NCPA - National Center for Policy Analysis

Health Insurers Express Worries over Obama Shift on Policy Cancellations

November 19, 2013

The president's move to placate millions of Americans rattled health insurers, who said they were unsure how to revive canceled policies in short order, says the Wall Street Journal.

While companies had expected the White House to address the white-hot issue of policy cancellations, President Barack Obama's decision to let people keep their old policies undercuts years of preparations for the overhaul of the health insurance market and introduces new uncertainties.

  • Two senior insurance executives said they had not yet received any formal direction on how to carry out the change, and had only learned the outlines of the plan.
  • At least two insurance commissioners, in Washington state and Washington, D.C., were quick to declare they wouldn't allow insurers there to continue offering plans that don't comply with the law.
  • "I do not believe [Mr. Obama's] proposal is a good deal for the state of Washington," said Mike Kreidler, the commissioner there.

It also means significant new risks for the insurance industry if the change is carried out.

  • If old plans are restored, "fewer healthy people and younger people would be leaving their current plans," said Jim O'Connor, a Milliman Inc. actuary who advised health plans on setting rates for the exchanges.
  • Meanwhile, he said, the sickest people now in the individual market would likely see lower prices through the exchanges and move to those plans.

Some insurance commissioners expressed doubt that Obama's decision could be implemented. "[I]t is unclear how, as a practical matter, the changes proposed today by the president can be put into effect," said Louisiana insurance commissioner Jim Donelon, the president of the National Association of Insurance Commissioners, in a statement.

"In many states, cancellation notices have already gone out to policyholders and rates and plans have already been approved for 2014," said Donelon, a Republican. "Changing the rules through administrative action at this late date creates uncertainty and may not address the underlying issues."

Source: Timothy W. Martin et al., "Health Insurers Express Worries over Obama Shift on Policy Cancellations," Wall Street Journal, November 14, 2013.


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