by the president and other supporters, you actually can't keep what you like under the new partisan health reform law," he said. "Change is coming for a lot of people, whether they want it or not."

And the early review from Neil Trautwein, vice president of the National Retail Federation, was not favorable. Trautwein said that based on his preliminary look at the regulation that its limits on how much employers could increase costs to employees "could be too strict for the value employers will get by pursuing grandfather status."

Employers might opt instead to simply adopt wider consumer protections in order to retain their ability to raise deductibles, co-payments and other cost-sharing with employees. But the added consumer protections they would have to offer would hike employers' own costs, and in combination with other factors, perhaps make employers more likely to drop coverage altogether in 2014 when coverage-related mandates begin and pay the penalties involved.

If employers were looking at the grandfather reg as a harbinger of "how the Obama administration wants to craft regulations this was pretty strict and pretty troubling," Trautwein said.

But patient advocacy groups see the regulation differently. The American Cancer Society Cancer Action Network (ACS CAN), the advocacy affiliate of the group, said "this is a strong rule that encourages plans to strengthen benefits."

Susan Eckerly, senior vice president of the National Federation of Independent Business, also criticized the reg.

"A lot was said today about choice and flexibility and 'keeping what you like' under the new health care law. However, today's latest rules on grandfathered plans mean small businesses will be left with even less choice and flexibility. Instead, they will be faced with the difficult choice of paying more to maintain grandfathered coverage, shopping for a new (and more expensive) plan or possibly dropping it entirely," Eckerly said.

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