Substandard insurance policies throughout the US are expected to be cancelled at the end of the year
Thousands of people throughout the U.S. will be losing their health insurance coverage at the end of the year. Those that are losing their coverage have substandard policies that do not comply with federal regulations. These policies were initially meant to expire at the beginning of the year, but were granted a reprieve by the federal government. This reprieve is coming to an end and consumers may be forced to find new policies either through state-based insurance exchanges or the private market.
Substandard policies no longer make “businesses sense” for insurers
Cancellation notices are being mailed out to consumers throughout the country. Insurers say that substandard policies no longer make “business sense” and must be cancelled in order to avoid serious financial risks. In some states, like Maryland and Virginia, consumers were warned that their substandard insurance policies would be cancelled months ago. The reprieve granted by the federal government is meant to keep these policies active through 2017, however.
Federal government has allowed substandard policies to remain in effect through 2017
The problem of substandard policies gained national attention earlier in the year, before the open enrollment period for health insurance exchanges came to an end. The Obama Administration had opted to grant a reprieve for these policies in order to ensure that people could keep their policies, but the government also allowed states to determine whether or not these policies would remain valid. Some states opted to cancel substandard policies, while others chose to follow the directive of the federal government. In many states, the issue was left to the discretion of the insurance industry.
Insurers could find better business through state-based exchanges
Insurers have been examining the continued viability of substandard policies and many have found that these policies are not worth supporting any longer. Some claim that they can find better business through state-based exchanges, while others cite financial risks as the primary reason they are cancelling substandard policies. It is currently unclear how many people will lose their insurance coverage at the end of the year.