Adopt or forego? CT leaders weighing Obamacare fix

For Lynn Walkoff, it’s simple: If she were allowed to continue her health insurance policy, which is now slated to be discontinued at the end of the year, she’d do it, “in a heartbeat.”

But for state regulators in charge of deciding whether to allow people to keep insurance plans now slated for cancellation, and the politicians who are likely to have a hand in the decision-making process, the choice isn’t likely to be as simple.

Instead, determining if Connecticut will adopt the fix offered by President Obama for the thousands of people poised to lose their health plans will require navigating a host of policy, political and logistical challenges.

While insurance commissioners in some states have already decided to adopt or forego the president’s policy change, Connecticut Insurance Commissioner Thomas B. Leonardi, an appointee of Democratic Gov. Dannel P. Malloy, said he’s taking a more deliberate approach and weighing the state’s options.

Here’s a look at the factors making Connecticut unlikely to adopt the Obama option, why it still might and what some alternatives might be.

Why Connecticut might not adopt the Obama fix:

The majority of plans slated for cancellation wouldn’t be affected by Obama’s policy change.

According to projections by Leonardi, about 27,000 health insurance policies are slated to be discontinued in the state. But of those, only about 9,000 are subject to the change Obama announced last week, which applies to policies that would have had to be discontinued next year because they don’t meet the requirements of the health law. Obama’s plan would allow insurers to extend those policies for one year.

The other 18,000 or so policies being canceled could legally be sold in Connecticut next year, if the insurers wanted to sell them, because they existed before the health law passed in 2010 and are exempt from the new requirements.

Essentially, if Leonardi’s math is correct, most of the Connecticut plans being discontinued were not canceled for the reasons Obama’s fix was trying to address.

Even if the state adopts the Obama fix, insurers aren’t required to extend the plans.

Insurance companies didn’t answer questions this week about whether they would extend policies if the state allowed it.

“I think to a plan, it really is a situation of payers wanting to hear from and respond to what the regulators and the administration find,” said Keith Stover, a lobbyist for the Connecticut Association of Health Plans.

Getting canceled plans extended would require a highly accelerated regulatory process.

There are six weeks left in the year, and that doesn’t leave much time for insurers and regulators to prepare to extend policies — a process that typically takes several months.

For insurers, it would mean coming up with new prices for the plans and documenting why they’re justified. In addition to the usual calculations and projections, that would involve figuring out which customers are likely to keep their plans rather than opting for the new options available for 2014.

Then the Connecticut Insurance Department would have to review the proposed rates.

Add in some time for customers to be able to weigh their options and that would mean squeezing a months-long process into just a few weeks.

“I think there are players on the national scene who perhaps aren’t as familiar with how rigorous the review process is for rates, and who frankly aren’t as familiar with how much work a plan has to do to come up with filings, who think that this is a mere flipping of a switch,” Stover said. “And it doesn’t work like that.”

Allowing plans to be extended could lead to higher rates in the state’s insurance exchange — at a politically sensitive time.

Connecticut’s insurance exchange — a marketplace for coverage set up under Obamacare — is aiming to enroll at least 100,000 people for 2014, and its success depends largely on getting the right balance of healthy and sick people.

Starting next year, all insurance companies will have to sell policies to anyone who wants to buy them, regardless of their medical history. That’s a change from today’s Connecticut market, in which insurers can decide whether people are healthy enough to get coverage.

The people whose policies are being canceled are those who were deemed healthy enough in the existing market to buy insurance. In other words, they’re the ones the exchange would like in its pool.

If a lot of them opt to keep their existing policies, they won’t be in the exchange customer pool, or the risk pool for the other Obamacare-compliant plans sold in 2014. That could leave a disproportionate number of sicker people buying the new plans, potentially leading to higher overall medical costs and future rate hikes.

There’s a political angle here too: If healthy people stick with their old plans and prices rise for the exchange and other Obamacare-compliant plans, policyholders would likely learn about it in mid or late 2014 — right in the middle of an election for the governor’s job, all five Congressional seats and every state legislative seat.

Obama’s plan puts Democrats who have backed the health law and tried to boost the exchanges in a tough spot.

Malloy has embraced Obamacare and has touted Connecticut as one of the leaders in implementing it, particularly in having a functional exchange. One of the candidates for his job, Senate Minority Leader John McKinney, a Republican, has already tried to make Obamacare into a campaign issue, linking Malloy to a law he described as failing.

State law might not permit it.

A law passed in 2011 requires all insurance plans sold in Connecticut to comply with the requirements of the Affordable Care Act. McKinney said last week that the law would prohibit the state from adopting Obama’s suggested fix, since the president did not change the actual law.

On Monday, Leonardi said the department is still determining whether he would have the authority to approve plans to be sold in 2014 that don’t meet all of the health law’s requirements.

Why Connecticut might adopt the Obama fix:

People whose policies were canceled are angry, and they’re vocal.

State officials are hearing from constituents who are among the thousands whose plans are being discontinued.

McKinney cited calls from a single mom losing her plan who would have to pay higher rates for a new policy when he called for the state to allow plans to be extended. (Malloy’s spokesman said the administration is still reviewing the issues involved.)

If the insurance commissioner’s figures are right, allowing plans to be extended would affect at most about 9,000 policyholders. That’s a relatively small number in a state with 1.4 million insurance policies. But it’s still more than Malloy’s 2010 victory margin of 6,404 votes.

Walkoff, who lives in Weston, is one of those hoping the state will allow the Obama fix. She had what she considered good coverage in the past, with a $5,000 deductible and a wide network of doctors, including providers in New York. The options she found for 2014 — on the exchange and outside it — would cost more, require higher out-of-pocket spending if her family needs care and wouldn’t cover her out-of-state doctors as in-network providers, she said.

The cancellations are a big deal to people she knows who are getting them, she said. But Walkoff noted that people with employer-sponsored insurance, who aren’t affected by the cancellations on the individual market, are largely staying on the sidelines.

“It’s a very personal thing, and if I hadn’t gotten my [cancellation] letter, I would have likely remained out of the conversation as well,” she said.

What might happen instead:

If state officials decide not to allow plans to be extended, look for them to offer alternatives, possibly pushing hard for those losing their plans to sign up for coverage through the exchange. Some canceled customers are likely to qualify for federally subsidized coverage that could keep their premiums down, although those who don’t could face higher prices for the new coverage.

In some cases, insurers are offering policyholders another option: Buying or renewing plans before January. That would allow them to maintain benefits that aren’t subject to Obamacare and most likely have lower premiums, for the next 12 months. Aetna offered this option to people whose plans were scheduled to expire in the first half of 2014, and about 30 percent opted for it.

That’s what Walkoff is doing. She and her family are buying a new plan that doesn’t meet all the Obamacare requirements and takes effect before the year ends. Because insurers are still allowed to consider medical history in determining whether to cover someone, she and her family had to be deemed healthy enough to buy the new plan.

She’s not thrilled with the option; the new plan costs $175 more per month than her current one, and while the deductible in her old plan is $5,000, in her new plan it’s $16,000. But it’s cheaper than the policies she looked at that comply with the Obamacare requirements taking effect Jan. 1, she said, and has a broader network of doctors.