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Rebecca Farley

Director, Policy & Advocacy, National Council for Behavioral Health

Obama Proposes Fix Allowing Consumers to Temporarily Keep Canceled Plans

November 21, 2013 | Health Insurance Exchanges | Comments
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Responding to the backlash over insurance plan cancelation notices millions of Americans have received in recent weeks, President Barack Obama announced last Thursday an administrative fix to ensure Americans who like their insurance can keep it through 2014.

Obama’s proposal would allow insurers who currently offer plans in the individual market—many of whom have sent cancellation letters in recent weeks—to continuing offering their plans into 2014, even if those plans do not meet the Affordable Care Act’s minimum coverage standards. Insurance companies will be required to inform customers how their policies do not comply with the ACA’s minimum requirements and direct them to the health insurance Marketplaces to educate them on new options that might offer improved coverage at a lower cost. Plans that are not in compliance with the ACA’s standards could not be sold to new customers, only renewed by existing customers.

The White House’s new policy would not force insurers to continue offering canceled plans, nor would it force states to participate. States have the authority to regulate their private insurance markets, meaning that the availability of canceled plans in any state will depend on whether that state permits insurers to continue offering the non-ACA-compliant insurance plans. Hawaii, Kentucky, Florida and Texas have said they will allow insurers to renew the plans slated for cancelation. Indiana, Massachusetts, Minnesota, Rhode Island, Vermont and Washington have already rejected the proposal, citing concerns about its impact on their insurance marketplaces.

The National Association of Insurance Commissioners has said the President’s policy could destabilize the new insurance exchanges and potentially lead to higher premiums. People who currently hold cheap, bare-bones plans in the individual market are likely to be healthier than those seeking comprehensive coverage through the exchanges, and allowing them to opt out of the marketplace could raise premiums for other consumers.