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Insurers, lawmakers slam latest Obamacare fix

5:36 AM, Nov 15, 2013   |    comments
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(CBSNews.com) - President Obama on Thursday announced an administrative policy change that will let people keep their existing health insurance for another year, but the plan is already facing pushback from Republicans, some Democrats and the insurance industry -- with some saying the president's move goes too far, and others saying it doesn't go far enough.

The president's decision doesn't force insurers to renew existing insurance plans on the individual and small markets, it only gives them the option of doing so -- it also gives them the option of reaching out to the millions of Americans already dropped from plans and letting them renew their coverage for next year.

However, already at least one state insurance commissioner -- Washington state insurance commissioner Mike Kreidler, a former Democratic member of Congress -- said he will not go along with the president's decision.

"I understand that many people are upset by the notices they have recently received from their health plans and they may not need the new benefits today," Kreidler said in a statement. "But I have serious concerns about how President Obama's proposal would be implemented and more significantly, its potential impact on the overall stability of our health insurance market."

In the interest of keeping consumer protections in place and keeping costs on the new marketplace down, he said, "We are staying the course. We will not be allowing insurance companies to extend their policies."

One other Democratic state insurance commissioner, Jay Bradford of Arkansas, is also reportedly refusing to comply with the president's fix.

State insurance commissioners are responsible for determining what plans insurance companies can sell in the state-based marketplaces, and Mr. Obama predicted Thursday, "There's gonna be some state-by-state evaluation on how this is handled."

He added, however, that the "key point" is that it's no longer the Affordable Care Act that's responsible for plans being dropped.

CBS News correspondent Carter Evans spoke to Natalie Willes, whose insurance was basic but cheap. Kaiser cancelled it because it didn't meet Obamacare requirements. She was anxious to call her insurer to get it reinstated, but they told her to call back in a week."

"I don't want to believe the worst case scenario about the Affordable Care Act," she said. "I don't want to think that it will compromise my health coverage, but when things like this keep happening it makes it really difficult for me to be confident that things will not continue to get worse."

Yet letting people keep their current coverage as the new Obamacare marketplaces open could weaken the new markets, insurance officials and industry analysts are warning. Letting those with coverage on the individual market keep their existing plans, they've argued, would leave only the sickest consumers on Obamacare marketplaces. That could, in turn, lead to higher future premiums in the market. Some have said this could lead to a "death spiral," but there are mechanisms in the health care law that would make that unlikely.

"Changing the ACA provisions could alter the dynamics of the insurance market, creating two parallel markets operating under different rules, thereby threatening the viability of insurance markets operating under the new rules," Cori Uccello, a senior health fellow for the American Academy of Actuaries, said in a statement.

America's Health Insurance Plans' (AHIP) President and CEO Karen Ignagni warned in a statement that premiums have already been set for next year based on the assumption that those on the individual market would join Obamacare.

"If now fewer younger and healthier people choose to purchase coverage in the exchange, premiums will increase and there will be fewer choices for consumers," she said. "Additional steps must be taken to stabilize the marketplace and mitigate the adverse impact on consumers."

Individual insurance companies released marginally optimistic statements, warning they'll need the support of state insurance commissioners.

Cigna said that "the preservation of choice for consumers is key."

Aetna said, "We support efforts to allow people to keep what they have. However, we will need cooperation and expedited approval from state regulators to remove barriers that would make it difficult to make this change in such a short period of time. State regulators will need to allow us to update our policies and secure appropriate rates so we can get these plans back in the market."

At least one congressional Democrat -- Sen. Tom Harkin, D-Iowa, chairman of the Senate Health, Education, Labor, and Pensions (HELP) Committee -- also suggested the president's decision may be too harmful to the new marketplace.

"If it had been up to me, I am not certain I would have made this decision, but the president felt it was important to do," Harkin said in a statement. "My hope, however, is that everyone who has received a cancellation notice will fully and carefully consider their options... If they go to the marketplace... they can get quality coverage - in some cases paying a little more, perhaps, but getting many more benefits."

A number of other Democrats, however -- particularly Democrats up for re-election next year -- commended Mr. Obama's decision and suggested it may not go far enough.

Sen. Mary Landrieu, D-La., sponsored a bill that would have forced insurers to extend their current plans. She told reporters Thursday that Mr. Obama's move "was a great first step and we will probably need legislation to make it stick."

Similarly, Sen. Kay Hagan, D-N.C., who supports Landrieu's bill, said in a statement that the president's announcement "is a step in the right direction." However, she added, "A one-year fix is not enough, and we need to do more."

Sen. Mark Udall, D-Colo., also said he would have preferred an extension longer than one year.

Senate Majority Leader Harry Reid, D-Nev. said that "if we need to do more, we will," while chiding Republicans for "rooting for failure."

At least one Republican -- Sen. Lamar Alexander, R-Tenn., the top Republican on the Senate HELP committee -- suggested Congress could work with the president.

"After too many broken promises from this administration, the details matter," he said in a statement. "The president should send his proposal to Congress to consider and give Americans the certainty of law over rhetoric."

Other Republicans, however, said they remain committed to repealing the law.

"President Obama's announcement doesn't even come close to fixing the problems that so many Americans are facing right now as a result of cancelled health care plans and skyrocketing premiums," Senate Minority Leader Mitch McConnell, R-Ky., said. "Americans are becoming increasingly aware of the fact Obamacare is broken beyond repair. The only 'fix' is full repeal followed by step-by-step, patient-centered reforms that drive down costs and that Americans actually want."

House Speaker John Boehner, R-Ohio, told reporters, "The only way to fully protect the American people is to scrap this law once and for all. There is no way to fix this."

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