Obama alters rules to stall cancellations

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WASHINGTON -- President Barack Obama relented Thursday to pressure from the public and his own party and changed one of the new health care law's bedrock requirements to fulfill his pledge to let people keep their insurance plans if they want.

While the move was aimed at solving a problem threatening the Democratic president's credibility and public faith in the law, it raised a slew of new questions, including whether insurers would adjust, whether millions of customers would pay higher premiums and whether states would make it available.

The president, announcing the change at a White House news conference, was contrite, and his admissions were many: He conceded that he was left in the dark about aspects of his presidency's crowning achievement; he acknowledged that he and his advisers underestimated how hard it would be to sell insurance on a website; he could not guarantee that the website would work well for all by the month's end; he allowed that federal rules were an impediment; and he lamented the political woes he caused for members of his own party.

Mr. Obama said insurance firms could continue for another year to offer health plans sold to individuals and small businesses that do not meet requirements under the new law, which set minimum standards for the benefits that policies must cover.

Individual policies have long been a problematic part of the insurance market, with higher prices than most group plans, lower benefits and a tendency to cut off people when they get sick. The health care law tried to address this by directing Americans who rely on individual policies to buy coverage through the new insurance marketplaces and by defining essential benefits.

Under the new rules, people may renew individual and small-group policies, which otherwise would have ended at New Year's, until Oct. 1, 2014 -- letting them stay in effect through September 2015. Mr. Obama said the administration will insist that insurance firms that continue to sell non-compliant policies inform consumers of "what protections these renewed plans don't include" and alert them to potentially better, more affordable insurance in the federal and state marketplaces.

The new proposal appeared to strengthen the president's position with many Democratic lawmakers, including those who will vote today on a House Republican bill that would let people keep existing policies for a year and also allow new customers to buy such policies, though they don't conform to the new law. "For now, the president's actions are sufficient," said Rep. Elijah Cummings, D-Md., the House Oversight and Government Reform Committee's top Democrat.

The White House is letting each state decide whether its residents may keep noncompliant health plans. State insurance commissioners and other experts made clear that the landscape will vary substantially among states. Eight, including California and New York, have recently forbidden insurance firms from continuing to sell individual or small-group health plans unless they meet the federal standards.

Shortly after the president's announcement, insurance commissioners in Washington state and Arkansas said they would not let noncompliant policies be extended beyond year's end, to protect consumers from substandard plans.

Insurers said Thursday that while they appreciated Mr. Obama's bid to address consumer concerns, they worried that it could distort the risk pool in the state and federal health insurance marketplaces. That's because individual policies tend to be much more expensive than group insurance, except for customers who are young, healthy and use little medical care -- the people federal officials are counting on to join the exchanges.

"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," said Karen Ignani, president and chief executive of America's Health Insurance Plans.

Even if their customer mix changes with the new rules, insurers cannot change their prices for 2014 because rates already have been set by each state's insurance regulators. Senior administration officials said they could not predict what might happen to prices for 2015, when some old individual and small-business policies will still be in effect for much of the year.

Highmark Inc., in a statement Thursday, noted that it had discontinued 40,000 clients' individual plans in Pennsylvania because of the array of benefits the federal law requires.

Of Mr. Obama's announcement Thursday, Highmark said: "It is unclear how these proposed changes can be put into effect. Many of the details of the federal proposals to change the Affordable Care Act are still in development, including the operational and financial implications to insurance companies."

Post-Gazette staff writer Bill Toland contributed.


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