State insurance regulators hesitate to embrace Obamacare fix

Fri Nov 15, 2013 7:34pm EST

U.S. President Barack Obama takes the stage to deliver remarks on the Affordable Care Act, commonly known as Obamacare, at an Organizing for Action grassroots supporter event in Washington, November 4, 2013. REUTERS/Jonathan Ernst

U.S. President Barack Obama takes the stage to deliver remarks on the Affordable Care Act, commonly known as Obamacare, at an Organizing for Action grassroots supporter event in Washington, November 4, 2013.

Credit: Reuters/Jonathan Ernst

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(Reuters) - Many U.S. states are hesitant to embrace President Barack Obama's fix to keep Americans from losing health insurance plans that do not comply with his healthcare reform, saying they need to figure out how to resurrect canceled policies and whether to allow insurers to raise prices.

California, Colorado, Florida, South Carolina, Ohio and Oregon said they would act on Obama's offer, announced on Thursday, to give a one-year extension to existing policies. Washington, Vermont and Rhode Island - all of which are running their own state-based insurance exchanges - said they would not.

But at least 16 insurance departments queried by Reuters from states as diverse as Alabama, Virginia, Minnesota, Maryland and Michigan said they did not have enough information and were still trying to decide how to proceed.

The responses highlight the complexity of efforts to modify unpopular, or unworkable elements of Obama's Patient Protection and Affordable Care Act. Several million Americans stand to have their individual health insurance canceled at some point in 2014 despite a pledge by Obama that people who liked their benefits would be able to keep them under his law.

That pledge became a focus of Republican efforts to change or delay Obamacare, culminating in a vote in the House of Representatives on Friday on a Republican bill to keep the existing policies. It was supported by 39 members of Obama's Democratic party.

But Obama's decision to allow an extension requires each state to examine whether it can do so under existing laws.

Some regulators are waiting for answers from the federal government on the guidelines for allowing insurers to increase the prices on these plans in 2014.

At stake, they say, is the financial viability of the health plans and the insurers. Unexpected changes in the mix of healthy and sick, young and old people who choose the existing plans over new Obamacare-compliant policies could mean that some insurers lose money and policyholders end up empty-handed.

"There are so many moving parts to this process. When you tamper with one, no matter how good your intention is, you have intended consequences and unintended consequences," Ben Nelson, chief executive of the National Association of Insurance Commissioners, said in an interview.


Nelson and regulators who are undecided said they were not asked for input on Obama's proposal and first heard of it on Thursday.

"From a regulator's perspective, it was a little disappointing to come up with this idea and not check with the regulators to see if functionally it was going to work," said Wisconsin Deputy Insurance Commissioner Dan Schwartzer.

Insurers also were unaware of the plan until it was announced, according to two industry sources. On Friday, they met with the President at the White House to "brainstorm" how to make the fix work.

Schwartzer said he was looking to hear back from administration officials as soon as possible with more information that would help Wisconsin decide how to proceed, though he said that like some other states the department had already encouraged insurers to issue early renewals on expiring policies through most of 2014.

In addition to Obama's Thursday speech outlining the fix, commissioners have a 2-1/2 page letter from the Centers for Medicaid and Medicare Services that contains guidelines for carrying it out. Regulators have had several conference calls in the last two days, including at least one that included officials from CMS, several state insurance department sources said.

The pressure is on insurers to implement this change by the end of December before plans start to be canceled on January 1.

"The president is essentially asking them to do in the next six weeks what normally takes a year to do, which is offer a policy and certify it for sale ... I think they can do something but I don't think they are going to get a radical impact on the number of people with dropped policies," said Douglas Holtz-Eakin, President of the American Action Forum and a health economist.

Among states that have decided how to proceed, some that plan to allow the fix do so out of opposition to Obamacare.

"Of course we will let South Carolinians keep their insurance plans. They never should have lost them in the first place, and should be able to keep them far beyond this one-year 'fix' that President Obama is proposing. Obamacare is a complete disaster, and we don't want any part of it," said Doug Mayer, spokesman for Republican Governor Nikki Haley.

The few that have rejected the fix were states that early on embraced the new health marketplaces under Obamacare and say it will create an imbalance in their fledgling market. Vermont had already worked with local insurers to allow state residents and small business to extend their current policies until March 31, and won't go further than that.

"We remain confident in that timeframe and believe it will provide Vermonters the security and options they need," Governor Peter Shumlin said in a statement.

(Reporting by Caroline Humer; Editing by Michele Gershberg and Tim Dobbyn)

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Comments (10)
xyz2055 wrote:
Why should health care insurers work with the administration to extend the life of certain plans for a measly 12 months. Exactly what does that accomplish? Gives those that will ultimately have to pay much more for health insurance time to figure out how they are going to pay for it? Is this just a new version of “kick the Can” down the road?

Nov 15, 2013 7:50pm EST  --  Report as abuse
8inthecorner wrote:
The gall of the man. Actually looking into the eyes
of intelligent people and spinning the same lies he’s
been sprouting for almost five years.

Nov 15, 2013 8:48pm EST  --  Report as abuse
AsokAsok wrote:
In case anyone who was wondering how Obama could wave his magic dictator’s wand and “allow” insurance companies to offer continuation of non-compliant (illegal) policies: he can’t. Not really. He can’t make the policies legal, but what he can do is tell the insurance companies he won’t prosecute them for offering illegal policies. So Obama is telling the insurance companies: “Don’t worry, it’s OK to issue illegal policies because I promise my administration won’t prosecute you.” In other words, Obama can’t make the policies legal, so he’s encouraging the insurance companies to break the law.

So encouraging the insurance companies to break the law is “Obama’s Big Fix”! So how’s that for great health insurance reform? Oh, yeah, and what a wonderful way to govern the country: encourage law-breaking. Given the example this President sets, why should anyone else feel compelled to follow the law about anything?

On the other hand, we all know that “Obama’s Big Fix” is impossible. State insurance commissioners are saying “NO”, and the insurance companies won’t issue illegal polices anyway due to massive liability issues. Oh, and what happens in case anyone does get to buy such an illegal policy? They’d still have to pay the “fine” because they won’t have Obamacare-compliant polices and the President didn’t give those people any “prosecutorial discretion”.

Besides, Obama himself said the reason for “Obama’s Big Fix” is ““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.”

That’s just plain despicable. Absolutely despicable. Coming up with a health care plan that requires encouraging companies to break the law, yet knowing the call to illegality is actually impossible anyway, and then on top of doing that, doing it solely to shift blame from himself and the Democrats that passed this monstrosity.

Mortally ill people who’ve lost their insurance and their doctors will soon be dying because of Obamacare. Ted Cruz needs to gather a couple of dozen of these poor souls from around the nation, and hold a press conference with them surrounding him, and declare: “Mr. President, let’s tear down this Obamacare now! It’s time to repeal this monstrosity. Too many innocent people are dying already. Let’s stop the horror before more are killed by it.”

Nov 16, 2013 12:44am EST  --  Report as abuse
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