Obamacare "fix" puts insurers in a tough spot

|By:, SA News Editor

Pres. Obama's administrative fix for health insurance cancellations may sound simple - allow insurers to extend their plans for another year - but it's anything but easy.

"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," says the head of the top insurer trade group. "Premiums have already been set for next year based on an assumption of when consumers will be transitioning to the new marketplace."

"The logistics of doing it with just a few days left in the policy year are extremely difficult," says a former CEO of Oklahoma's largest health system. The fix "shifts the blame and makes [the insurance companies] the culprits."

Aetna (AET) says it will need close cooperation from state insurance regulators to implement the fix.

Beyond the administrative burden, Citi analyst Carl McDonald says the change presents a risk of building a less healthy and less profitable pool of insurance buyers; the potential deterioration of the exchange market will pose a risk for WellPoint (WLP), Humana (HUM) and Health Net (HNT), which pursued aggressive exchange strategies for 2014.

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