A big controversy came up this past week concerning certain rules under the Patient Protection and Affordable Care Act, also known as Obamacare. Millions of Americans found that they were losing their coverage, prompting outrage from those who'd expected to keep their policies. What's behind the move, and why did President Obama choose to give states the right to allow people to keep their coverage for another year?
In the following video, Dan Caplinger, The Motley Fool's director of investment planning, looks at why so many people got cancellation notices from their insurance companies. Dan notes that under the Affordable Care Act's rules, many existing policies with a combination of high deductibles and limited coverage for health-care expenses weren't comprehensive enough to qualify, forcing insurers to stop offering them. As Dan observes, policyholders were upset because the low costs for many of these policies were attractive, and insurance companies UnitedHealth Group (NYSE:UNH), WellPoint (NYSE:ANTM), and Cigna (NYSE:CI) weren't necessarily happy to lose those customers. Even with President Obama's proposed fix, there's no guarantee that states will approve extensions or that insurance companies will extend coverage after having cancelled it.