Insurance companies immediately slammed the proposal, and some observers saw a clear effort by the White House to push blame from the administration to insurers.
On Thursday, Obama did not attack insurers directly but alluded to bad practices that characterized the market before ObamaCare's consumer protections took effect.
“Insurance companies may still come back and say, we want to charge you 20 percent more than we did last year, or we’re not going to cover prescription drugs now,” Obama said Thursday, criticizing the old market.
“It’s important that we don’t pretend that somehow that’s a place worth going back to,” he said.
Health insurers had already denounced the White House plan before Obama finished speaking.
“Changing the rules after health plans have already met the requirements of the [healthcare] law could destabilize the market and result in higher premiums for consumers," said Karen Ignagni, president of America's Health Insurance Plans, a leading trade group.
“The only reason consumers are getting notices about their current coverage changing is because the Affordable Care Act requires all policies to cover a broad range of benefits that go beyond what many people choose to purchase today,” she added.
The back-and-forth highlights the uneasy relationship between the Obama administration and insurers that has existed since the Affordable Care Act was being written.
It was also a change of course for a White House that, despite its tensions with insurers, has been hesitant to criticize the industry that is now its partner in enacting the healthcare law.
Democrats were not reluctant to blast the insurance industry, a longtime enemy of the political left, during negotiations over the law. At one point in the debate, House Minority Leader Nancy Pelosi (D-Calif.) referred to insurers as “immoral villains.”
Health insurers have also fought taxes and requirements under ObamaCare they see as onerous, endearing them to the right and further complicating relations with the White House.
The two sides appeared to have reached a detente earlier this month when the administration asked for help in repairing HealthCare.gov, the broken online enrollment portal.
The White House and insurers formed “alpha teams” to prevent errors on ObamaCare applications, and were seen as working closely to ensure the site was improving week by week.
Though a handful of insurance companies signaled they would embrace Obama's “fix” on Thursday, the proposal appeared to drive a new wedge between the two sides.
The new plan would allow insurance companies to continue selling policies that do not meet ObamaCare's standards for one more year to consumers who previously held them.
It also requires insurers to disclose which benefits are not included in the policies they continue to sell, and to inform consumers about the variety of new coverage options and financial assistance available under ObamaCare.
If the industry chooses to relaunch canceled policies, it would mean relief for people on the individual and small-group markets who would prefer to keep plans they would otherwise lose next year.
But the need for industry backing reduces this possibility.
Health insurance companies argue that changing course long after they've starting complying with ObamaCare would disrupt their work and risk market chaos.
The about-face would undermine the new health insurance exchanges where insurers are hoping to sell new policies to healthy consumers, some of whom would remain on old plans if given the option.
Without an influx of young, healthy people to those marketplaces, insurers' costs will rise sharply.
To mitigate this possibility, the administration is planning regulations that would likely boost the risk-adjustment policies already included in the healthcare law. These include direct payments from the government to insurance companies.
But this olive branch from the White House failed to stave off insurers' criticism, and Ignagni insisted that regulators take “additional steps to stabilize the marketplace and mitigate the adverse impact on consumers.”