Obamacare Fix Shifts Responsibility to Insurers

A CMS letter to insurance commissioners leaves the decision to continue coverage plans up to issuers.

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
Sophie Novack
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Sophie Novack
Nov. 14, 2013, 9:54 a.m.

A let­ter sent to in­sur­ance com­mis­sion­ers Thursday out­lines White House guid­ance to ad­dress the prob­lem of in­sur­ance can­cel­la­tions un­der Obama­care. The let­ter places the onus on in­surers to choose wheth­er they will con­tin­ue of­fer­ing can­celed or would-be can­celed plans.

“Health in­sur­ance is­suers may choose to con­tin­ue cov­er­age that would oth­er­wise be ter­min­ated or can­celed, and af­fected in­di­vidu­als and small busi­nesses may choose to re-en­roll in such cov­er­age,” says the let­ter, sent from Gary Co­hen, dir­ect­or of con­sumer in­form­a­tion and in­sur­ance over­sight at the Cen­ters for Medi­care and Medi­caid Ser­vices.

The ad­min­is­trat­ive fix al­lows in­sur­ance com­pan­ies to con­tin­ue of­fer­ing plans that do not meet the new, more-com­pre­hens­ive stand­ards set un­der the health care law.

Un­der what is re­ferred to as a “trans­ition­al policy,” in­surers and con­sumers will be al­lowed to re­new their cov­er­age in the in­di­vidu­al or group mar­ket for the policy year between Jan. 1, 2014 and Oct. 1, 2014. 

The guid­ance comes with cer­tain con­di­tions. Cov­er­age must have been in ef­fect on Oct. 1, 2013, so new cus­tom­ers can­not pur­chase these plans, and the in­sur­ance com­pan­ies must in­form con­sumers of al­tern­at­ive op­tions avail­able through the health in­sur­ance mar­ket­place.

“State agen­cies re­spons­ible for en­for­cing the spe­cified mar­ket re­forms are en­cour­aged to ad­opt the same trans­ition­al policy with re­spect to this cov­er­age,” the let­ter reads. 

The policy does not, however, re­quire com­pan­ies to com­ply, and in­dustry ex­perts say it may be too late to re­verse can­cel­la­tions.

Obama was not shy about the polit­ic­al nature of the an­nounce­ment Thursday.

“What we want to do is to be able to say to these folks, ‘You know what, the Af­ford­able Care Act is not go­ing to be the reas­on why in­surers have to can­cel your plan,’ ” Obama said. “Now, what folks may find is, the in­sur­ance com­pan­ies may still come back and say, ‘We want to charge you 20 per­cent more than we did last year, or we’re not go­ing to cov­er pre­scrip­tion drugs now.’ “

Need­less to say, in­sur­ance com­pan­ies aren’t so pleased with the solu­tion.

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