President Obama’s ACA Extension – NAIC Response

With the January 2014 effective date under the Affordable Care Act’s (ACA) essential benefits and guaranteed coverage provisions quickly approaching, several million people have received a cancellation notice. Facing wild criticism, President Obama responded with a regulatory fix that will allow Americans to keep ACA non-compliant insurance policies, albeit temporarily.

The extension gives American consumers the option to renew their current non-conforming plans for one year. This extension mostly affects those plans not grandfathered in under the ACA, including those newer policies that were purchased by consumers after the 2010 approval of the ACA.

The extension has been met with criticism of its own. One trade group, the America’s Health Insurance Plans noted that the extension could have an adverse effect on consumers. It cited concerns with the effect of the extension on the assumptions that premiums for next year were based upon. A change in the number of younger, and healthier consumers who purchase insurance through the marketplace could have the effect of increasing premiums and leaving consumers with fewer coverage choices.

The National Association of Insurance Commissioners (NAIC) has its own concerns. The NAIC questions the practical effects and the uncertainty created by the extension, including the cancellation notices that have already been sent out and the rates and plans that have been approved for 2014.

The NAIC has been clear from the beginning that allowing insurers to have different rules for different policies would be detrimental to the overall market and result in higher premiums.

“We have expressed these concerns with the Administration and are concerned by the President’s announcement today that the federal government would use its “enforcement discretion” to delay enforcement of the ACA’s market reforms in 2014 for plans that are currently in effect.  This decision continues different rules for different policies and threatens to undermine the new market, and may lead to higher premiums and market disruptions in 2014 and beyond.”

Obama recently met with more than a dozen insurance company CEO’s to discuss the fix. Both the President and the Insurers took some accountability for the problem surrounding the cancellation notices. Jim Roosevelt, CEO of Tufts Health Plan said following the conference that “if we had realized that there would not be an easy way for people to reassure themselves by quickly enrolling in a plan, there probably would’ve been a lot more interaction” among insurers and government officials. He added that the cancellation notices were written with standard industry language but failed to account for how jarring it would sound to the people who received them.

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