State insurers head: Obama fix could sink healthcare law

President Obama’s decision to let insurers offer limited plans that do not meet ObamaCare’s requirements could sink the entire healthcare law, the head of the group representing state insurance commissioners said Friday.

“It threatens the solvency of the system and it threatens to spike the cost to policyholders across the board,” said Jim Donelon, president of the National Association of Insurance Commissioners (NAIC).


Donelon argued on CNN that the White House proposal is not logistically feasible and would be an administrative nightmare. He said premium prices have been set based on assumptions about what plans would be available.

“The problem is you can’t change the rules at the last minute when the game’s about to start,” he said. “And the rules have given benefits to lots of policyholders — guarantee issue, caps on coverage for older policyholders.”

The state insurance regulators would play a big role in implementing Obama’s fix. Donelon, who is also Louisiana’s insurance commissioner, said Friday there was near unanimous opposition among state regulators to the White House proposal.

“At the NAIC level, we had two calls yesterday in the aftermath of the president’s announcement,” he said. “And I was pleased and surprised at the unanimity that I found across the board in concern over what the president is proposing.”

On Thursday, the country’s largest healthcare insurance company trade group, America’s Health Insurance Plans (AHIP), said the order wouldn’t work in practice and could cause marketplace chaos. The American Academy of Actuaries leveled a similar criticism.

The White House on Thursday sought 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. Millions are receiving policy cancellation notices.

But even Democrats ­— particularly those in the Senate who face tough reelection prospects in 2014 — have been reticent to embrace the president’s proposed fix.

Six Democrats in the Senate have signed on as co-sponsors of a bill proposed by Sen. Mary LandrieuMary Loretta LandrieuCongress needs to work to combat the poverty, abuse and neglect issues that children face Dems wrestle over how to vote on ‘Green New Deal’ Lobbying world MORE (D-La.) that would require insurance companies to continue offering plans to those who continue making payments on them, even if the plan doesn’t comply with the minimum requirements of the Affordable Care Act.

And the House will vote Friday on a GOP bill that has four Democratic co-sponsors that would allow insurance companies to continue offering limited plans. The White House has said it will veto that bill.  

Supporters of the Affordable Care Act worry that such workarounds would torpedo the law by forcing the beefier, and in some cases more expensive, federally compliant plans, to compete with the cheaper, limited plans that don’t meet minimum requirements.

ObamaCare needs to recruit young and healthy consumers for a balanced risk pool, and if the limited plans are still available, the young and healthy might opt to keep their old plans.