Obama Reprieve on Health Insurance Cancellations Welcome News for Consumers, But Premiums Still Likely to Go Up, Says Consumer Watchdog

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Santa Monica, CA – Consumer Watchdog today applauded President Obama’s move to delay cancellations of health insurance plans for millions of Americans, one week after the nonprofit group called for a moratorium, but expressed concern that consumers will still face steep rate hikes in January. Consumer Watchdog called on the President to endorse reforms to require health insurance companies to publicly justify and get approval for rate hikes, including a ballot measure on the 2014 California ballot, and impose a one-year rate freeze on newly extended plans.

A report released this week by the nonprofit Consumer Federation of America demonstrated that strong regulation of auto insurance rates in California, rules that the initiative would extend to health insurance, has saved drivers over $100 billion dollars in the last 25 years.

“Today’s action by the President to extend existing health plans is a welcome reprieve for millions of Americans who are facing cancellations, but unless more is done these consumers are still likely to face skyrocketing prices. In the short term, the President should announce a year-long rate freeze on premiums that have been increasing unreasonably for years. To make affordability permanent, health insurance companies must be required to justify and get approval of rate increases, a reform that was not included in the health care law and is crucial to its success in coming years,” said Consumer Watchdog executive director Carmen Balber.

In California, state insurance regulators do not have the power to reject excessive health insurance rate increases. In addition to creating that authority, the initiative measure on the November 2014 ballot would allow for refunds of excessive rate increases imposed by health insurance companies since November 2012.

The change announced today by the President does not guarantee that health insurance companies will postpone cancellations, Consumer Watchdog also warned. The plan allows, but does not require, health insurance companies to continue for a year current plans in the individual market that do not comply with the Affordable Care Act. Unless the administration and state authorities require insurers to extend policies, some could choose to go ahead with cancellations.

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Carmen Balber
Carmen Balber
Consumer Watchdog executive director Carmen Balber has been with the organization for nearly two decades. She spent four years directing the group’s Washington, D.C. office where she advocated for key health insurance market reforms that were ultimately enacted into law as part of the Affordable Care Act.

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