Senate Rejects Canceling Grandfathered Plan Rules

The Senate voted along straight party lines in rejecting a Republican move to overturn regulations that exempt “grandfathered” health care plans from having to meet all requirements of the new health care reform law.

The proposal, S.J. Res. 39, introduced by Sen. Mike Enzi, R-Wyoming, was defeated on a 59-40 vote on September 29.

The measure would have nullified grandfathered rules that regulators issued in July. The rules detail requirements that plans must meet to be grandfathered and exempt from requirements such as providing full coverage of preventive services.

Under those rules, to win grandfathered status, a health care plan can’t, among other things, ever increase co-insurance requirements or boost the percentage of the premium paid by enrollees by more than 5 percentage points.

In addition, grandfathered status is revoked for insured plans if an employer changes insurers. The Labor Department, though, said last week that the rule on changing insurers may be relaxed.

Before the Senate vote, Enzi said in a written statement that the grandfather rules were so tough that as many as 80 percent of small employers would not be able to meet them, forcing employers to boost benefits, therefore increasing their costs.

“That means the small firms that do offer health insurance won’t be able to afford what they now provide,” Enzi said.

But Senate Finance Committee Chairman Max Baucus, D-Montana, defended the rules.

“It makes perfect sense to require plans to maintain their benefits as a condition of the preferred status,” he said on the Senate floor.

If Republicans pick up more votes in the Senate and control of the House in the November congressional elections, new attempts are expected to be mounted to undo certain health care reform rules, Washington observers say.

Enzi’s effort could be a “harbinger of what may happen in the new Congress,” said Frank McArdle, a consultant with Hewitt Associates Inc. in Washington. 

Filed by Jerry Geisel of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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