Obama's Fix for Cancelled Insurance could come at a High Cost

President Obama's proposal to allow insurance companies to keep offering consumers plans that would otherwise be canceled under the federal health care law could lead to an increase in premiums, according to insurance industry experts and state regulators. 

America's Health Insurance Plans, the main industry trade group, said Obama's offer comes too late and could lead to higher premiums, since companies already have set 2014 rates based on the assumption that many people with individual coverage will shift over to the new markets created under the law.

"Changing the rules after health plans have already met the requirements of the law could destabilize the market and result in higher premiums for consumers,” Karen Ignagni, president of the industry group, said in a statement in reaction to Obama's plan. 

“If due to these changes fewer younger and healthier people choose to purchase coverage in the exchange, premiums will increase in the marketplace, and there will be fewer choices for consumers.”

In a letter to state insurance commissioners Thursday, the Obama administration referred to the risk of ‘‘unanticipated changes in premium revenue.’’ It promised to provide assistance through other provisions of the health care law. 

The chief complaints among insurers are that changing the rules at this stage and allowing people to renew cheaper, lower-premium policies will upend the financial balance that the industry was trying to strike -- likely resulting in higher premiums for others. Plus there's the logistical matter of companies reaching out to customers who have already received cancellation notices and insurance commissioners reassessing rates and plans for 2014 which had already been set.

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