ACEC

AMERICAN COUNCIL OF ENGINEERING COMPANIES

100 Years of Excellence

Davip A. RAYMOND.
PRESIDENT & CEO August 12, 2010

Office of Consumer Information and Insurance Oversight
Department of Health and Human Services

Room 445-G Hubert H. Humphrey Building

200 Independence Ave., SW

Washington, D.C. 20201

Re: OCIIO-991-IFC, 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 (PPACA)

On behalf of the American Council of Engineering Companies (ACEC) — the national
voice of America’s engineering industry — 1 am writing to express our concerns about the
interim final rules for group health plans relating to status as a grandfathered plan.

ACEC members — numbering more than 5,300 firms representing hundreds of thousands
of engineers and other specialists throughout the country — are engaged in a wide range of
works that propel the nation’s economy, and enhance and safeguard America’s quality of
life. ACEC supports efforts to improve the availability of affordable, high-quality health
insurance.

ACEC also affirms the commitment made by President Obama and congressional leaders
to allow people who like their health insurance to keep what they have. The Council is
concerned however that the rules for maintaining status as a grandfathered plan
undermine that commitment, particularly as they relate to how employers manage the
increasing cost of health insurance.

America’s engineering firms have demonstrated a strong commitment to the employer-
provided health care system. According to independent surveys, 98 percent of
engineering firms with more than one employee offer group health coverage to their
employees. The biggest challenge they face in providing this important benefit is the
rapidly rising cost of health insurance. Average premiums for family coverage have
increased by 131 percent since 1999.

Implementing cost-sharing measures allows employers to continue offering
comprehensive health insurance to their employees. Reasonable measures such as co-
pays and co-insurance help keep premiums at an affordable level. However, the interim

T 202-347-7474 F 202-898-0068 DRAYMOND@ACEC.ORG
115 15TH STREET, NW, 8TH FLOOR WASHINGTON, DC 20005-2605 —WWW.ACEC.ORG


final rules place substantial limits on cost-sharing for plans that want to maintain
grandfathered status.

Under the interim rules, employers cannot decrease their contribution rate to employee
premiums more than five percent below what they contributed on March 23, 2010 if the
employer wants to keep grandfathered status. Moreover, any increase in a percentage
cost-sharing requirement — such as co-insurance — after March 23, 2010 will cause a plan
to lose grandfathered status. Increases in a fixed-amount cost-sharing requirement other
than a co-payment — such as a deductible or an out-of-pocket limit — that exceed the
percentage of medical inflation plus 15 percent will cause a plan to lose grandfathered
status. Finally, any increase in a fixed-amount co-payment beyond the greater of five
dollars plus medical inflation or medical inflation plus 15 percent will cause a plan to
lose grandfathered status. It is important to note that medical inflation plus 15 percent is
measured against the baseline of cost on March 23, 2010, and that baseline will not be
reset each year.

These restrictions will make it difficult for plans to maintain grandfathered status for any
significant length of time. In fact, the interim final rules state, “In total, approximately 66
percent of small employers and 48 percent of large employers made a change in either
cost sharing or premium contribution during 2009 that would require them to relinquish
grandfather status if the same change were made in 2011.” The fact that two-thirds of
small firms and nearly half of large firms would lose grandfather status based on actual
data from 2009 suggests that the cost-sharing requirements placed on grandfathered plans
are too restrictive. The rules go on to say that, “the Departments’ mid-range estimate is
that 66 percent of small employer plans and 45 percent of large employer plans will
relinquish their grandfather status by the end of 2013.” If this estimate is correct, then
clearly the interim final rules do not appropriately reflect congressional intent that people
should be able to keep the health insurance they have.

As the Administration considers comments and revises the interim final rules, ACEC
recommends that the provisions that relate to cost-sharing and grandfathered status be
made more flexible so that our member firms can continue to provide their employees
with affordable, high-quality health insurance. Thank you for your consideration of our
views.

Sincerely,
GAZPE LLY _

David A. Raymond
President & CEO