Experts And Officials Say Insurance Death Spiral “Fix” Won’t Do!

Amid mass cancelations due to ObamaCare regulations, President Obama announced that he will allow insurance companies to keep offering consumers plans that would otherwise be canceled under the federal health care law. Aside from critics who challenge he even has the constitutional authority to unilaterally change a law, the “fix” could lead to an increase in premiums and an insurance death spiral, according to insurance industry experts and state regulators.

The main industry trade group America’s Health Insurance Plans, which represents more than 90 percent of insurers across the country, said Obama’s “fix” comes a day late and a dollar short, because it will lead to higher premiums. Companies have already set 2014 rates based on the assumption that many people with individual coverage would be canceled due to the Essential Health Benefit Standards written into regulations, which would shift over canceled Americans to the new so-called “markets” that were created under the law.

“Changing the rules after health plans have already met the requirements of the law could destabilize the market and result in higher premiums for consumers,” Karen Ignagni, president of the industry group, said in a statement in reaction to Obama’s plan.

“If due to these changes fewer younger and healthier people choose to purchase coverage in the exchange, premiums will increase in the marketplace, and there will be fewer choices for consumers.”

In a letter sent by the Obama administration to state insurance commissioners Thursday, they make reference to the risk of ‘‘unanticipated changes in premium revenue.’’ The letter promised to provide assistance through other ObamaCare regulatory provisions.

The main problem insurers foresee are that changing the rules at this stage of the game and allowing people to renew cheaper, lower-premium policies will tip the financial balance that the insurance industry was trying to strike, which will inevitably result in higher premiums for Americans. Put simply, as is in all collectivist government policy, the basic premise is to have able people pay for those unable, and the individuals who have had their insurance plans canceled were needed in the high risk pools.

Insurers also say that there are logistical challenges for companies attempting to contact customers who have already received cancellation notices, insurance commissioners reassessing rates, and reassessing plans for 2014; which again, had already been set.

By Friday it was still unclear whether or not state officials, who would have to implement the “fix,” would even go along with the president’s “fix.”

Louisiana Insurance Commissioner Jim Donelon, said that the idea “may lead to higher premiums and market disruptions in 2014 and beyond,” while speaking for the organization.

One commissioner made up his mind almost immediately. Washington state Insurance commissioner Mike Kreidler, literally within hours of Obama’s press conference, told media reporters his state would not be making any changes.

“I know that many people who buy their own health insurance have struggled to keep their coverage. That is why we have worked so hard to make these significant changes,” he said. “I do not believe his proposal is a good deal for the state of Washington.”

Arkansas and Vermont are also in agreement with Washington state’s assessment and are not allowing canceled Americans to reinstate their old plans. Ohio, Florida and Kentucky will allow residents to keep plans that they like if insurance companies will let these policies be reinstated. As of Friday mid-morning,  Utah, Colorado, Oregon, the District of Columbia, Indiana, Mississippi, South Dakota and Nevada are still weighing the administrative “fix.”

Oklahoma Insurance Commissioner John D. Doak mocked the president’s decision, and called Obama out on what state commissioners believe he is really doing, saying he’s “just passing the buck” off to the states.

Others announced Friday they will not be implementing the “fix.” State officials in Rhode Island said Friday they won’t be adopting Obama’s late in the game proposal, stating that its 2014 plans have gone through a “rigorous review process” designed to ensure they meet the Essential Health Benefit Standards mandated under ObamaCare.

In Nevada, one of the GOP’s Hispanic upcoming rock stars Gov. Brian Sandoval, urged Congress to reconsider ObamaCare, altogether. He argued that the president’s last minute “fix” to allow people to keep their old health insurance policies has made the law unworkable.

“As a state, Nevada’s only choice was whether to let the federal government control the process or manage the process ourselves. We rightly opted for the latter,” Sandoval said in a statement to media.

“Now, despite our best efforts to comply with this ill-conceived law, the failure at the federal level has made this effort in Nevada significantly more difficult or even impossible.”

Friday, the Republican-controlled House of Representatives passed a bill to let insurance companies sell individual health coverage to anyone, even if the policies do not meet the Essential Health Benefit Standards mandated under ObamaCare.

The vote tally was 261-157, with 39 Democrats breaking ranks and supporting the legislation (View Vote By Lawmaker). The measure would typically face a doomed fate in the Senate, which blocked every House measure during the shutdown to prevent Americans from being canceled, but Democrats seeking re-election in 2014 have been moving for a piece of similar legislation.

President Obama has promised to veto the House bill if it makes it to his desk, despite pleas from Democrats who supported the bill and are up for reelection.