Flurry of Tweaks to Affordable Care Act Leaves Insurers Rattled

From The Wall Street Journal:
  
A spree of surprise changes to the health-care law in recent weeks has rattled insurers, who say the Obama administration's pronouncements could undermine the law's new marketplaces.

The latest change, announced Thursday, days before the Dec. 23 deadline to choose coverage starting Jan. 1, allows people of any age whose current coverage is being phased out under the law to buy so-called catastrophic coverage. These plans, with limited benefits and high deductibles, were mainly reserved for customers under age 30.

In November, President Barack Obama urged insurers to resurrect plans that had been canceled for next year. A week later, the administration delayed a key enrollment deadline to Dec. 23, giving insurers less time to sort out new customers before coverage is set to begin in January. In mid-December, officials asked insurers to cover some services even for customers who hadn't paid their bills by Jan. 1.

Together, the shifts increase administrative burdens and leave insurers with less confidence they know the rules of the game. Allowing desirable customers to opt out of the new exchanges or delay decisions inserts new risk in the marketplaces. Insurers say that could translate to higher prices that would jeopardize the law's success.

 

The Obama administration made the changes as it sought to mitigate the fallout from problems with the federally run insurance website and to stymie public outcry over policy cancellations that seemed to violate a presidential promise: that people who liked their coverage could keep it. Many of the tweaks also affect the exchanges run by 14 states and Washington, D.C. The federal site, HealthCare.gov, serves consumers in 36 states.

 

The string of changes could add to costs by making the market more risky, said Gary Tanner, spokesman for Blue Cross Blue Shield of Tennessee. "The rates in 2015 will rise because of them," he said.

 

Health plans set their 2014 prices months ago, using the guidelines of the 2010 health-care law as a road map. But the map has changed. For the new marketplaces to work, insurers must sign up broad swaths of customers including young, healthy people who can offset the costs of sicker enrollees. The health law bars insurers from charging unhealthy people higher rates.

 

Enrollees are trending older than expected in the first months: 62% of the 162,000 people signed up are over age 45, according to a McKinsey & Co. analysis of five state-run exchanges.

 

Thursday's decision allowing more consumers to buy the catastrophic plans could steer key healthy customers away from costlier policies, which could be left with a bigger share of sicker customers who need the rich benefits.

 

"If everyone on the healthier spectrum moves to the catastrophic plan, it further deteriorates who's left in all your other plans," said Joan Budden, chief marketing officer for Michigan insurer Priority Health.

 

"The rules of engagement have changed so much that maybe low enrollment isn't such a terrible thing," Ms. Budden said.

 

Priority Health has tallied enrollments in the "low thousands," a manageable number even if the plans lose money, she said.

 

The late changes coupled with glitches in the online enrollment websites raise the prospect that the law won't achieve its primary goal: taking a bite out of high rates of uninsured people, insurers worry.

 

The series of last-minute changes leaves some consumers such as Michael Huling, a 48-year-old from Greensboro, N.C., with health-law whiplash.

 

His bare-bones plan with Blue Cross & Blue Shield was canceled, then uncanceled. Now, he is wondering if a catastrophic plan might be a better choice. He doubts he will decide by Monday, the sign-up deadline. "Now, there's something else that's changing and not a lot of time left to decide," Mr. Huling said.