Things are about to get really interesting. Amid cries from millions of Americans that the President is breaking his oft-repeated promise that “if you like your health plan, you can keep it,” the White House is searching for an administrative fix to the problem. But an administrative fix may not actually be necessary as the House is expected to vote this week on a new bill that would allow people to keep their current health coverage. The “Keep Your Health Plan Act” actually has some bipartisan support, and there is a similar bill being discussed in the Senate. This bill would make a mess of things.
First, it’s a bit unfair for all those people who actually read the rules and made the decision to stay grandfathered, severely limiting their choices at renewal time for the last three years and often forcing them to pay higher premiums. Now people who ignored the June 2010 regulation about grandfathering might get a do-over. It’s sort of like people who ignore the road sign saying that their lane is ending in half a mile and wait until the last possible second to cut in front of you.
Second, for the last three years, insurance companies have expected those folks to move to the new, ACA-compliant plans. They actually know the risks present in this group of individuals, and that was no doubt a factor in determining the rates they set for the qualified plans in 2014. If we pull individuals with current, non-grandfathered coverage out of the new rating pool or allow them to hang on to their current plans, that throws off the projections. And while it may be too late to adjust for January 2014 effective dates, you can bet that we’d see some rate adjustments for new plans later in the year and in 2015 to account for the increased risk.
Third, this will take a lot of un-doing. Insurance companies have already sent out cancellation notices and offer letters. Stopping that process could be a nightmare.
Finally, it’s likely that the new plans would not be eligible for a subsidy, and that’s the point that a lot of the people who are currently complaining about their coverage being cancelled are missing. They may think they like their current plan, but many of them would actually be eligible for better coverage at a lower price if they were to purchase a new plan through the individual marketplace and take advantage of the premium tax credits that will be available. But keep in mind that these credits are only available for ACA-qualified plans and only for plans offered by carriers participating in the individual state or federal exchange. Many of these cancelled policies may have been offered by non-participating carriers, and even those offered by participating insurance companies are not compliant and were not purchased through the exchange. That’s not something that can be fixed by the administration – they’re not granted the authority by the ACA to correct that. Just like allowing people to keep their current plans, permitting those individuals to receive a premium tax credit would also take an act of Congress. And it’s unlikely that the Republicans in either the House or the Senate will vote to expand the subsidies.
Regardless of the problems associated with a change in the law, it is looking more and more likely. Yesterday President Clinton said that, even if the law needs to be changed, President Obama should honor his commitment and allow people to keep their existing coverage. His statement got a lot of media attention, and with continued news reports on this issue and a plummeting approval rating, the President wants to make this problem go away as soon as possible.
What does that mean for agents and brokers? The same thing all of the other changes have meant. We need to be advising our clients that the law is not constant – many of the rules are yet to be written, and they’ll continue to make changes during the implementation process. The best advice is to stay on top of things and adjust your strategy as we learn more. But one thing is certain – eventually the Healthcare.gov site will be fixed and eventually Americans will realize that they’re eligible for subsidies and may not like their current plan as much as they thought they did, and when that time comes, brokers who have a solution and can help those individuals get signed up will be in high demand.