If you're a policy wonk, politically obsessed, or otherwise fascinated by health-care news during the troubled rollout of Obamacare, you may be either worried or gleeful that President Obama has offered a temporary reprieve to people whose policies have been canceled because they don't meet the standards of 2010's Affordable Care Act. The president's fix: They can keep the policies - whether they're decent insurance or junk - for one more year.
Experts on both sides have warned that such a change raises the risks of "adverse selection": If only the oldest and least-healthy people buy coverage via the new exchanges, such as the glitchy federal marketplace at HealthCare.gov, then rates for those policies could rise - perhaps even into the fearsome "death spiral." The whole concept of the ACA, as I reminded readers in Sunday's column, is based on pooling risks as widely in the individual market as they are for those covered through work. Today's news raises the question: By extending the reach of the ACA's grandfather clause, does Obama's fix - like some clearly damaging measures proposed in Congress - threaten to undermine the whole law?
Well, at least one major insurer, Philadelphia's Independence Blue Cross, apparently doesn't share that worry. Although it canceled about 24,000 policyholders covered by so-called "guaranteed-issue" plans - Pennsylvania's pre-Obamacare answer to covering the uninsurable - IBC took another tack with policies aimed at the young, healthy market, such as its Keystone HMO plans: It set them to expire on Dec. 31, 2013, and has been inviting policyholders to renew them for a year even though they don't meet the law's new standards.
Why didn't IBC do the same with its guaranteed-issue plans? The answer I got recently from the company is that those plans, such as Personal Choice Basic and Special Care, are sold on a month-to-month basis, and thus could not be renewed past Jan. 1.
But the biggest difference between the canceled plans and the plans IBC will happily renew through 2014 is that the renewable plans are "medically underwritten," the euphemism for pre-Obamacare plans that charge significantly higher premiums, or simply aren't offered, to those whose medical or family histories suggest they might prove too costly.
Paula Sunshine, IBC vice president for consumer sales and marketing, says the renewable plans are "pretty robust," though they may not cover some ACA-required services such as mental health or maternity. But the point here is that IBC apparently believes it can offer competitively priced policies on the ACA exchanges without those younger and healthier people - at least for the next year.