During the consideration of health reform, we were assured repeatedly by President Obama and proponents of the behemoth euphemistically called the Patient Protection and Affordable Care Act (PPACA) that if we liked our health insurance we could keep it.  Many opponents of the bill, including the National Association of Manufacturers, never bought that talking point and now we know for a fact the promise will not be kept.

Ostensibly, the intent of health reform was to insure the uninsured and protect the coverage of those who get health insurance from their employer.  Instead, what we got is a looming crisis for as many as 170 million Americans who could lose their coverage because their employer can’t afford to provide it anymore or inadvertently runs afoul of the government.  Now that’s reform.

The “grandfather rule” issued by the Department of Health and Humans Services (HHS) in June essentially read like a cynical attempt to make good on a promise never intended to be kept.  (HHS news release, fact sheet, rule.) In a technical sense, if your plan doesn’t change at all from what it looked like on March 23, 2010, you can keep it – but how realistic is that?  Not very, and they know it.

In fact, the HHS itself acknowledges that up to 70 percent of all employers will either lose their health plan by violating the new federal regulations or forgo grandfather status on their own within the first three years.

Under the rules for so-called “grandfathered plans,” small businesses that purchase health insurance for their employees have been stripped of the single most important tool they have to keep their rates in line – the ability to shop around and negotiate with multiple health insurance companies to get the best coverage they can afford.  If an employer switches insurance companies now, they lose their grandfather status.

If employers decide to stick it out with their current plan, other tools to keep costs in check have been taken away as well.  Increase co-payments beyond limits set in the regulation?  Lose your grandfathering.  Increase employee cost-sharing for premiums beyond what the government tells you?  Lose your grandfathering.  And the HHS isn’t done yet.

HHS has asked for comments on whether a plan should lose its grandfather status if it changes their prescription drug coverage or the network of physicians and hospitals beneficiaries can see.  These are common alterations insurers and employers look to for cost control so their employees can afford the coverage.  The NAM will be submitting comments to the HHS today on these and other issues raised by the rule. [UPDATE: Here are the NAM's comments.]

Unless significant changes are made, it seems clear what the end goal is with the so-called “grandfather rule” – design it to effectively ensure that within three years all current employer-based plans will go the way of the Dodo.

 Joe Trauger is the NAM’s Vice President for Human Resources Policy.

The National Association of Manufacturers has joined a dozen other business associations in asking Administration agencies to apply reasonable standards as they establish rules and compliance requirements under the Patient Protection and Affordable Care Act.

On April 30, the group sent a letter to Treasury Secretary Timothy Geithner, Health and Human Services Secretary Kathleen Sebelius, and Labor Secretary Hilda Solis making the request.

As Neil Trautwein of the National Retail Federation told Bloomberg: ““We’ve got a lot of existing and new costs to manage and face a lot of uncertainty over whether the health-care law will actually lower health-care costs. It’s not really a good idea to swamp the business community when we’re still struggling to get off the mat from the last recession.”

From the letter:

We recognize that the appropriate federal agencies are working diligently to quickly issue rules on many of the reforms in advance of their effective dates. However, given the September effective dates for the near-term requirements (e.g., no lifetime or annual limits, bans on cost-sharing for preventive services, dependent coverage changes, etc.) employers and health plans will be making coverage and policy decisions either in the absence of final regulations or with little time between the issuance of rules and the effective date of the new law. These changes include policy and contract revisions, IT system upgrades, modifications to employee benefit and marketing materials and development of employee and customer communications, just to name a few.

Given the amount of changes required, the uncertainty regarding the content of many pending rules, and the short time frame, we respectfully request that the applicable federal agencies provide affected entities with a good faith compliance standard as proposed in the attached document entitled, “Transition Period and Good Faith Compliance Standard under the PPACA Regulations.” We feel this standard, similar to those issued in the past, will provide the compliance environment to allow us to move forward in a spirit of partnership while we implement the numerous provisions of the law.

The full attachment is available here.

Today the National Association of Manufacturers sent a “Key Vote” letter to U.S. House members expressing strong opposition to the health care legislation the House is expected to act on soon. (.pdf letter)

“Key votes” are determined by a committee of representatives of member companies. A member of Congress’ votes on these issues are used to determine the member’s record on manufacturing-related issues.

Here’s is the text of the letter, signed by NAM Executive Vice President Jay Timmons:

The National Association of Manufacturers (NAM), the nation’s largest industrial trade association representing small and large manufacturers in every industrial sector and in all 50 states, urges you to oppose the Patient Protection and Affordable Care Act and related budget reconciliation legislation pending before the House.

The vast majority of American manufacturers, including 97 percent of NAM member companies, voluntarily offer health benefits not only to attract a skilled workforce, but because we believe it is the right thing to do for our employees. Our members support proposals that reduce soaring health costs, improve the efficiency of the current system and enhance the quality of care. Conversely, we oppose proposals that make it more expensive or more difficult for employers to offer health benefits.

We regret that neither the House-passed Affordable Health Care for America Act nor the Senate-passed Patient Protection and Affordable Care Act includes important policies that would lower manufacturers’ health care costs – particularly in the areas of legal liability reform, enhancing competition by allowing employers to purchase insurance across state lines, and robust delivery reform. (continue reading…)