Obama’s Flip-Flop Health Fix Means Higher Premiums
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The Fiscal Times
November 15, 2013

President Obama’s proposed “fix” to his health care law has enraged many within the insurance industry who say that it could seriously damage the insurance marketplace and lead to higher premiums for consumers.

A handful of angered insurance executives met with the president today to discuss how their companies will adjust to his rule change, which allows millions of people to reinstate existing insurance policies that either have been or will be cancelled under Obamacare. Before the president’s announcement on Thursday, insurers were not allowed to offer plans that didn’t meet the Affordable Care Act’s standards which require benefits like maternity care, emergency services and prescription drug coverage. 

Related: If Obama Keeps His Promise, Premiums Could Go Sky High

Insurers say it’s too late to retract the cancelled plans without creating new problems for the industry. The main concern is that through the new rule, many healthy people will likely opt to stay on their old plans, since they tend to be less expensive than those offered through the insurance exchanges. This could result in higher premiums since insurance companies had priced their 2014 policies with the assumption that everyone would be buying plans in the new market, which was, at that time, required by law.

“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. “If due to these changes, fewer younger and healthier people choose to purchase coverage in the exchange, premiums will increase in the marketplace and there will be fewer choices for consumers."

The president’s “fix” was aimed at allowing him to keep his promise to the American people that “if you like your insurance plan, you can keep it.”

But it still might not actually do that, since his rule change doesn’t require insurance companies to continue offering these plans. Instead it passes off the decision to state insurance regulators, who will decide whether to allow the plans to be offered in their respective states. If they do, it’s up to insurance companies to decide if they want to renew the policies.

Related: How Democrats Could Kill Obamacare

So far, at least one state insurance commissioner, Mike Kreidler, a former Democratic member of Congress from Washington State, said he will not go along with the president's decision.

“I do not believe his proposal is a good deal for the State of Washington,” he said in a statement. “In the interest of keeping the consumer protections we have enacted and ensuring that we keep health insurance costs down for all consumers, we are staying the course.”

Similarly, the District of Columbia's health insurance commissioner, William White, signaled that D.C. might also reject the president’s decision, saying the move “undercuts the purpose of DC’s health exchange.”

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Washington Correspondent Brianna Ehley, based in D.C., covers Congress, government agencies and spending issues, health care, and tax and economic policy for The Fiscal Times.