Responding to a wave of insurer letters notifying people that their current individual-market health plans won’t be available next year, Senators Mary Landrieu and Joe Manchin have proposed requiring insurers to permanently continue existing individual-market plans. Our new report explains why this would likely drive up premiums in the new insurance marketplaces, weakening their chances of survival. If the marketplaces unravel, millions of uninsured people expected to gain coverage under health reform (the Affordable Care Act or ACA) will lose access to coverage.
The Administration’s alternative proposal — to allow insurers to extend into 2015 any health plans they offer in the individual or small-group market that don’t comply with health reform’s standards and consumer protections — is also flawed but would be less damaging, as our report explains:
In general, both the Administration’s new policy and recent House and Senate proposals would prompt larger numbers of healthier-than-average people to remain in non-ACA-compliant individual-market plans outside the marketplaces; that, in turn, would cause the pool of people in the marketplace plans to be sicker, on average, than it otherwise would be. This “adverse selection” would produce higher premiums in the marketplaces, particularly for 2015. Depending on how many healthier people remained outside the marketplaces, the more far-reaching proposals — including the Landrieu-Manchin bill and the bill the House passed on November 15 — could trigger sticker shock when the 2015 premiums for marketplace plans are announced next October, just a few weeks before the congressional mid-term elections.
The Administration’s policy has strong advantages over the Landrieu-Manchin and House bills.
- It doesn’t allow new people to enroll in non-ACA-compliant plans, as the House bill would.
- It leaves the decision of whether to extend the non-compliant plans to insurers and states. This means that fewer people will remain in such plans, and less adverse selection will result, than if the policy required insurers to offer them, as under Landrieu-Manchin.
- It extends the non-compliant plans through 2015, rather than permanently, as under Landrieu-Manchin.
- It is an administrative action and thus doesn’t require legislative action that could open up the ACA to even more harmful statutory changes that could push marketplace premiums up markedly, undercut the ACA’s insurance-market reforms, and threaten the long-term viability of the new marketplaces, without which millions of Americans will remain uninsured.