Remember when President Obama said, "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 past 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 industry's 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," Louisiana Insurance Commissioner Jim Donelon, who is also president of the National Association of Insurance Commissioners, said 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 continued. "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 Jan. 1, 2014. But that meant that unless barred by separate state law, insurers could renew noncompliant policies right up to Dec. 31, 2013, that would run through the entirety of 2014.
The administration's proposal does come with some strings attached: Insurers that 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 the 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 that would boost insurance rates. One possibility is through an existing pool of funds that would help offset costs for insurance companies that 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 aren't in the exchanges, the harder that will be — which makes this a case where politics is fighting policy.
ROBERT SIEGEL, HOST:
We're going to hear more now about some of the fixes the president proposed today for people whose insurance policies are being canceled. NPR's Julie Rovner has been covering this and joins us now. Hi.
JULIE ROVNER, BYLINE: Hey, Robert.
SIEGEL: What has the president actually proposed today?
ROVNER: Well, I think the new phrase is: If you like your plan, you can keep it, but for one more year and only of your insurance company wants to do it. So essentially, if you have a policy that doesn't meet all the new requirements of the Affordable Care Act, you can renew it anytime through 2014. But it's at your insurance company's option, not yours.
SIEGEL: You mean, the president isn't compelling insurance companies to offer this? He's just urging them to do so?
ROVNER: That's right.
SIEGEL: And if they comply, then the policy that would otherwise expire could run all the way through 2015 but not necessarily longer than that.
ROVNER: That's right. This was sort of little known but many of the cancelation notices that insurance companies are sending out now were not strictly required by the health law. What the law said is that companies couldn't sell or renew policies that didn't meet the law's requirement starting January 1st, 2014. But that meant that they could renew non-compliant policies right up to December 31st of this year that would run through the entirety of 2014.
So this now basically advances that by a year, meaning you could have these less-than-full benefit plans running through basically December 31st of 2015. So they wouldn't have to sell things like prescription drugs or mental health.
SIEGEL: Now, speaking of less-than-full benefit plans, the administration is also proposing some new restrictions on insurers about disclosing exactly what benefits are in those policies.
ROVNER: That's right. Insurance companies would have to - who are selling these not-full benefit plans would have to notify their policyholders which benefits their current plans don't have that are technically required by the new law, and that they have right to buy a plan in a health exchange where they might qualify for a subsidy or they might qualify for Medicaid and that they have the right to buy another plan outside the exchange. And I should add that this applies not just to the individual insurance market but to the small group market as well, so small businesses.
SIEGEL: And unlike the additional year, that isn't just an exhortation. That's actually going to be a requirement?
ROVNER: That's only - if the insurance companies decide to go for this option, then they would have to notify their policyholders.
SIEGEL: Well, what's the reaction from the insurance industry?
ROVNER: Well, they're not very happy. And there are really two reasons. One is from a practical standpoint. Here it is the middle of November. These insurance companies spent the better part of this year completely redoing their policies for the individual market to comply with the law, redoing benefit packages, getting the policies approved by state regulators, getting the rates set and approved, then sending out these notices to policyholders telling them which policies were being cancelled, which policies they could choose instead.
Now they're being asked to reverse course with something that took them months in basically a matter of days. It's not really technically feasible in a lot of cases.
SIEGEL: So that's the objection that this would be at best very tedious to do. The other reason?
ROVNER: The other reason is more macro and it has to do with the way the law is structured. The insurance industry basically made a deal with the drafters of the law as it was being written. They agreed to accept everyone into the individual insurance market, in particular people with pre-existing health conditions, who are typically much more expensive.
And they agreed to offer a much broader benefit package than had been the norm. In exchange, the law required most people to have insurance. That was supposed to bring many more younger, healthier people into the risk pool to help offset the cost of those sicker people. But if too many people can keep their old policies, they won't be going into that new risk pool and it'll fill up with those sick people who haven't been able to get insurance before and it will just drive up future costs.
Hence, the statement from Karen Ignagni, head of the insurance industry trade group, who said today, quote, "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."
SIEGEL: But if today's proposals take effect, wouldn't they result in higher premiums for just one year?
ROVNER: Well, the concern is that that would feed into the following year's premiums and on and on and on.
SIEGEL: OK. Thank you, Julie.
ROVNER: Thank you.
SIEGEL: That's NPR's Julie Rovner. Transcript provided by NPR, Copyright NPR.