HHS regulations released Monday acknowledge that extending health plans that don't meet Patient Protection and Affordable Care Act requirements could lead to fewer healthy exchange enrollees and losses for health insurers.
Allowing people to keep their old plans in 2014 could mean fewer low-risk, healthy individuals will purchase coverage through the health insurance exchanges, according to HHS. However, insurers may have set premiums based on a risk pool that factored in those healthier people, under the assumption the old plans would be canceled next year. That could mean an increase in claims costs and unanticipated losses for those insurance companies.
The regulations stated HHS is exploring modifications to a number of programs such as the HHS-operated risk adjustment data validation process to help address the effect extending health plans will have on insurers' risk pool.
The potential financial fallout comes as a result of President Obama's decision earlier this month to use executive action to allow health plan providers to continue offering individual coverage next year that doesn't meet the reform law's requirements. Insurance industry members expressed concern about his decision, saying it could lead to fewer younger and healthier people purchasing coverage through the health insurance exchanges, causing premiums to increase.
Originally, non-grandfathered policies — plans that went into effect or underwent certain changes after the PPACA became law in March 2010 — had to meet new coverage requirements in 2014. Under the PPACA, individual health plans must cover "essential benefits" such as prescription drugs, mental health services and maternity care. Insurers must also cap consumers' annual expenses.
Many insurers sent out cancellation notices to people enrolled in non-grandfathered individual plans that didn't meet these requirements. The development spurred Republicans to criticize President Obama, saying he had failed to keep his promise that Americans could keep their old health plans if they wanted under the PPACA.
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