Health Insurers Express Worries Over Obama Shift on Policy Cancellations

The president’s move to placate millions of Americans on Thursday rattled health insurers, who said they were unsure how to revive canceled policies in short order.

While companies had expected the White House to address the white-hot issue of policy cancellations, President Barack Obama’s decision to let people keep their old policies undercuts years of preparations for the overhaul of the health-insurance market and introduces new uncertainties. Two senior insurance executives said they had not yet received any formal direction on how to carry out the change, and had only learned the outlines of the plan Thursday morning.

It was unclear how many insurers would follow the president’s lead and start offering again plans they had canceled or planned to cancel for as many as 10 million consumers because those plans didn’t provide the same level of health coverage required under the 2010 health-care law. Mr. Obama’s proposal wouldn’t require insurers to resurrect terminated policies, but gives them the choice to do so.

At least two insurance commissioners, in Washington state and Washington, D.C., were quick to declare they wouldn’t allow insurers there to continue offering plans that don’t comply with the law. “I do not believe [Mr. Obama’s] proposal is a good deal for the state of Washington,” said Mike Kreidler, the commissioner there and an elected Democrat.

“The action today undercuts the purpose of the exchanges,” the District of Columbia insurance commissioner, William White, said.

California’s insurance commissioner, Dave Jones, asked health insurers there to honor the decision. Kentucky Democratic Gov. Steve Beshear said he ordered the state insurance regulator to comply with the plan.

The White House said it would consider easing the new risks to the insurance industry that the change could trigger by adjusting a government-run program meant to help compensate insurers who face losses under the law. An administration official also said it is up to insurers and state regulators to carry out any changes.

If insurers don’t follow Mr. Obama’s new directive, they risk drawing the wrath of consumers.

“In many states, cancellation notices have already gone out to policyholders and rates and plans have already been approved for 2014,” said Mr. Donelon, a Republican. “Changing the rules through administrative action at this late date creates uncertainty and may not address the underlying issues.”

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