President Obama’s Announcement

This was sent to me in an email from Humana – gives a nice summary of President Obama’s announcement last week about keeping your current coverage.

 

The biggest news in the health care arena has been President Obama’s announcement regarding the treatment of discontinued 2013 health plans.

Policy holders across the country have been receiving letters from their health insurers telling them their current health plans do not comply with the health reform requirements that go into effect on Jan. 1 because (1) they don’t meet the reform law’s new minimum benefit requirements, and (2) they aren’t eligible to be grandfathered (regulations allowed for some old health plans to be locked in). The notifications affected individual and small business health plans.

Some health insurers like Humana, where it was permitted under state law, gave policy holders a choice.

  • They could “early renew” their current, non-health reform compliant coverage, which meant signing up for a year-long policy before the end of 2013.
  • They could end their current coverage at the end of the year and sign up for a new reform-compliant version of their health plan for 2014.
  • They could compare other options on the health insurance marketplace.

Many other insurers simply explained that policy holders’ current coverage was being cancelled.

The arrival of those letters took many Americans by surprise, since the President had repeatedly promised, “If you like your health plan, you can keep it.”

So last Thursday, the President responded to the public and political pressure to make his promise true. “I’m offering an idea that may help,” he said: He proposed that for 2014 – one year – health insurers be allowed to continue to sell health plans that were due to be cancelled at the end of 2013. “State insurance commissioners still have the power to decide what plans can and can’t be sold in their states,” Obama explained. “There’s going to be some state-by-state evaluation of how this (proposal) is handled.”

  • The industry group America’s Health Insurance Plans (AHIP) immediately released a statement saying, “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.”
  • The National Association of Insurance Commissioners released a statement reiterating AHIP’s concerns and added, “It is unclear how, as a practical matter, the changes proposed today…can be put into effect,” since rates and plans for 2014 had already been approved in many states.
  • Insurance consultant Robert Laszewski explained the challenge in a note to clients: “This means that the insurance companies have 32 days to reprogram their computer systems for policies, rates and eligibility, send notices to policyholders…ask the consumer for their decision…and then enter those decisions back into their systems.”
  • An analyst with Citigroup wrote in a report, “The complexity of trying to uncancel millions of canceled individual policies with only six weeks left in the year is staggering.” He predicted the “enormous administrative burden” would mean many insurers would choose not to extend coverage.

As the New York Times wrote, “It remained unclear just how much impact the fix delivered by an apologetic Mr. Obama would actually have. …There is no guarantee that insurers will…allow people to stay on their existing plans…or that states will allow such renewals.”

Some health plans may have an easier time than others implementing the President’s proposal. Humana, for example, has already reached out to members in states where permitted and offered them the option to retain their current health plans, extending their current coverage to the end of 2014.

States are reacting to the President’s announcement in different ways. For example, the insurance commissioners in the states of Rhode Island and Washington immediately responded they would not follow the President’s proposal to allow the continuation of 2013 policies into 2014. Kentucky and Ohio said they would work to help health plans provide their members with the option of renewing their 2013 policies.

The executive director of the industry group California Association of Health Plans said he was opposed to the idea of reversing course. “The entire underlying premise of the ACA – balancing costs of the young, old, sick and healthy – has been left adrift with this announcement,” he said.

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