For a person to keep their old individual market policy under Obama’s “fix” three things need to happen: their state insurance regulator needs to approve it, their insurance companies must choose to extend the plan, and the person must decide to renew it. Going through the hurdles with each of these three steps it becomes clear the number of people who will actually take part could be very small.
1) Insurance regulators – Already five states have decided not to take part in this fix and many are still making a decision. Even if a state tries to allow this fix, the process of getting these old plans approved in such a short time might prove too big a barrier for it to be practical. This significantly reduces the number of affected people who could take advantage of the “fix.”
2) Insurers must continue their cancelled plans – Insurance companies must decide to continue these old plans and there are many reasons they might not choose to do so. These companies don’t just flip a switch. There are administrative hurdles that must be overcome in mere weeks. They need to get plans approved, set new premiums, possibly renegotiate with providers, etc. There are also financial concerns. Getting people to sign up through the exchanges normally means higher premiums for the insurers. In some crowded markets continuing old plans that will hold on to old customers could make sense. But in states where only one or two insurers dominate, forcing people to buy more expensive insurance on the exchanges could be the smart business move.
3) People may not keep these plans – Some with current policies will get subsidies on the exchanges so will go that route. You also have a lot of natural turnover in the individual market. People get new jobs with benefits, get married, or move. Some of the people being told their plans will eventual be cancelled were not going to renew them anyway.
Theoretically, Obama’s announced fix could impact millions and noticeably change the risk pool in the new exchanges. With so many real world hurdles, though, the number who actually take part will likely end up being much smaller.
Photo by Thomas Hawk under Creative Commons license