Insurance companies are crying foul over the president’s announcement Thursday that he would allow a one-year extension of health plans that are not compliant with the Affordable Care Act’s coverage regulations.
The move is largely a White House effort to stop the Democrats’ political bleeding over the cancellation notices that have been sent to millions of Americans. It places the ball in the court of state insurance commissioners and insurance companies, who now must decide whether to offer consumers their 2013 plans in 2014.
“State insurance commissioners still have the power to decide what plans can and can’t be sold in their states,” President Obama said. “But the bottom line is insurers can extend current plans that would otherwise be canceled into 2014.”
The National Association of Insurance Commissioners issued a statement saying that they share the president’s concern for individuals who are weighing their 2014 coverage options after receiving cancellation notices, especially given the issues many Americans are having in navigating HealthCare.gov.
The troubled federal exchange website raised red flags in Washington that consumers would be kicked off of their coverage and unable to sign up for options made newly available by the Affordable Care Act. But even the political promise of “If you like your health plan, you can keep your health plan” has lawmakers — including Sen. Mary Landrieu, D-La., and Rep. Fred Upton, R-Mich. — scrambling for solutions that would redefine the makeup of the 2014 market.
The president’s proposal, the NAIC says, comes very late in the game, when it will be difficult to reverse the cancellations.
“It is unclear how, as a practical matter, the changes proposed today by the President can be put into effect,” the statement reads. “Changing the rules through administrative action at this late date creates uncertainty and may not address the underlying issues.”
Both the NAIC and America’s Health Insurance Plans — a national trade association that represents roughly 1,300 insurance companies — charged that the president’s proposal would be “destabilizing” and “detrimental” to the health insurance market and would lead to higher premiums for consumers.
“The only reason consumers are getting notices about their current coverage changing is because the ACA requires all policies to cover a broad range of benefits that go beyond what many people choose to purchase today,” Karen Ignagni, AHIP president and CEO, said in an emailed statement. “Additional steps must be taken to stabilize the marketplace and mitigate the adverse impact on consumers.”
Insurance companies are lining up behind her words about the negative market effect and expressing additional concern that they might not even be able to accomplish the task.
“We will need cooperation and expedited approval from state regulators to remove barriers that would make it difficult to make this change in such a short period of time,” Aetna spokesman Walt Cherniak said in an email.
Blue Cross Blue Shield spokesman Eric Lail said he assumes they’d be able to do it, but that it would take “heavy lifting.”
The American Academy of Actuaries — a Washington-based professional association representing insurers and financiers — said the premium effect of the president’s proposal could extend into 2015.
“If lower-cost individuals retain their prior coverage, and higher-cost people move to new coverage, the medical spending for those purchasing new coverage could be higher than expected,” the Academy wrote in its evaluation.
This so-called death spiral would doom the president’s signature health-reform initiative by driving up premiums and driving out healthy individuals as insurance companies cover the costs of the sick. But the administration said Thursday’s proposed fix would not threaten the future of the law.
People will be attracted to the more robust coverage the Affordable Care Act exchanges provide, one senior White House official said.
“We expect that as we get the website fixed and ramp up our outreach, we’ll get more people enrolled,” the official said. “We are allowing the slice of people for whom a cancellation is perceived as a burden to have this option.”
In the meantime, the House is set to vote Friday on Upton’s Keep Your Health Plan Act, a proposal that, like Obama’s, allows consumers to renew their 2013 coverage, but also allows new consumers to purchase those same, noncompliant plans.
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