From: Joy Goldman - NAW

To: E-OHPSCA1251.EBSA

Subject: Comments Attached

Date: Friday, August 06, 2010 10:01:38 AM

Attachments: CommentsDOLgroupHealthPlans.pdf

TO:

U.S. Department of Labor Employee Benefits Security Administration

Office of Health Plans Standards & Compliance Assistance

ATTENTION: RIN 1210-AB42

Our comments regarding the interim final rules for Group Health Plans and Health Insurance Coverage

Relating to Status as a Grandfathered Health Plan Under the Patient Protection and Affordable Care

Act are attached.

Many thanks --

Jade West

Senior Vice President-Government Relations

National Association of Wholesaler-Distributors

202-872-0885
Jade C. West 

Senior Vice President-Government Relations 

August 6, 2010 

Office of Health Plans Standards and Compliance Assistance 

Employee Benefits Security Administration 

U.S. Department of Labor 

200 Constitution Avenue, NW, Room N-5653 

Washington, DC 20210 

Attention: RIN 1210-AB42 

RE: INTERIM FINAL RULES FOR GROUP HEALTH PLANS AND HEALTH 

INSURANCE COVERAGE RELATING TO STATUS AS A GRANDFATHERED 

HEALTH PLAN UNDER THE PATIENT PROTECTION AND AFFORDABLE CARE 

ACT 

Dear Sir/Madam: 

The National Association of Wholesaler-Distributors (NAW) appreciates the opportunity to submit 

comments in connection with the rulemaking referenced above undertaken by the Departments of 

Health and Human Services, Labor, and Treasury. 

NAW, the “national voice of wholesale distribution”, is a Washington, DC-based trade association 

comprised of direct member companies and a federation of national, regional, state and local line-oftrade associations which together include approximately 40,000 enterprises with 150,000 places of 

business located in every state in the United States. 

Wholesaler-distributors are the link in the marketing chain between manufacturers and retailers as 

well as industrial and governmental end-users. While the largest companies in wholesale 

distribution are publicly-traded firms that employ thousands of people with sales in the tens of 

billions annually, the industry is overwhelmingly populated by small to mid-size, closely-held 

family-run businesses. According to NAW’s Institute for Distribution Excellence, aggregate sales in 

wholesale distribution were valued at $4.2 trillion in 2007, and total employment in the industry 

reached 5.2 million people that year. 

The overwhelming majority of wholesaler-distributors provide employer-subsidized health coverage 

to their employees. Data dating back nearly a full decade consistently reveal that upwards of 90% of 

employers in the industry offer employer-subsidized coverage. Skyrocketing premium costs have 

been a painful reality, however: for most of this decade, the average annual increase in premiums 

was well into the teens, at times approaching 20%, and higher still for smaller wholesalerdistributors. In the last year alone, nearly nine in 10 wholesaler-distributors experienced a rate 

increase, and for more than 40% the increase was in excess of 15%. Not surprisingly, the average 

share of premiums paid by employers has declined over the past decade, a trend that can be expected 

to continue under current conditions. 

NATIONAL ASSOCIATION OF WHOLESALER-DISTRIBUTORS

1325 G Street N.W., Suite 1000, Washington, DC 20005  202-872-0885  FAX: 202-785-0586  www.naw.org
August 6, 2010 

Page 2 

Throughout this decade, wholesaler-distributors have warned that the need to calm exploding health 

coverage costs would force them to take cost-cutting measures certain to increase their workers’ outof-pocket health care expenses, most significantly increased deductibles, increased co-insurance, and 

increases in the percentage of premium paid by the employee. In just the last year, more than half 

have increased deductibles. Well over 40% have increased co-insurance amounts, and nearly 40% 

have increased the employees’ premium share. 

Against the backdrop of this “litany of horribles” is the fact that employers in the wholesale 

distribution industry have remained in the health coverage distribution business despite the lack of 

any federal requirement that they provide such coverage to their employees. They have done so for 

several reasons, for example: 

• Employees value their employer’s health insurance plan, and employers believe it is the 

right thing to do for their employees. 

• Employers believe that an insured workforce will be a healthier workforce, resulting in 

fewer lost workdays and greater productivity. 

• Employers offering good health benefits are more attractive in labor markets than are 

employers offering no, or what are viewed as inadequate health benefits. This is 

critical to attracting/retaining quality employees.

In short, NAW believes it is the reality of the marketplace that has made the employment-based 

health coverage system the success it is. Clearly it is not perfect – in the experience of employers in 

the wholesale distribution industry cost is huge problem – and NAW has, on its members’ behalf, 

supported legislative initiatives focused on greater access through enhanced affordability; i.e., 

providing coverage to more people by making health insurance products more affordable to nonoffering employers and their employees through free-market reforms. This was our hope as the 

recently-concluded health reform debate got underway and unfolded during the 111th Congress. We 

were initially encouraged by what we viewed as President Obama’s promise to pursue reforms that 

would address skyrocketing costs as well as access and quality, and would not punish employers 

who in offering health coverage to their employees were already doing the right thing, by allowing 

those who liked their current plan to “keep it”. 

Regrettably, enactment of the Patient Protection and Affordable Care Act (Pub. L. 111-148) and, 

subsequently, the Health Care and Education Affordability Reconciliation Act (Pub. L. 111-152), 

leaves us far from that goal. Instead, wholesaler-distributors believe that newly-enacted health care

reforms will yield an increase in their health care costs, an increase in national health expenditures

and an increase in government spending for health care. Even the Obama Administration itself 

appears to have “turned the page” on the notion that “if you like your plan you can keep it”. The fact 

sheet “Keeping the Health Plan You Have: The Affordable Care Act and ‘Grandfathered Health 

Plans”, acknowledges that several significant reforms are immediately applicable to all health plans 

whether they are “grandfathered” or not. 
August 6, 2010 

Page 3 

Beyond that, what is set forth in the instant rulemaking regarding “grandfathering” of health plans in

existence on March 23, 2010 will substantially limit, to the point of practically removing, the tools 

employers, including wholesaler-distributors, have routinely used to partially mitigate large 

increases in health premiums and related costs, enabling them to continue, with considerable and 

growing difficulty to be sure, offering health coverage benefits to their workers. Failure to abide by 

those limits will result in the loss of “grandfathered” status, thus subjecting plans to a wide range of 

new and costly requirements. 

Neither the new statutory health care reforms in general nor this interim final rule governing 

“grandfathered” status of existing health plans is consistent with the President’s assurance of 

allowing people to keep their existing plans if they wish to do so. Moreover, this interim final rule is 

so overreaching as to severely discount the value and purpose of “grandfathered” status. The result, 

we fear, will be an unending yet unsustainable upward spiral in employer health care costs with a 

concomitant impact on the wages, non-health care benefits, and jobs of American workers. 

NAW, on behalf of its 40,000 affiliated employers, urges the Departments of Health and Human 

Services, Labor, and Treasury, to radically re-shape this “grandfathering” regulation to more closely 

adhere to the President’s assurances regarding existing health plans and to preserve the flexibility 

employers need to sustain their participation in the employment-based health coverage system. 

Thank you for your consideration of NAW’s views. 

Respectfully submitted, 

Jade C. West 

Senior Vice President-Government Relations