State insurance regulators hesitate to embrace Obamacare fix

Reuters

By Caroline Humer and Curtis Skinner

Nov 15 (Reuters) - Many U.S. states are hesitant to embracePresident Barack Obama's fix to keep Americans from losinghealth insurance plans that do not comply with his healthcarereform, saying they need to figure out how to resurrect canceledpolicies and whether to allow insurers to raise prices.

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

But at least 17 insurance departments queried by Reutersfrom states as diverse as Alabama, Virginia, Minnesota,Maryland, Michigan and Oregon, said they did not have enoughinformation and were still trying to decide how to proceed.

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

That pledge became a focus of Republican efforts to changeor delay Obamacare, culminating in a vote in the House ofRepresentatives on Friday on a Republican bill to keep theexisting policies. It was supported by 39 members of Obama'sDemocratic party.

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

Some regulators are waiting for answers from the federalgovernment on the guidelines for allowing insurers to increasethe prices on these plans in 2014.

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

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

NO INPUT

Nelson and regulators who are undecided said they were notasked for input on Obama's proposal and first heard of it onThursday.

"From a regulator's perspective, it was a littledisappointing to come up with this idea and not check with theregulators to see if functionally it was going to work," saidWisconsin Deputy Insurance Commissioner Dan Schwartzer.

Insurers also were unaware of the plan until it wasannounced, according to two industry sources. On Friday, theymet with the President at the White House to "brainstorm" how tomake the fix work.

Schwartzer said he was looking to hear back fromadministration officials as soon as possible with moreinformation that would help Wisconsin decide how to proceed,though he said that like some other states the department hadalready encouraged insurers to issue early renewals on expiringpolicies 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 forMedicaid and Medicare Services that contains guidelines forcarrying it out. Regulators have had several conference calls inthe last two days, including at least one that includedofficials from CMS, several state insurance department sourcessaid.

The pressure is on insurers to implement this change by theend of December before plans start to be canceled on Jan. 1.

"The president is essentially asking them to do in the nextsix weeks what normally takes a year to do, which is offer apolicy and certify it for sale ... I think they can do somethingbut I don't think they are going to get a radical impact on thenumber of people with dropped policies," said DouglasHoltz-Eakin, President of the American Action Forum and a healtheconomist.

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

"Of course we will let South Carolinians keep theirinsurance plans. They never should have lost them in the firstplace, and should be able to keep them far beyond this one-year'fix' that President Obama is proposing. Obamacare is a completedisaster, 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 onembraced the new health marketplaces under Obamacare and say itwill create an imbalance in their fledgling market. Vermont hadalready worked with local insurers to allow state residents andsmall 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 willprovide Vermonters the security and options they need," GovernorPeter Shumlin said in a statement.

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