The Obama administration's politically minded decision to allow consumers to stay in health plans that are not compliant with Obamacare standards through 2016 received a cool response from state regulators and insurers. They expressed concern that this latest change could destabilize the fledgling state and federal exchange marketplaces by robbing exchange plans of healthier enrollees.
The change, announced last week, is just the latest intended to make implementation of the federal healthcare overhaul less onerous for consumers and more politically palatable going into the 2014 elections. But it's unclear how many insurers and state regulators will go along. In addition, the administration argues that the number of people who choose to continue in noncompliant plans will dwindle because they can't receive federal premium subsidies and many will find that Obamacare-compliant plans are a better deal.
“There is broad agreement that if more young and healthy individuals choose not to participate in the new marketplaces, it could lead to higher premiums for those consumers that remain in the exchanges,” Karen Ignagni, president and CEO of America's Health Insurance Plans, said in a written statement. “That is why it is crucial that sufficient steps be taken to stabilize the market, and we are currently reviewing the new changes to the premium stabilization programs to assess their impact on affordability for consumers.”
Brian Hamm, president of the National Association of Insurance Commissioners, expressed similar skepticism. “This decision allows different rules for different policies, which threaten to undermine the new marketplace,” said Hamm, North Dakota's insurance commissioner. “Creating two tiers of plans—the compliant and noncompliant—could result in higher premiums overall and market disruptions in 2015 and beyond.”