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Some could lose insurance benefits because of 'grandfather clause'

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Health care reform

Some could lose insurance benefits because of 'grandfather clause'

Kaiser Health News: Millions of people could end up losing some benefits of the new health law because of the interpretation of "grandfathered."

"Under the law, existing, or 'grandfathered' health plans are exempt from several consumer protections, including a requirement that beginning as early as September prohibits health plans from charging co-payments and other cost-sharing for certain preventive health services such as immunizations and cancer screenings." Consumer groups say the definition is too lenient, but businesses say that if their plans have to forfeit their "grandfathered" status they will have to raise premiums because of costs. It's unclear what ends a plan's grandfathered status, for instance if a change in deductible or drug coverage would do so, and plans that "give up their grandfather status must abide by all the consumer protections in the new law." The Obama administration is writing regulations that interpret the clause (Galewitz and Carey, 5/10).

The Associated Press: In the meantime, higher premiums in plans that will now have to cover children with preexisting conditions could undermine that coverage guarantee, also part of the health reform law. "Starting later this year, President Barack Obama's health care law requires insurers to accept all children regardless of medical history. But the law doesn't limit what the companies can charge" and some worry that it may still cost too much. Insurers "can spread the cost broadly across their customers, modestly raising premiums for everyone" or they can increase premium cost for families with kids with pre-existing conditions. It's unclear what many insurers will do (Alonso-Zaldivar, 5/9).

The New York Times: Another fight is brewing over rules the Obama administration has issued to "enforce a 2008 law that requires equal insurance coverage for the treatment of mental and physical illnesses. ... Insurance companies and employer groups are lobbying the White House to delay and rework the rules on 'mental health parity.' Insurers and many employers supported the 2008 law, but they say the rules go far beyond the intent of Congress and would cripple their cost-control techniques while raising out-of-pocket costs for some patients." The law's goal is to stop insurance from discriminating against those with mental health disorders and substance abuse with higher co-payments or deductibles. "But insurers say the Obama administration went overboard when it tried to regulate 'nonquantitative treatment limits.' These include the techniques used by insurers to manage care, the criteria for selection of health care providers and the rates at which they are paid." The rules have the support of groups like the American Medical Association and the American Psychiatric Association (Pear, 5/9).

The Seattle Times: Small business owners remain worried over tax credits for their businesses attached to the health reform law. "Effective this year, the credit will take up to 35 percent of health-care expenses straight off the top of any taxes owed by the smallest businesses — those with fewer than 25 full-time workers earning less than $50,000 a year on average, and for whom the company pays at least 50 percent of premiums." But, there's a catch, many say, and many wonder if they qualify, how much paperwork will be involved and what the credits will do when they run out after six years, when health insurance exchanges are slated to relieve some of the burden on small businesses. "Despite those concerns, many employers — even ones unsure they can use the credit — say any help is appreciated. And they are appreciated, too: Economists say small companies often jump-start economic recovery." In the state of Washington, "[t]he state Employment Security Department estimates that more than 100,000 companies might be eligible for some level of tax credit" (Ostrom, 5/9).

The Hill: Some states that have declined to help the federal government run a high-risk insurance pool for the uninsured are "the ones most likely to punt again when most of the coverage benefits go into effect years down the road." States must decide as early as 2012 if they intend on helping the federal government run insurance exchanges. The "latter decision has attracted charges of partisan politics. With only three exceptions, the 19 states that have declined to run their own show are run by Republican governors. … Governors who let HHS administer the program have justified their decisions by claiming the $5 billion set aside by the health reform law will run out before the program expires in 2014, at which point insurance market reforms will make high-risk pools unnecessary. That could have left them having to foot the bill for several years" (Pecquet, 5/8).

Kaiser Health News is an editorially independent news service. It is a program of the Kaiser Family Foundation, a nonpartisan health-care-policy research organization unaffiliated with Kaiser Permanente.

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