There are three provisions in Sec. 202 that include the requirements for Grandfathered Healthcare Coverage, Grace period for current employment based health plan, and Limitation on individual health insurance coverage.
(1) Grandfathered health insurance coverage is private individual health insurance that was effective and offered before the first day of Y1 (2013). In order for private coverage to be immune from the requirements for insurance under the Healthcare Reform Bill, it must comply with certain conditions. These conditions are limitations on new enrollment, limitation on changes in terms or conditions, and restrictions on premium increases.
The" limitation on new enrollments" states that private insurers cannot enroll new individuals into their private health program on or after the first day of Y1. This limitation does not apply to later enrollment of dependent(s) of an individual who is already enrolled in a private health insurance prior to the start of Y1.
Subject to "Restrictions on premium increases" in the succeeding paragraph, the "limitation on changes in terms or conditions" requires that private health insurers do not change any of its term or conditions including benefits and cost sharing that already is effective before the start of Y1.
"Restrictions on premium increases" limits private health issuers from price discrimination based on the risk groups. Premium increases/decreases must apply for all risk group enrollees or it cannot be applied at all.
(2) Under the Grace period for current employment based health plan section, the Healthcare Reform Bill states that an employment based health plan that is in effect before the first day of Y1 should have a grace period of 5 years to adapt to the requirements of a Qualified Health Benefit Plan. After the fifth year, current employment based health plans must meet all the requirements. During the grace period, the current employment based health plan is treated as an acceptable coverage.
(3) Limitation on individual health insurance coverage states that any individual health insurance coverage that is not grandfathered can only be offered on or after the first day of Y1 as a participant of the Health Insurance Exchange.
I think that this provision is beneficial for everyone because those who want to keep their old private plans can do so without being penalized and those who choose to have public health insurance can purchase it through the Health Insurance Exchange. Enrollees who choose to stay with their private health insurance plans will be protected from price discrimination as well as adverse selection. Private health insurers may lose from this provision because they may not make as much profit due to all of the restrictions that they have to comply with. If this is a problem, they have the option to remain a private insurer and not accept any new enrollees or they can join the Health Insurance Exchange and be subject to the rules of the public plan. Another benefit of this provision is for those who have employment based insurance coverage. This is because they are granted sufficient time within the five year grace period to transition from employment based insurance to Qualified Health Benefit Plans. I believe that with this provision, the U.S. healthcare system is one step closer to the French Healthcare system, which is said to be one of the best healthcare systems in the world.