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Hearing of the Health Subcommittee of the House Energy and Commerce Committee - "PPACA's Effects on Maintaining Health Coverage and Jobs: A Review of the Health Care Law's Regulatory Burden"

Statement

By:
Date:
Location: Washington, DC

I have here on the desk every regulation, notice, and correction that the Obama Administration has issued so far related to the recent health care law. By the count of subcommittee staff, 370 Obamacare related items have been issued. Over 3,500 of pages of rules, notices, and corrections have been published, many of which were released as interim final rules, bypassing the traditional public comment period, and giving them the force of law.

I'd like to focus on just two: grandfathering of existing health plans and the Medical Loss Ratio (MLR).

"If you like what you have, you can keep it." A promise President Obama repeatedly made on the campaign trail and in the months leading up to the passage of PPACA in March 2010.

"If you like your current plan, you will be able to keep it. Let me repeat that: If you like your plan, you'll be able to keep it." (President Obama, remarks at White House, 7/21/09)

"If you like your insurance plan, you will keep it. No one will be able to take that away from you. It hasn't happened yet. It won't happen in the future." (President Obama, remarks April 2010)

During the 2008 presidential campaign and the months leading up to passage of the health care reform law, President Obama, his administration, and Congressional Democrats made a series of promises to the American people.

Whether you supported PPACA when it became law or not, it has become abundantly clear that those promises have been broken.

According to the administration's own estimates (June 17, 2010), its regulations will force half of all employers -- and as many as 80% of small businesses -- to give up their coverage in the next two years.

The regulations state: "after some period of time, most plans will relinquish their grandfathered status," meaning American workers will lose the coverage they have now and become subject to PPACA's more costly requirements.

A May 2011 Price Waterhouse Coopers survey of employers reveals companies' responses to the new health care law and how many are contemplating eliminating coverage as a result. It also echoes the administration's warnings.

Of note, 51% of employers surveyed did not expect to maintain grandfathered health status, meaning their employees would forfeit their current coverage and pay higher premiums due to the health care law's mandates on their new coverage.

The report also found that "84% of companies indicated they would make other changes to their plans [e.g., raising premiums and copayments] to offset costs associated with [PPACA]".

The regulations associated with grandfathering health plans are just one reason Americans will lose the coverage they have, even if they like it.

The Medical Loss Ratio (MLR) is another.

Despite the fact that the MLR has been billed as a tool to protect consumers from insurance companies, many states are clamoring for waivers to exempt their citizens from these "protections."

Recently, the administration granted waivers to New Hampshire and Nevada regarding the medical loss ratio requirements in the health care law, on top of the waiver already granted to Maine.

Nine other states still have their own waiver applications pending before HHS: Kentucky, Florida, Georgia, North Dakota, Iowa, Louisiana, Kansas, Delaware, and Indiana.

In an October 27, 2010 letter to Secretary Sebelius, the National Association of Insurance Commissioners warned: "[W]e continue to have concerns about the potential for unintended consequences arising from the medical loss ratio. As we noted in our letter of October 13, consumers will not benefit from higher medical loss ratios if the outcome is destabilized insurance markets where consumer choice is limited and the solvency of insurers is
undermined."

Many companies have also applied for MLR waivers. Perhaps the most publicized was McDonald's, whose 30,000 employees were granted a waiver from the annual limit requirement on their mini-med plans, and yet were still in danger of losing their coverage because they could not meet the MLR requirements.

The December 1, 2010, MLR regulation exempted mini-med plans from the requirement for one year, after which HHS will determine whether or not to extend the waivers for 2012 and 2013, meaning employees could still be in danger of losing their current coverage.

The fact that so many Americans have had to be exempted from the law's "protections" under waivers, or risk losing their current coverage, should be alarming to every Member of Congress.

And this stack is just the beginning. More regulations are due out in the near future, including the establishment of the essential minimum benefits package, which will increase premiums and put people's coverage at risk.

Thank you to our witnesses today. I would especially like to welcome a fellow Pennsylvanian, Dr. Scott Harrington of the Wharton School at the University of Pennsylvania.


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