The health insurance industry, which stands to reap billions of dollars in new business from uninsured Americans under the Affordable Care Act, worries the market will be destabilized and costs will rise if younger and healthier people are now able to take more time to purchase coverage on exchanges.
In a major policy shift, President Obama said Thursday that health insurance companies can for another year renew policies that were set to be cancelled because they didn’t provide adequate coverage under his signature health law. That move isn’t sitting well with the powerful insurance lobby that has banked on both sick and healthy people signing up for coverage.
“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,” said Karen Ignagni, president and chief executive officer of the health insurance lobby, America’s Health Insurance Plans. “Premiums have already been set for next year based on an assumption of when consumers will be transitioning to the new marketplace. If now fewer younger and healthier people choose to purchase coverage in
the exchange, premiums will increase and there will be fewer choices for
AHIP represents the biggest names in health insurance, including Aetna Aetna (AET), Cigna Cigna (CI), UnitedHealth Group UnitedHealth Group (UNH), Humana Humana (HUM) and most of the nation’s Blue Cross and Blue Shield plans. AHIP was the main proponent of the requirement that uninsured Americans be forced to buy coverage or face a penalty.
Prior to the President’s announcement, millions of Americans were receiving cancellation notices because their policies were not offering adequate coverage known as “essential benefits.” Though the health law would bring these policyholders a richer benefit, some have been upset, saying they liked their skimpier offerings and said Obama didn’t keep his promise that Americans could keep the coverage they had.
The new law doesn’t allow for health plans to carve out certain things that might historically have allowed a health plan to price a product lower. Under the law, all plans operating on the exchanges would be required to provide certain maternity coverage. Policies now don’t have to provide these essential health benefits until the end of 2014 under Obama’s proposal.
Due to the additional essential benefits, some actuaries say costs could go up for younger policy holders and go down for older policy holders given younger purchasers of health insurance historically get limited benefits and the essential benefit provision requires more coverage than some policyholders have had.
“Making sure consumers have secure, affordable coverage is health plans’ top priority,” AHIP’s Ignagni said. “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.”
Ignagni said “additional steps must be taken to stabilize the marketplace and mitigate the adverse impact on consumers.” She did not, however, elaborate.