Insurance Companies Waver on Obama’s Proposed Fixes

It is unclear how health insurers would reverse the cancellation notices that already have been sent to millions of consumers.

WASHINGTON, DC - NOVEMBER 14: U.S. President Barack Obama speaks about an administrative fix for some of the problems with the HealthCare.gov. website in the Brady Press Briefing Room at the White House on November 14, 2013 in Washington, DC. The president announced that canceled insurance plans would be renewed for a year. (Photo by Win McNamee/Getty Images)
National Journal
Clara Ritger
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Clara Ritger
Nov. 14, 2013, 12:14 p.m.

In­sur­ance com­pan­ies are cry­ing foul over the pres­id­ent’s an­nounce­ment Thursday that he would al­low a one-year ex­ten­sion of health plans that are not com­pli­ant with the Af­ford­able Care Act’s cov­er­age reg­u­la­tions.

The move is largely a White House ef­fort to stop the Demo­crats’ polit­ic­al bleed­ing over the can­cel­la­tion no­tices that have been sent to mil­lions of Amer­ic­ans. It places the ball in the court of state in­sur­ance com­mis­sion­ers and in­sur­ance com­pan­ies, who now must de­cide wheth­er to of­fer con­sumers their 2013 plans in 2014.

“State in­sur­ance com­mis­sion­ers still have the power to de­cide what plans can and can’t be sold in their states,” Pres­id­ent Obama said. “But the bot­tom line is in­surers can ex­tend cur­rent plans that would oth­er­wise be can­celed in­to 2014.”

The Na­tion­al As­so­ci­ation of In­sur­ance Com­mis­sion­ers is­sued a state­ment say­ing that they share the pres­id­ent’s con­cern for in­di­vidu­als who are weigh­ing their 2014 cov­er­age op­tions after re­ceiv­ing can­cel­la­tion no­tices, es­pe­cially giv­en the is­sues many Amer­ic­ans are hav­ing in nav­ig­at­ing Health­Care.gov.

The troubled fed­er­al ex­change web­site raised red flags in Wash­ing­ton that con­sumers would be kicked off of their cov­er­age and un­able to sign up for op­tions made newly avail­able by the Af­ford­able Care Act. But even the polit­ic­al prom­ise of “If you like your health plan, you can keep your health plan” has law­makers — in­clud­ing Sen. Mary Landrieu, D-La., and Rep. Fred Up­ton, R-Mich. — scram­bling for solu­tions that would re­define the makeup of the 2014 mar­ket.

The pres­id­ent’s pro­pos­al, the NA­IC says, comes very late in the game, when it will be dif­fi­cult to re­verse the can­cel­la­tions.

“It is un­clear how, as a prac­tic­al mat­ter, the changes pro­posed today by the Pres­id­ent can be put in­to ef­fect,” the state­ment reads. “Chan­ging the rules through ad­min­is­trat­ive ac­tion at this late date cre­ates un­cer­tainty and may not ad­dress the un­der­ly­ing is­sues.”

Both the NA­IC and Amer­ica’s Health In­sur­ance Plans — a na­tion­al trade as­so­ci­ation that rep­res­ents roughly 1,300 in­sur­ance com­pan­ies — charged that the pres­id­ent’s pro­pos­al would be “destabil­iz­ing” and “det­ri­ment­al” to the health in­sur­ance mar­ket and would lead to high­er premi­ums for con­sumers.

“The only reas­on con­sumers are get­ting no­tices about their cur­rent cov­er­age chan­ging is be­cause the ACA re­quires all policies to cov­er a broad range of be­ne­fits that go bey­ond what many people choose to pur­chase today,” Kar­en Ig­nagni, AHIP pres­id­ent and CEO, said in an emailed state­ment. “Ad­di­tion­al steps must be taken to sta­bil­ize the mar­ket­place and mit­ig­ate the ad­verse im­pact on con­sumers.”

In­sur­ance com­pan­ies are lin­ing up be­hind her words about the neg­at­ive mar­ket ef­fect and ex­press­ing ad­di­tion­al con­cern that they might not even be able to ac­com­plish the task.

“We will need co­oper­a­tion and ex­ped­ited ap­prov­al from state reg­u­lat­ors to re­move bar­ri­ers that would make it dif­fi­cult to make this change in such a short peri­od of time,” Aet­na spokes­man Walt Cher­niak said in an email.

Blue Cross Blue Shield spokes­man Eric Lail said he as­sumes they’d be able to do it, but that it would take “heavy lift­ing.”

The Amer­ic­an Academy of Ac­tu­ar­ies — a Wash­ing­ton-based pro­fes­sion­al as­so­ci­ation rep­res­ent­ing in­surers and fin­an­ci­ers — said the premi­um ef­fect of the pres­id­ent’s pro­pos­al could ex­tend in­to 2015.

“If lower-cost in­di­vidu­als re­tain their pri­or cov­er­age, and high­er-cost people move to new cov­er­age, the med­ic­al spend­ing for those pur­chas­ing new cov­er­age could be high­er than ex­pec­ted,” the Academy wrote in its eval­u­ation.

This so-called death spir­al would doom the pres­id­ent’s sig­na­ture health-re­form ini­ti­at­ive by driv­ing up premi­ums and driv­ing out healthy in­di­vidu­als as in­sur­ance com­pan­ies cov­er the costs of the sick. But the ad­min­is­tra­tion said Thursday’s pro­posed fix would not threaten the fu­ture of the law.

People will be at­trac­ted to the more ro­bust cov­er­age the Af­ford­able Care Act ex­changes provide, one seni­or White House of­fi­cial said.

“We ex­pect that as we get the web­site fixed and ramp up our out­reach, we’ll get more people en­rolled,” the of­fi­cial said. “We are al­low­ing the slice of people for whom a can­cel­la­tion is per­ceived as a bur­den to have this op­tion.”

In the mean­time, the House is set to vote Fri­day on Up­ton’s Keep Your Health Plan Act, a pro­pos­al that, like Obama’s, al­lows con­sumers to re­new their 2013 cov­er­age, but also al­lows new con­sumers to pur­chase those same, non­com­pli­ant plans.

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