Those Tricky Insurance Companies!

Reporting on Politics and Policy.
Nov. 14 2013 2:57 PM

Those Tricky Insurance Companies!

A wise reader writes in, cutting through some of today's PR and muck by bringing the topic back to the insurers.

In speaking with Empire Blue Cross of New York's marketing department, I know the following:
Private insurance companies are dropping pre-2010 (grandfather insurance plans), because they are not profitable, not because they don't meet ACA standards (those plans don't have to because of the grandfather clause).  However, the insurance companies are required by the ACA to provide low cost products to the exchanges, and they need to make up for this loss in premiums by, in part, canceling the private low premium insurance policies. That is simply a private business decision.
Now, several legislators are proposing bills (and the President by executive order)  that would require continuation of these canceled policies, which sounds interesting on it's face, but for one glaring problem. Insurance companies will simply raise the premiums of said policies, as high as necessary, to make up for the above losses or simply to drive the policy holders into canceling the policy because of inability to pay the high premiums.

I spoke with Senator Landrieu's representative today and broached this subject with him and he admitted that the effect of the Landrieu bill would be negated, by the above scenario.

Isn't this problem at the center of "Keep Your Plan" mania? Not to be a broken record about this, but, while not every week will be as panic-filled as this one, there's nothing at all preventing Republicans from blaming every future rate or premium hike on Obamacare. Democrats are now seeking a way to put the onus for sticker shock back onto the insurers. That, at least, was a major theme of their answers to reporters in the Capitol today.

David Weigel is a reporter for Bloomberg Politics



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