None of the three proposals to allow people to keep their existing coverage will send the Affordable Care Act into a “death spiral,” according to a study released Tuesday by the RAND Corp.
The independent healthcare policy institute reported that the three proposals would each be disruptive to varying degrees, but none of them threatened the long-term viability of the new healthcare exchanges.
Millions of people have received policy cancellation notices saying their old plans don’t meet the minimum requirements under ObamaCare. The notices usually come with an option to buy into a range of new plans that meet the basic requirements but could be more expensive.
In November, the president announced he would allow insurance companies to offer the old plans for an additional year. The proposal was offered to quell the bipartisan outcry that the healthcare law doesn’t comply with the president’s promise that you can keep your plan, if you like it.
However, the executive action has received a cool reception from some liberals, state insurers and industry groups.
Democrats worry the proposal could undermine the law by allowing limited healthcare policies to compete with the beefier, and often more expensive, plans offered through the state and federal exchanges.
State insurers and industry groups have also argued the proposal isn’t logistically feasible and would be an administrative nightmare. The groups contend premium prices have been set based on assumptions about what plans would be available, and any last-minute change could cause chaos in the marketplace.
But the RAND study forecasted Obama’s fix is the least disruptive of the three and would have “only minimal effect on enrollment and premiums.”
Two other plans have been offered in Congress, although both have lost momentum.
Last year, the House passed a bill that would allow insurance companies the option of offering old healthcare plans indefinitely and would allow anyone in the country to buy into these plans.
The RAND study said this was by far the most disruptive of the three and would lead to a 10 percent premium hike and decrease enrollment by 3.2 million. The bill would also trigger an additional $5 billion in federal spending on subsidies and tax credits.
In the Senate, a Democratic-backed bill would require companies to continue to offer plans that were offered before the new ObamaCare rules took effect for as long as consumers continue to pay their premiums.
The Senate bill would also raise premiums, reduce enrollment and provoke more federal spending, but to a lesser degree than the bill in the House.
“Our analysis shows that plans to allow individuals to keep their old policies will not threaten the short-term viability of the new individual insurance marketplaces,” said Evan Saltzman, the study's lead author and a project associate at RAND. “However, the strategies put forward may increase federal spending and increase prices in the new individual marketplaces.”