Regulators, Insurers Scramble Following Obama’s Extension of Plans
Regulators at Connecticut’s Insurance Department were busy Thursday dealing with President Barack Obama’s announcement that he would extend for one year some plans that were cancelled in 2014 as a result of the Affordable Care Act.
Facing criticism from all sides and plummeting poll numbers, Obama put insurance companies back in the spotlight by encouraging them to reinstate the plans, but only if state insurance regulators agreed to allow those plans back in the marketplace.
State Insurance Commissioner Thomas Leonardi said his department is “carefully examining the full effect that this change would have on all Connecticut policyholders.”
It’s unknown at the moment how many consumers in Connecticut have had their plans cancelled.
“The ACA is an expansive and complex law built on myriad consumer protections, and any change deserves careful and thoughtful analysis,” Leonardi said.
The ACA, also known as Obamacare, included a provision that allowed people who, at the time of its passage, had coverage that did not meet the law’s standards to keep their plans if their plan hadn’t changed. The concept of grandfathering those plans will be expanded another year as long as the insurance companies are still willing to offer them and regulators are still willing to allow them.
“State insurance commissioners still have the power to decide what plans can and can’t be sold in their states, but the bottom line is, insurers can extend current plans that would otherwise be cancelled into 2014,” Obama explained during a televised press conference. “And Americans whose plans have been cancelled can choose to re-enroll in the same kind of plan.”
But the late-in-the-game decision by Obama to extend enrollment in those plans may work against consumers.
“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,” America’s Health Insurance Plans’ President and CEO Karen Ignagni, 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.”
The danger is that if “fewer younger and healthier people choose to purchase coverage in the exchange, premiums will increase in the marketplace and there will be fewer choices for consumers,” Ignagni, head of the national trade association for the health insurance industry, said.
Access Health CT CEO Kevin Counihan agreed with Ignagni’s assessment.
He said a key principle of the Affordable Care Act is a balanced risk pool. So, demographically speaking, the key is a good distribution of younger, healthier people — who aren’t using many medical services but are paying into the system — to offset the costs of older, maybe sicker, individuals who are using the medical services more frequently.
Obama’s announcement “may incent people to stay with plans outside the exchange that could have a deleterious effect on the pool,” Counihan said.
It also only gives insurance carriers about seven weeks to come up with new rates that would have to be approved by regulators before allowing consumers to re-enroll.
Democratic Gov. Dannel P. Malloy said his administration is examining the ramifications of Obama’s statements.
“We understand there is uncertainty among some policyholders and that is why I have asked Commissioner Leonardi to carefully review the legal and regulatory questions that this poses,” Malloy said. “As a part of this review, Lt. Gov. Wyman is also convening a meeting with the Exchange and other stakeholders.”
In the meantime, he urged residents to check out the rates on the Access Health CT website to see how they stack up to their existing policy.