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NOW you can keep your plan. You sure about that?

Last Thursday, President Obama, in an effort to keep his health care promise,  extended the deadline for individual and small business plans to own policies that conform to the ten new Affordable Care Act  (ACA). This extension now allows insurers who offered plans in the past without the new essential benefits, to renew the old plans, without changes for existing subscribers, through 2014. But is it mandatory that providers adhere to this request by the President?

The answer is no. Health insurance is state regulated and it is unclear whether all 50 states and the District of Columbia will go along with this request. It’s also uncertain that if a state does consider abiding by it, all individual plans will remain unchanged. With a very short window until year end, it would be very difficult for insurers to do an about face and reinstate all of the canceled policies even if they wanted to. In addition to reinstatement, the President’s request includes providing a comparison between new plans offered through the state’s exchange and the insurer’s renewable plan. Not easy to accomplish in six weeks.

On Friday, the House passed their own bill, authored by Rep Fred Upton (R., Mich) which would  permit insurers to continue to offer the old individual plans indefinitely AND add new subscribers. The bill had overwhelming support, with 39 Democrats joining 222 Republicans in voting for the legislation. It is unlikely that the bill will win enough Democratic support to pass the Senate and the President has indicated that he will veto it.

How did this happen? Simply put, if an insurer offers individual plans outside of the exchange they must comply with new regulations. Most individual plan subscribers are younger, and most often, healthier. Older, less healthy individuals wouldn’t have been accepted into these plans prior to the ACA. As a result, the included services are more limited than those required by the ACA and the premiums are significantly less. If an insurer were  to continue to offer these individual plans, they would be required to add the ACA provisions which would result in raising the premiums. Instead, the providers canceled the coverage.

Now what? What would this do to the exchanges? Both the President’s request and the House bill would impact the exchanges, and, perhaps that is one of the reasons that some state insurance commissioners are not in favor of either of these solutions. It is well documented that exchanges can only offer affordable care if there is a broad demographic of policyholders. Should the policyholders consist of only older, sick people, premiums  will skyrocket and the exchanges will falter.

Stay tuned for November 30th. It’s an important day in Obamacare history. If the website works, maybe some of those with canceled policies will look at what’s available through the exchanges. There is a catastrophic care plan for those under age 30. We’ll see.

For additional information, contact EAB HealthWorks.