Administration: ObamaCare fix could weaken exchanges, drive up costs

The Obama administration is conceding that its decision to allow people to keep insurance policies that would otherwise be canceled under the Affordable Care Act could weaken federal health exchanges.

Hundreds of pages of regulations made public Monday contain an acknowledgment that the decision, announced amid fierce criticism over canceled policies, would mean fewer healthy people would buy healthcare through the exchanges.

Healthy participants are a critical component to the success of the exchanges, because they offset the costs associated with consumers considered to carry a higher risk.

“If lower health risk individuals remain in a separate risk pool, the transitional policy could increase an issuer’s average expected claims cost for plans that comply with the 2014 market rules,” according to a Department of Health and Human Services (HHS) notice detailing a variety of regulations governing the exchanges.

Because insures would have set premiums with an expectation that more healthy participants would enroll earlier, “an increase in expected claims costs could lead to unexpected losses,” a section of the HHS notice reads.

The agency said it is exploring ways to address the decision’s impacts by tweaking other programs, including ObamaCare’s “risk corridor” provision allowing partial reimbursements for insurers who take on high-risk consumers.

“As we continue to analyze its potential impacts, we will determine whether such approaches and modifications are warranted,” the agency wrote.

The 255-page notice also details regulations involving the parameters and oversight rules for provision of the law related to risk adjustment, reinsurance and the security of personal information supplied by enrollees.

Members of the public and interested parties will have 30 days to comment on the regulations, once they are published in the Federal Register.