Today, President Obama said that his administration would allow insurers to renew for one year the policies of consumers who had them canceled because of the Affordable Care Act. But will it make a difference? Doesn’t seem so based on the early reaction.

The National Association of Insurance Commissioners, which represents state insurance regulators, had this to say:

The NAIC has been clear from the beginning that allowing insurers to have different rules for different policies would be detrimental to the overall market and result in higher premiums. 

We have expressed these concerns with the Administration and are concerned by the President’s announcement today that the federal government would use its “enforcement discretion” to delay enforcement of the ACA’s market reforms in 2014 for plans that are currently in effect.  This decision continues different rules for different policies and threatens to undermine the new market, and may lead to higher premiums and market disruptions in 2014 and beyond.

In addition, it is unclear how, as a practical matter, the changes proposed today by the President can be put into effect.  In many states, cancellation notices have already gone out to policyholders and rates and plans have already been approved for 2014. Changing the rules through administrative action at this late date creates uncertainty and may not address the underlying issues.

Health industry consultant Robert Laszewski was even more blunt.

This puts the insurance companies, who have successfully complied with the law, in a hell of a mess.

First, this gives insurers the “option” of offering the extension. The blame for this cancellation issue thus moves to those insurers refusing to do it.

To have coverage take effect by January 1, the consumer must make their coverage elections by December 15–you will note that is the Healthcare.gov requirement.

This means that the insurance companies have 32 days to reprogram their computer systems for policies, rates, and eligibility, send notices to the policyholders via US Mail, send a very complex letter that describes just what the differences are between specific policies and Obamacare compliant plans, ask the consumer for their decision–and give them a reasonable time to make that decision–and then enter those decisions back into their systems without creating massive billing, claim payment, and provider eligibility list mistakes.

All by January 1.

So, the insurer can choose between not doing something so risky and complicated or being the “goat” for refusing to do it.

The President and the Democrats would appear to be in a very difficult political spot over these cancellations.

They appear to be throwing this “hot potato” into the hands of the insurance industry who will now be on the hot seat to agree to do the impossible or take the heat for failing to do so.