Since the Obama administration decided to allow insurers to continue offering health plans in 2014 that don't comply with the healthcare reform law, numerous reports have predicted the extension of these old policies will have negative consequences for health insurers.
Originally, non-grandfathered policies — plans that went into effect or underwent certain changes after the Patient Protection and Affordable Care Act became law in March 2010 — had to meet new coverage requirements in 2014, and many insurers sent out cancelation notices to people in non-grandfathered plans that weren't compliant with the new criteria. The canceled plans sparked criticism from Republicans, who said the president had broken his promise that Americans could keep their plans under the PPACA.
Insurance industry members, Moody's Investors Service and HHS have said the extension of non-PPACA compliant plans will lead to fewer healthy exchange enrollees, a negative effect on the risk profile of the health insurance exchanges and losses for health insurers.
Researchers from the nonprofit Rand Corp. evaluated three proposals allowing people to keep individual health insurance coverage that isn't PPACA-compliant in 2014. The proposals were optional extension, under which insurers can choose but aren't required to extend non-PPACA compliant plans for those already enrolled (President Obama's policy), mandatory extension and optional extension plus buy-in, which would give insurers the option to extend policies for the already enrolled and also let new people enroll in non-compliant policies.
Here are three of their key findings on how these three health plan extension proposals would affect the health insurance market.
1. Under the key provisions of all three proposals, health insurance premium increases would be small to moderate. In 2015, premium increases for PPACA-compliant health plans sold through the exchanges would range from 1 percent as a result of the optional extension proposal to 10 percent under the optional extension plus buy-in plan.
2. The drop in enrollment the extension plans would cause in the PPACA marketplaces ranges from just 4 percent (500,000 people) for the optional extension plan to 26 percent (3.2 million) under the optional extension plus buy-in proposal.
3. All three proposals would reduce the number of people who are expected to remain uninsured under the PPACA. The optional and mandatory extension proposals would have a minor impact, reducing the uninsured population by 260,000 and 450,000 respectively. However, the optional extension plus buy-in proposal would decrease the uninsured population by 2.5 million by allowing new enrollees in non-compliant health plans. Although this seems like a positive effect, it's important to note the non-compliant plans may have a much lower actuarial value and provide more limited coverage than compliant plans, according to the
For more information, read the full study here.
More Articles on Health Plan Extensions:
Moody's: PPACA Policy Changes Mean More Risk for Health Insurers
HHS: Extending Health Plans Could Lead to Losses for Insurers
D.C. Insurance Commissioner Fired After Criticizing Health Plan Extension