Washington – President Obama on Thursday announced that health insurers who sent cancellation letters to hundreds of thousands, perhaps millions, of people can continue the policies for another year, even if they don’t meet Affordable Care Act requirements.
The president was responding to a political firestorm that developed as people learned in recent weeks that their insurance plans would be discontinued at the end of the year, requiring them to buy other coverage. Obama had promised repeatedly that if Americans liked their current health plans they could keep them.
The policy change he announced Thursday does not require insurers to extend policies, and leaves state insurance departments to decide whether to allow the policies to be sold. It drew concern from the insurance industry, which warned that the move could destabilize the market and lead to price increases, and from insurance regulators, who warned that the change could be difficult to implement.
Obama, who apologized for the cancellations last week, said he was unaware so many policies would be discontinued. He said he “deeply regretted” his error “because it’s scary getting a cancellation notice.”
“We fumbled on the rollout of the health care law,” he said.
The Affordable Care Act already allows insurers to continue plans that were in effect before it became law in 2010, as long as they haven’t changed substantially. Those plans are referred to as being “grandfathered.”
But in Connecticut, even some grandfathered plans have been slated for cancellation. Aetna is discontinuing most old plans and Anthem Blue Cross and Blue Shield, the state’s largest insurer, is discontinuing some of its plans at the end of the year. Most of ConnectiCare’s plans are slated to be discontinued, and CIGNA stopped selling plans that don’t meet the health law’s standards earlier in the year.
Insurance industry skepticism
Under the president’s new policy, insurers will continue to decide which policies are renewed. Many may prefer to push customers into more expensive policies that meet the requirements of the Affordable Care Act.
Whether the policies slated for cancellation can be extended for current customers also depends on each state’s insurance regulator, which can decide whether to allow the old plans to be sold into 2014 or not.
Karen Ignagni, president and CEO of the trade group America’s Health Insurance Plans, said the changes Obama announced are a problem.
“Changing the rules after health plans have already met the requirements of the law could destabilize the market and result in higher premiums for consumers,” she said in a statement. “Premiums have already been set for next year based on an assumption of when consumers will be transitioning to the new marketplace. If now fewer younger and healthier people choose to purchase coverage in the exchange, premiums will increase and there will be fewer choices for consumers. Additional steps must be taken to stabilize the marketplace and mitigate the adverse impact on consumers.”
A White House official said the impact of allowing the extension of plans for a year will be reviewed and may be continued into 2015.
The National Association of Insurance Commissioners also raised concerns about the plan. Jim Donelon, Louisiana’s insurance commissioner and the organization’s president, said the group has been concerned that having different rules for different policies would hurt the overall market and lead to higher premiums.
“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,” he said in a statement.
Donelon also questioned how the changes could be put into effect, since cancellation notices have already gone out and rates and plans for new policies have already been approved. “Changing the rules through administrative action at this late date creates uncertainty and may not address the underlying issues,” he said.
The American Academy of Actuaries’ Health Practice Council also issued a warning about the president’s plan, saying it could lead to higher premiums and federal spending.
“Changing the ACA provisions could alter the dynamics of the insurance market, creating two parallel markets operating under different rules, thereby threatening the viability of insurance markets operating under the new rules,” Cori Uccello, the academy’s senior health fellow, said in a statement.
Pressure from Congress
Obama said insurers that choose to continue policies must inform customers “of what protections these policies don’t include” and inform them there are “better options” on the state exchanges.
The move by the White House seemed aimed at pre-empting a bill introduced by Rep. Fred Upton, R-Mich., that would give insurance companies the option of continuing all existing health plans for a year.
The White House argued the Upton bill, which is scheduled for a vote on Friday, would allow insurers to continue to sell those policies, which migh not meet the requirements of the Affordable Care Act, to new customers.
Obama said many insurers might decide to allow customers to keep their policies, but raise rates or limit coverage.
“This fix won’t solve every problem for every person, but it will fix a lot of them,” the president said. “Doing more will require help from Congress.”
GOP leaders rejected any fixes to Obamacare.
“It’s just not fixable,” said House Speaker John Boehner, R-Ohio.
Before the president’s move, the Upton bill put members of Connecticut’s House delegation in a bind. On one hand they are getting calls and letters from constituents whose policies will be discontinued.
On the other hand, any member of the delegation who votes for the bill would join the House GOP in its 41st attempt to undercut Obamacare.
Before Thursday’s White House announcement, none of the five Democrats who represent Connecticut in the House said how they would vote for the bill -– despite a number of calls and emails to their offices. Now it’s easier for them to vote “no.”
The Center for Budget and Policy Priorities, a liberal think tank, said Upton’s bill “would have serious adverse effects” on the effort to reform the nation’s health care system.
The center’s analysis said the bill would encourage healthy people to keep their cheaper, less comprehensive policies, instead of buying new ones in the exchanges the ACA has set up in every state.
“The bill would make the pool of people enrolled in plans offered through the marketplaces sicker, on average,” the center’s report said.
The result is higher premiums in 2015 and “sticker shock” for people buying insurance for 2015 at the end of next year, right before the midterm elections.
In addition to the threat from the Upton plan, the White House faced more trouble in the Senate, where a group of moderate Democrats are backing a proposal by Sen. Mary L. Landrieu, D-La., that would require insurance companies to continue offering existing plans for an indefinite period of time.
Obama also rolled back Thursday from an administration promise that all the problems with the federal health insurance portal used by 36 state exchanges would be completely fixed by the end of the month.
“The improvement will be marked and noticeable” by that date, Obama said. “I think it’s not possible for me to guarantee that 100 percent of the people 100 percent of the time have a seamless experience.”
Connecticut Republican Party Chairman Jerry Labriola, Jr., released a statement saying Gov. Dannel P. Malloy, a Democrat, “must act immediately” and instruct Insurance Commissioner Thomas B. Leonardi to re-certify the plans slated for cancellation.
Malloy said in a statement that his administration is examining the effects of Obama’s announcement and how it would affect all policyholders. Leonardi will review the matter, and Lt. Gov. Nancy Wyman, who leads the board of the state’s exchange, will hold a meeting with the exchange and others.
In the meantime, Malloy said, people should look at their options for coverage sold by the state’s exchange, Access Health CT.
A spokeswoman for the Connecticut Insurance Department said the agency is considering how the state’s health insurance industry would be affected by allowing the extension of existing policies that don’t meet the health law’s requirements.
“The Department is carefully examining the full effect that this change would have on all Connecticut policyholders,” Leonardi said in a statement. “The ACA is an expansive and complex law built on myriad consumer protections and any change deserves careful and thoughtful analysis.”
Extending policies could require insurers to scramble to develop new rates for the plans, which would have to be approved by state regulators. And they’d have to do it in less than seven weeks.
Aetna spokeswoman Susan G. Millerick said the company supports efforts to let people keep the plans they have, but indicated that doing so wouldn’t be simple.
“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,” she said in a statement. “State regulators will need to allow us to update our policies and secure appropriate rates so we can get these plans back in the market.”