Nov. 21 (Bloomberg) -- Health insurers that want to offer plans next year that don’t meet the stricter standards of Obamacare are being instructed by the U.S. government to explicitly inform customers that there may be better options.
The guidance today from the Department of Health and Human Services requires insurers to tell customers that if the substandard plans are extended, they “will NOT provide all the rights and protections of the health-care law.” Insurers also must inform people they “have new options” through government-run marketplaces and may be eligible for tax credits.
President Barack Obama is trying to resolve the political thicket that arose after insurers began canceling policies in the individual market and telling customers that new plans complying with the health law would cost more. The decision clashed with Obama’s repeated promise that people who liked their health coverage would be able to keep it. The president on Nov. 14 offered a compromise allowing insurers to extend substandard policies in force in 2013 for as long as a year.
“This effort is a direct response to the president’s concerns that the small percentage of Americans receiving confusing letters from their insurance companies need clearer information about how to keep an existing plan, or how to choose a new plan with new protections available in the health insurance marketplace,” Chris Jennings, the White House’s coordinator for the health-care overhaul, said in a blog post.
The Patient Protection and Affordable Care Act of 2010 mandated an end to discrimination against people with pre-existing health conditions and required all policies next year to meet minimum coverage rules in return for an obligation that Americans obtain insurance or pay a fine.
At least 12 states have said they will enact Obama’s transitional policy for health plans that don’t meet the new standards, according to America’s Health Insurance Plans, a Washington lobby group for the industry. Four other states allowed extensions before Obama’s policy.
Washington, Minnesota, New York, Vermont, Massachusetts, Rhode Island and California have said they won’t allow extensions, according to AHIP.
About 1 million to 5 million policyholders may be affected by Obama’s proposal, according to an estimate from Matthew Borsch, a Goldman Sachs & Co. analyst. Almost three-quarters of the 15.2 million Americans who now buy their own health insurance have incomes low enough to make them eligible next year for subsidized private plans or the joint state-federal Medicaid program for the poor, the consumer advocacy group Families USA said today in a report.
To contact the reporter on this story: Alex Wayne in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Reg Gale at email@example.com