Insurance Exemptions, Premiums and the ACA

On the heels of the disappointing and politically disastrous rollout of the open enrollment period for the Affordable Care Act’s (ACA) heath insurance marketplaces in October 2013, the media reported that perhaps as many as 4.7 million Americans would receive cancellation notices from their “nongroup” or individual health insurance plans because they lacked basic coverage standards under the ACA

This action sparked a firestorm of additional public criticism surrounding the potential loss of coverage for millions and threatened the credibility of President Obama who had promised Americans that “if you like your health plan, you can keep it.” In fairly swift reaction, the president issued a directive on Nov. 14, 2013 encouraging state insurance commissioners to delay for one year the enforcement of new ACA rules governing plans beginning Oct. 1, 2013, and approximately half of the states complied. Similarly, on March 5, 2014, after the marketplaces were deemed more functional but fearing a second-generation public backlash during the 2014 midterm election season, the Obama administration announced the possible continuation of non-compliant ACA health insurance plans through October 2016. This announcement was met with sharp criticism from Republicans and the health insurance industry alike, the former alleging it to be a blatantly political move to alleviate a growing anti-ObamaCare sentiment, and the latter asserting the coverage requirement delay would carve out healthier individuals, disrupt the formation of the nascent risk pools in the marketplaces and lead to higher premiums in 2015.