The Obama administration's decision to allow people whose insurance has been canceled to buy "catastrophic plans" or avoid buying insurance altogether is causing howls of protest from the health insurance industry and a dip in market shares on Wall Street.
Thursday's surprise announcement came just four days before the Dec. 23 deadline for Americans to choose coverage that will begin on Jan. 1, reports The Washington Post
ObamaCare: You Can Win With The Facts
“This type of last-minute change will cause tremendous instability in the marketplace and lead to further confusion and disruption for consumers,” Robert Zirkelbach, spokeman for American’s Health Insurance Plans, told the Post.
Within hours of the announcement, several insurers' shares, which had been up in early trading started to drop on Friday, reports The Wall Street Journal
Aetna Inc. Cigna Corp.
, and Humana
, all of which have significant roles in the Obamacare marketplaces, all marked slight downgrades of less than 1 percent.
Meanwhile, two other major Obamacare insurers, WellPoint
and UnitedHealth Group Inc.
went up by about 1 percentage point.
Robert Zirkelbach, spokesman for America's Health Insurance Plans warned Thursday that "this type of last-minute change will cause tremendous instability in the marketplace and lead to further confusion and disruption for consumers."
Lawmakers are also speaking out about the change.
House Majority Leader Eric Cantor, R-Va., once again demanded a delay for Obamacare for everyone, saying the latest exemption shows the healthcare law is not working, and changes in the system should not be based on Obama's "random impulses," reports Bloomberg
And Michigan Republican Rep. Fred Upton, who chairs the House Energy and Commerce Committee, said that the "sad reality" is that fewer people will have coverage under Obamacare than were covered a year ago.
"Rather than more White House delays, waivers and exemptions, the administration should provide all Americans relief from its failed law," Upton said in an email to Bloomberg.
However, the Obama administration insists that allowing people to buy catastrophic coverage or opt out altogether is the right, fair thing to do.
“This is a common sense clarification of the law,” said Joanne Peters, a spokeswoman for the Department of Health and Human Services. “For the limited number of consumers whose plans have been canceled and are seeking coverage, this is one more option.”
The policy change went out in a letter to Democratic Sens. Mark Warner and Tim Kaine of Virginia, Jeanne Shaheen, of New Hampshire, Mary Landrieu of Louisiana, and Heidi Heitkamp of North Dakota, who had asked the administration Wednesday if people whose plans were cancelled could qualify to be exempted from having to buy insurance, reports The Hill
Two of the senators, Landrieu and Shaheen, are expected to face tough races in their 2014 re-election bids. Landrieu has been distancing herself from Obamacare for some time, and criticizes Obama
in her first campaign commercial over his handling of the new healthcare law rollout as she begins her re-election fight in Louisiana for a fourth term.
And in October, Shaheen called on the White House
to extend Obamacare's open enrollment period amid efforts to fix glitches plaguing the government's health insurance exchange website HealthCare.gov.
All five Democrats issued a statement Thursday to say they're pleased with the changes.
"This clarifies an option that will help those consumers who have had their plans cancelled this year transition more smoothly into the marketplace," the senators said.
According to the Centers for Medicare and Medicaid Services, the new rule means that consumers whose insurance has been cancelling for not meeting federal standards enforced under Obamacare can buy cheaper "catastrophic" coverage if their new out-of-pocket costs are too high.
Previously, the coverage was only available for buyers under the age of 30. Now, everybody can apply for the same hardship exemption younger policy buyers enjoy.
The Obama administration says the change is expected to affect fewer than a half-million people, Bloomberg reports. Insurers fear the exemptions will keep younger, healthier people from buying insurance plans, which could cause problems down the line when it comes to keeping plan prices from climbing.
But California alone has already reported that more than 1 million insured people received letters telling them they are losing their policies.
ObamaCare: You Can Win With The Facts
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