Remember President Obama’s phrase “If you like your health plan you can keep it?” Now it’s more like “if you like your health plan you can keep it – for another year, and only if your insurance company says it’s OK.”
It’s not clear whether the administration’s proposal to let insurers extend the policies they’ve been canceling for the last couple of months will solve the president’s political problem. But it’s sure not going over very well with the insurance industry.
“Changing the rules after health plans have already met the requirements of the law could destabilize the market and result in higher premiums for consumers,” Karen Ignagni, President and CEO of America’s Health Insurance Plans, the insurance industry trade group, said in a statement Thursday.
State insurance regulators are of a similar mind.
“This decision continues different rules for different policies and threatens to undermine the new market,” said Louisiana Insurance Commissioner Jim Donelon, President of the National Association of Insurance Commissioners, in a statement.
“In addition, it is unclear how, as a practical matter, the changes proposed today by the president can be put into effect,” the statement continues. “In many states, cancellation notices have already gone out to policyholders and rates and plans have already been approved for 2014. Changing the rules through administrative action at this late date creates uncertainty and may not address the underlying issues.”
In fact, many of the cancellation notices that insurance companies were sending out were not strictly required by the health law.
What the law says is that companies couldn’t sell or renew noncompliant policies starting January 1, 2014. But that meant that unless barred by separate state law, insurers could renew noncompliant policies right up to December 31 of 2013 that would run through the entirety of 2014.
The administration’s proposal does come with some strings attached. Insurers who decide to continue plans that don’t offer benefits required under the Affordable Care Act would have to notify their policyholders which benefits aren’t included. They would also have to tell customers that they have right to buy a plan in a health exchange, where they might qualify for a subsidy or Medicaid, and the right to buy from another insurer.
Letting people keep existing plans means they won’t be part of the new risk pool that was designed to make coverage under the Affordable Care Act more cost-effective. The administration says it’s looking for ways to make it less likely that would boost insurance rates. One possibility is through an existing pool of funds that would help offset costs for insurance companies who end up with too many sick people.
But the real worry remains that in order to make the entire effort a success, there has to be a balance of sick and healthy people in the health plans in the exchanges. And the more people who get carved out, the harder that will be. Which makes this a case where politics is fighting policy.