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New Insurance Rules Under Scrutiny

The Department of Health and Human Services announced new regulations Monday that it says will fulfill the Obama administration’s health care reform promise that “if you like your health care plan, you can keep it.”

But Republican critics on Tuesday charged that the rules would do the opposite, forcing tens of millions of Americans off their current employer-sponsored plans.

Under the health reform law signed in March, health insurance plans must meet a variety of new requirements. But plans that existed before the law was signed can be “grandfathered in,” without necessarily having to meet all the new requirements.

The rule issued Monday clarified that grandfather clause, and laid out the conditions that will allow insurance companies and employers to keep their “grandfather” status under the new law. Plans that do not significantly raise premiums, cut benefits or increase out-of-pocket expenses to consumers will be exempt from some new requirements.

HHS Secretary Kathleen Sibelius said the new provision will give “American families more control over their health care by providing greater benefits, cost savings and protections.” She said the rule will allow employers to make “routine and modest” adjustments to coverage without losing their grandfather status.

But at a Capitol Hill news conference, Republican Senators Orrin Hatch of Utah, John Barrasso of Wyoming and Tom Coburn of Oklahoma said the new rule shows that the president has “broken his promise” to the American people on health care reform.

“With every passing day, another one of the president’s promises….bites the dust,” Hatch told reporters. Barrasso said that under the new regulation, 51 percent of Americans with employer-sponsored coverage will lose it in the next three years.

The U.S. Chamber of Commerce has joined the Republicans in attacking the new regulation, saying it will force many employers to follow “expensive new insurance rules” that will increase the cost to employers, employees and will “threaten the coverage Americans currently have.”

Meanwhile all health plans, whether they are grandfathered or not, will be required to provide certain benefits under the new law starting in September including:

  • No withdrawal or rescission of coverage when people get sick or have made an unintentional error on their insurance application;

  • No lifetime caps on the amount of coverage for consumers.

  • Parents must be allowed to keep their young adults on their policy until they turn 26 years old.

  • Children may not be excluded from coverage because of pre-existing conditions.