White House Will Allow Some To Buy Catastrophic Health Plans - Health-Care Law Tweak Addresses People Whose Polices Were Canceled Under New Rules

From The Wall Street Journal:

The Obama administration said Thursday it would allow some of the millions of Americans whose insurance policies had been canceled to purchase bare-bones plans next year, in another 11th-hour tweak to the law likely to cause consternation among health insurers.

Health and Human Services Secretary Kathleen Sebelius told a group of six senators in a letter that people whose policies had been canceled because of new requirements under the Affordable Care Act would be allowed to purchase "catastrophic" plans. Those plans previously had been restricted under the new law to people under the age of 30 or those who qualified for a set of specific hardship exemptions.

Catastrophic plans generally have lower premiums than other plans but offer more limited benefits. They typically cover three primary-care visits a year and some preventive benefits, but beyond that they only cover large medical costs after a high deductible. Carriers offering them for the coming year already have cleared the plans with state regulators and set prices in the expectation that few people over the age of 30 would be purchasing them.

 

Mrs. Sebelius wrote that those with canceled plans who are having trouble paying for a new plan will be eligible for the hardship exemption. "As a result, in addition to their existing options these individuals will also be able to buy a catastrophic plan," she said.

 

The move could worry insurers because the typical person buying a catastrophic plan is healthy and expects to incur few medical expenses in the coming year. Insurers would prefer that those people purchase a pricier policy on the new exchanges, where they would balance the risk of those with illnesses.

 

Insurers already have expressed fears that the troubled rollout of the federal HealthCare.gov website would skew the balance in the new individual-insurance market, where they must charge the same premiums for customers regardless of their medical history. They say the people who have pressed forward to buy insurance despite technical problems are likely to be those with illnesses who know they need coverage.

 

The industry has reacted negatively to most of the late changes announced by the administration, arguing each one upends assumptions they made when setting premiums for 2014.

 

"This latest rule change could cause significant instability in the marketplace and lead to further confusion and disruption for consumers," said Karen Ignagni, head of or America's Health Insurance Plans, the industry trade group.

 

People who buy catastrophic coverage under the broadened hardship exemption will be exempt from the penalty imposed on many Americans who do not have coverage starting in 2014.

 

In official guidance published late Thursday, HHS said the exemption would be available to people who submitted an application on the grounds that it would be more expensive for them to buy the other plans on sale in their area, and submitted proof their policy had been canceled. The agency also said it was setting up a hotline for people who wanted to take advantage of the option.

 

It wasn't immediately clear how many people might qualify under such an arrangement. The administration said Thursday that it believed that fewer than 500,000 people whose existing coverage had been terminated hadn't yet enrolled in another plan.