Extending old health insurance plans may have little impact

NEW YORK, March 15 (UPI) -- The Obama administration's two-year extension of health insurance polices canceled for not meeting minimum standards should have little impact, an expert says.

Sara Collins, a vice president at The Commonwealth Fund, a non-profit group which conducts research on healthcare, said the administration wrote a letter last November to state insurance commissioners encouraging, but not requiring, them to allow non-compliant insurance policies to the Affordable Care Act that were canceled, or slated for cancellation, to be renewed for 2014.

Non-compliant plans might offer less comprehensive coverage, put people at risk for unaffordable medical bills, or charge premiums based on health status, Collins wrote in a Commonwealth Fund blog.

Earlier this month, the administration extended the policy, allowing renewals of existing policies in the individual and small-group insurance markets through October 2016.

"While the extension carries some risks for the nation's newly regulated insurance markets, its ultimate effects are likely to be small," Collins wrote in the blog.

"While only the nation's insurers know how many people have renewed health plans that are not compliant with the Affordable Care Act, the number is likely small. Research by Georgetown's Center for Health Insurance Reforms last year reported that several states had already allowed carriers to renew existing policies prior to the policy change. In addition, 21 states and the District of Columbia decided not to allow plans to extend policies."

In addition, most people who are eligible for premium and cost-sharing subsidies would likely switch to plans that meet the ACA standards because they'll be paying the same or less out-of-pocket for better coverage, Collins said.

"If the people who keep their sub-standard health insurance plans are healthier than average -- which is likely since they were all underwritten based on health for pre-2014 coverage -- their removal from the pool of people with policies that meet the law's benefit standards will lower that pool's average health status, and could lead to higher premiums next year," Collins said.

"Some actuaries of major health plans who participated in a recent meeting sponsored by The Commonwealth Fund did view the administration's policy as potentially moving healthy people out of those pools and increasing uncertainty about the health composition of those risk pools in 2014. But others expected the decision to have a limited effect, given that only 28 states are allowing the practice. The Rand Corp. estimated the administration's policy might increase 2015 premiums by 1 percent."

The administration's policy goes against Congress's intent that the Affordable Care Act both increase consumer protections for insurance and move people into larger pools of shared risk to help maintain lower premiums for everyone over time.

"While some Americans will find comfort in the option to keep their sub-standard policies, the Affordable Care Act's biggest benefits -- including lower out-of-pocket costs and subsidized coverage -- will go to those millions of eligible people who are signing up for the law's new protections," Collins said.