His announcement comes amid mounting anger in Congress and among public. Insurers are caught by surprise.
WASHINGTON – President Obama, trying to quell a growing furor over the rollout of his health care law, bowed to bipartisan pressure Thursday and announced a policy reversal that would allow insurance companies to temporarily keep people on health plans that were to be canceled under the new law because they did not meet minimum standards.
The decision to allow the policies to remain in effect for a year without penalties represented the administration’s hurriedly developed effort to address one of the major complaints about the beleaguered health care law. It seemed for the moment to calm rising anger and fear of a political backlash among congressional Democrats who had been threatening to support various legislative solutions that are opposed by the White House because of their potential to undermine the law.
Senate Democratic leaders said they did not see the need for an immediate legislative fix — a victory for White House officials worried that momentum was building in the Democrat-controlled Senate toward consideration of a measure to force the change.
The Republican-controlled House is still set to vote Friday on a bill by Rep. Fred Upton, R-Mich., chairman of the Energy and Commerce Committee, that would allow Americans to keep their existing health coverage through 2014 without penalties — as well as allow new people to continue to buy the plans. White House officials say that would effectively gut the Affordable Care Act.
Thursday’s announcement seemed to limit Democratic defections, with only two dozen or so House Democrats now expected to support Upton’s bill. Without the presidential action, officials said, scores of Democrats might have joined Republicans in approving the Upton measure.
It remained unclear, however, just how much effect Obama’s fix will actually have. While his proposal grants discretion to insurers to allow people to stay on their existing plans, there is no guarantee that insurers will do so or that the states will allow such renewals.
Also unclear are what prices will be charged by insurers for existing policies that are continued in force through 2014. Insurers generally did not have rates approved for the renewal of such coverage because the policies were supposed to be terminated at the end of this year.
Insurers taken by surprise
Some state insurance commissioners caught off-guard by the announcement said they did not intend to allow insurers to reinstate the policies. The Obama announcement also met a cool reaction from the industry.
“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,” said Karen Ignagni, president of America’s Health Insurance Plans, a trade group.
“Premiums have already been set for next year,” she said. “ … 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.”
The National Association of Insurance Commissioners, representing state officials, and the American Academy of Actuaries, a nonpartisan professional group, said the move could threaten the viability of the insurance markets.
Republicans portrayed the policy switch as an effort to shift blame to insurance companies. House Speaker John Boehner was dismissive.
“Promise after promise from this administration has turned out to be not true,” the Ohio Republican said. “ … The only way to fully protect the American people is to scrap this law once and for all. There is no way to fix this.”
‘Won’t solve every problem’
The president said Thursday that the changes should allow many people to retain their health care plans for a year despite having received letters saying they could no longer keep their insurance.
“This fix won’t solve every problem for every person, but it’s going to help a lot of people,” said Obama, who repeatedly took responsibility for misrepresenting the law and saying Americans who like their coverage would be able to keep it.