The Obama administration had a message Monday for employers who want to keep federal bureaucrats from rewriting the rules for their company medical plans: Don't jack up costs for workers, and you won't have to worry about interference from the new health care law.
"What we don't want is a massive shift of costs to employees," said Health and Human Services Secretary Kathleen Sebelius.
She announced a new regulation that spells out how health plans that predate the health overhaul law can avoid its full impact. Meant to deliver on President Barack Obama's promise that people who like their current health coverage can keep it, the rule sets limits likely to become increasingly important as medical costs keep rising.
Plan changes that would cause a health plan to lose its "grandfathered" status and trigger new federal requirements include:
— Dropping coverage for a particular health problem, for example, diabetes.
— Increasing the proportion of insurance paid by workers, for example from 20 percent of the hospital bill to 25 percent.
— Cutting back the share of premiums that the company pays by more than 5 percent.
— Significantly increasing annual deductibles or co-payments paid by workers. For example, if an employer raises a $1,000 deductible by $500 over the next two years.
Workplace coverage is the mainstay of the nation's health insurance system, and will remain so under the new law. Consumer advocates said the regulation gives employers the flexibility to make needed changes, while protecting workers.
"If a plan changes in some significant way, or if it increases cost-sharing amounts, then that results in a very different plan — and it should not be grandfathered in," said Ron Pollack, executive director of Families USA, an advocacy group that supports the overhaul law.
Employers are wary.
"It's a big unknown," said Steve Wojcik, vice president of the National Business Group on Health, which represents human resources managers at major companies. "It definitely sets boundaries where plans have been used to considering all kinds of changes to both improve quality and control costs."
For example, Wojcik said it's unclear whether a plan would lose its protected status by making a change such as requiring counseling and dieting before approval of weight-loss surgery. And converting from traditional health insurance to a policy with a health savings account might lead to problems because the latter have significantly higher deductibles.
The administration's own analysis suggests it may not be easy for current plans to keep their special protected status. By 2013, two-thirds of small employer plans will have to relinquish their "grandfathered" status, along with 45 percent of large company plans, according to regulators' projections. Those plans will have to comply with a range of federal requirements on benefits.
The rule, effective immediately, is "a key part of a balanced approach" that will "provide Americans who like their plans with stability," Sebelius said.
It won't be a free ride for workers, said Wojcik. "Part of the bargain is that employers will be facing higher costs," he said. "The percentage share of the premiums will remain the same, but costs are going to go up for both sides in terms of dollars."
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