Thursday, November 14, 2013

This is How Obama Plans to Un-Cancel Insurance Policies

Sarah Kliff at WaPo has put together a great primer on what's going on with Obamacare:

I hear that the president just changed Obamacare. Give me the simplest possible explanation of what happened.
The White House is giving health insurance plans the option to keep selling plans that don't comply with the Obamacare for one more year.
How does that change the law?
Prior to this morning, any insurance plan offered after Jan. 1, 2014, had to comply with new Obamacare requirements. These are things like covering essential health benefits, such as maternity care, accepting all consumers and not charging people higher rates if they have a pre-existing condition.
Let's say you bought an insurance plan in April 2013 that did not cover maternity care (maybe you're male, maybe you're over 60 -- these details are less important). You would have bought a one-year contract that ran into 2014. April 2014 rolls around and you can't renew your plan: It's 2014 and the plan doesn't meet the health law requirement to cover certain benefits.
So now my insurance company would have to renew my plan?
Not quite: What Obama did today wasn't force all insurance plans to keep offering their products. That would be pretty difficult (and possibly illegal) given that health carriers take products on and off markets all the time.
Instead, President Obama is giving two key players the opportunity to make two key decisions. He's giving insurance regulators the opportunity to allow health insurers to sell some plans that they weren't allowed to sell, prior to this morning. If the insurance commissioners decide to give plans the go-ahead, it's then up to health insurers whether they would want to renew these policies.
Why wouldn't insurers want to keep offering these policies? It's pretty much guaranteed customers!
This is actually a pretty tricky decision for insurers, especially for those that are selling in the health insurance law's new marketplaces. Months and months ago, they submitted the insurance premiums they planned to charge on the exchanges. These premiums assumed that some of their current customers  would move into those new policies.
The people in the individual market right now tend to be relatively healthy--that's the whole reason that insurers decided to offer them coverage in the first place. One senior White House official estimates that one-quarter of these subscribers are under 25. They are, in other words, the nice young gentlemen (and ladies!) who put the proverbial "bro" in "brosurance."
If insurance companies leave all the bros and younger women in these old products, then that likely means average health care costs among their exchange population will go up. This is why the trade group that represents insurers worries that "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."
So what will insurers decide?

1 comment:

  1. She hit the nail on the head. Barry and his brain trust are bright enough to know that the regulatory ability to enact this is close to nil (rather like asking the Titanic to turn on a dime with the iceberg dead ahead).

    But they also know that with jackals like Stephen Hemsley, Gail Boudreaux, Mark Bertolini, and their ilk available as scapegoats, they just might be able to deflect the public's wrath.