Obama administration wants fewer people to get insurance cancellation notices


(REUTERS/Jessica Rinaldi)

After insurance policy cancellations created a huge political headache for the Obama administration last fall, the administration has offered a plan to reduce the cancellations going forward.

The administration has proposed laxer standards for defining what constitutes a modification of an existing insurance policy instead of the cancellation of a health plan.

The proposal came in a batch of HHS rules and guidance issued around 7:15 pm on a Friday. My Friday night post focused on the administration’s decision to broaden exchange provider networks and increase federal oversight after some early backlash aimed at limited networks this year. The HHS rule dump contained all sorts of policy proposals that will influence how Obamacare is implemented in 2015 and beyond.

That includes this new policy on plan cancellations. The administration has proposed letting insurers make more tweaks to benefits and cost-sharing when it comes time to renew health plans. If the changes meet certain conditions, insurers would consider that a continuation of an existing plan instead of the cancellation and creation of a new plan.

HHS clearly spells out in the proposed rule the motivation for the change: “We believe these proposed standards will minimize unnecessary terminations of coverage, ensuring predictability and continuity for consumers, while reasonably providing issuers the flexibility to make necessary adjustments to coverage.”

The HHS proposal doesn’t spell out how many fewer cancellations it expects as a result of this change. Estimates peg the number of individual health plan cancellations last year at around 4-5 million. Of course, some of those people were offered new plans by the insurers, but the headlines about cancellations were politically damaging. This latest proposal seems to be the administration's latest effort to help bring that number down.

Jason Millman covers all things health policy, with a focus on Obamacare implementation. He previously covered health policy for Politico.
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