In keeping with President Obama's promise that you can hold on to your insurance if you like it, the new law exempts existing health plans from many of its provisions. But the law leaves it to regulators to decide how much a health plan can change without giving up its grandfathered status.
In other words, when does a health plan cease to be the same health plan?
Say you get coverage through your job: Would something as small as an increase in your co-payments forfeit your health plan's exemption? Or would your employer have to do something more dramatic, such as switching from UnitedHealth to WellPoint?
The answer could test more than Obama's promise. It could determine how many Americans are affected by key elements of the new law, including provisions meant to improve coverage and protect consumers. Some consumer advocates say that grandfathering could become a giant loophole through which many health plans escape aspects of the overhaul.
"It's two sides of the same coin," said Paul B. Ginsburg, president of the Center for Studying Health System Change. "It was meant to assure people who see nothing wrong with their insurance, but . . . of course it's creating a loophole."
At issue is whether health plans covering millions of Americans must meet requirements such as covering screenings for breast cancer and other diseases without charging co-payments, and limiting annual out-of-pocket expenses.
Depending on the outcome, grandfathered plans could continue tailoring their own benefits, or they could be required to offer at least a minimum set of benefits to be defined by the federal government. They could fall subject to new rules governing internal and external appeals of decisions to deny coverage, they could be prohibited from favoring employees with higher incomes, and they could be forced to report a variety of data to the federal government.
The unanswered questions about grandfathering are another reminder that the nation's health-care overhaul did not end when Obama signed the historic legislation. Now, government officials must translate the law into detailed regulations.
Big employers want the freedom to continue making routine changes in their plans from year to year without subjecting themselves to the legislation's full requirements. "I think employers want maximum flexibility in order to do the kinds of things they have to do to manage costs," said Helen Darling, president of the National Business Group on Health, which represents large employers.
For example, if corporate health plans lose grandfathered status, their coverage of preventive services could be dictated by the federal government and thereby politicized, as a battle over breast cancer screenings last year illustrated, said Steven Wojcik, vice president of the National Business Group on Health.
Consumer advocates say that grandfathering "could prevent many consumers from fully benefiting from increased consumer protections and standards," as several consumer representatives put it in a recent report to the National Association of Insurance Commissioners. They argued that any change to a grandfathered health plan should force it to give up grandfathered status -- unless the change benefits everyone in the plan.
The administration has been talking to interest groups on opposite sides of the debate and "trying to find the appropriate balance," said an administration official who was not authorized to discuss the matter for the record and spoke on the condition of anonymity.
The government is under pressure to issue the rules soon, because employers are already planning for their next open-enrollment season and their 2011 coverage, said Paul Frontsin, a researcher at the Employee Benefit Research Institute.
Taken literally, Obama was promising more than he had the power to deliver when he said you could keep your current plan. Health plans are constantly making changes large and small -- switching from one insurer to another or tinkering with the terms of coverage. Even without the sweeping new legislation, there was no guarantee that your employer would offer you the same choices from one year to the next.
Some of the law's provisions apply even to grandfathered plans. For example, even plans that were in place when the law was enacted must eliminate lifetime limits on the dollar value of coverage and enroll dependents up to age 26.
And, even if they lose grandfathered status, certain plans could remain exempt from certain requirements. Big employers that pay medical claims out of their own coffers instead buying conventional insurance for workers would not have to comply with the government's minimum essential benefits package, analysts said.