Insurance market destabilised by healthcare delay, industry says

Any delay in the individual mandate forcing all Americans to be insured by next year would have a "destabilising" impact on the insurance market, according to an insurance industry lobby group.

The White House is resisting any push for a delay, despite increasing pressure from some Democrats and Republicans to postpone the mandate because of the faulty rollout of the government website, Healthcare.gov.

When the Affordable Care Act passed in 2010, insurance companies led the fight to derail the healthcare law, which imposes significant new regulations on the industry.

But as the Obama administration comes under fire over the botched launch of the policy, its biggest allies in Washington could be the same companies which once fought to undermine the legislation.

"Delaying the individual mandate and/or extending the open enrolment period past March 31 could have a destabilising effect on insurance markets, resulting in higher premiums and coverage disruptions for individuals and families," said the lobby group called America's Health Insurance Plans, or Ahip.

It added that if enrolment "incentives" were changed - a reference to the tax penalty Americans will face if they are not insured for nine consecutive months, beginning next year, as stated by the law - monthly premiums would have to increase to account for fewer young and healthy participants in the healthcare exchanges.

Republicans have long been opposed to the individual mandate for ideological reasons. It was included in the ACA because the law was designed to increase the availability of affordable insurance to all uninsured and underinsured Americans.

To accomplish that, new insurance plans that were to be sold on healtcare.gov had to be purchased not only by the sick, but also by the young and healthy to ensure that the risk pool was balanced. The relatively minor tax penalty under the law was meant to force the young and healthy to participate.

But if that mandate is delayed, the insurance companies argue, the only people who will buy insurance on the new exchanges will be those who are sick and need coverage resulting in expensive claims.

Some Democrats in the Senate, such as Jeanne Shaheen of New Hampshire, are calling for a delay in the mandate because of the poor rollout of the website that was supposed to offer affordable health insurance.

They argue that the White House cannot punish taxpayers by next year, when the product they were promised - affordable health coverage - is not readily available online.

The alliance between the White House and insurance companies could shape the debate in the next few weeks if the health insurance website does not begin working properly by the end of November.

Dan Pfeiffer, the White House aide, on Sunday told ABC News that the website would be working smoothly for the "vast majority" of Americans by that date.

© The Financial Times Limited 2013. All rights reserved.
FT and Financial Times are trademarks of the Financial Times Ltd.
Not to be redistributed, copied or modified in any way.
Euro2day.gr is solely responsible for providing this translation and the Financial Times Limited does not accept any liability for the accuracy or quality of the translation