U.S. health plan to up aid to insurers on sicker members

Reuters

Nov 26 (Reuters) - The U.S. government is proposingcompensation to help insurers participating in Obamacare healthexchanges who fear that their costs will spin out of control iftheir plans are dominated by sicker people.

Fears about cost burdens from sicker patients increased whenPresident Barack Obama introduced a "fix" to fulfill his promiseto let people who like their existing insurance plans keep them.

The exchanges were created as part of Obama's healthcarereform law, popularly known as Obamacare. An estimated 7 millionpeople are expected to sign up in the first year. Insurance wenton sale on Oct. 1 and goes into effect on Jan. 1.

The law also set new standards for health insurance thatmillions of existing policies did not meet, causing companies tosend cancellation notices that critics said broke Obama'slong-standing promise that people could keep their policies.

The so-called fix announced earlier will let companiescontinue to offer these otherwise non-compliant policies for ayear.

Those individual market policies are believed to be held byhealthier people, who may now be less likely to sign up forpolicies sold through the exchanges, overloading them withcostlier consumers.

Under the change proposed late Monday, the government wouldlower the threshold for reimbursement to insurers for expensivemedical claims.

Under existing rules, the government can pay insurers 80percent of claims greater than $60,000 for an individual in2014. That threshold would be lowered to $45,000 under theproposal.

In addition, the government proposed altering the "riskcorridor" program, which compensates insurers if they spend moreon medical claims than they take in from plan premiums.

The public has 30 days to comment on the proposed changes.

About 15 million people buy their own insurance in theUnited States, and an estimated few million plans were due to becanceled either at the end of this year or in 2014. More than150 million people buy health insurance through their employersand are not affected.

States have been mixed on whether they will move forwardwith renewing these policies as now permitted by Obama's fix.

America's Health Insurance Plans, a trade group, whichinitially thought Obama's plan would destabilize the newexchange market and raise premiums, welcomed the proposal.

"We appreciate that the administration is taking steps tostabilize the market and minimize disruption for consumers,"spokesman Robert Zirkelbach said on Tuesday.

Insurers had spelled out their concerns about the plancancellations and suggested changes in a hastily called meetingof executives at the White House on Nov. 15, one day after thepresident announced the move.

The chief executive of Molina Healthcare Inc, whichis offering plans on exchanges in nine states, said the moveshowed the government's desire to appease insurers.

"I think was a nice gesture on the part of the government,"CEO J. Mario Molina said. "I don't know if it's going to make ahuge difference overall, but I think this was a way for theadministration of saying, 'We recognize your concerns. We'llmeet you halfway. And please continue to reach out to theuninsured.'"

Other insurers offering plans on the state-based exchangesinclude Aetna Inc, Humana Inc, WellPoint Inc, Cigna Corp, and UnitedHealth Inc.

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