President Obama came out with the surprising decision this morning to allow insurance companies to revive health plans that have already been canceled. But he left it up to state insurance commissioners to decide whether to resurrect these policies — which don’t comply with the Affordable Care Act — or continue as planned and encourage people to buy new coverage with a broader range of benefits.
Washington’s commissioner Mike Kreidler opted to stay the course, and he didn’t mince words in making his choice:
I understand that many people are upset by the notices they have recently received from their health plans and they may not need the new benefits today. But I have serious concerns about how President Obama’s proposal would be implemented and more significantly, its potential impact on the overall stability of our health insurance market.
In Washington state, most of the 290,000 people with individual policies already have received letters from their insurance companies telling them their plans are being canceled at the end of the year. These plans failed to meet all of the new health insurance requirements, including providing 10 “essential benefits” such as maternity care, prescription drugs and preventive care, and limiting out-of-pocket expenses at $6,350 per person.
All 90,181 people with insurance coverage from Regence BlueShield have learned their plans will be canceled, as did all 60,000 people covered by Group Health Cooperative. Some 77,000 people with LifeWise Health Plan, a subsidiary of Premera Blue Cross, also learned their plans were being scrapped.
An additional 24,000 people with LifeWise are covered under “grandfathered” plans that predate the act and will not be canceled, though members will be getting letters this month informing them they can move to another plan if they would like to.
Some have already started looking for or even signed up for new plans either through the state’s Healthplanfinder insurance exchange, where they could be eligible for tax breaks, or outside of the exchange.
So what was Kreidler thinking when he decided to reject Obama’s offer? We at HealthCare Checkup had the chance to talk to the commissioner on Wednesday when it was just Congress kicking around ideas for bringing back the canceled plans. Already Kreidler was worried that lawmakers would reverse direction because of the huge amount of uncertainty it would create. Here were his main concerns:
How would the resuscitated plans be priced?
The plans could be offered for the same price, or a higher rate. In recent years, individual insurance premiums in the individual market have increased on average anywhere from 8 to 18 percent a year.
How long would the plans last?
Would they be valid for a year, two years, indefinitely?
Would people be able to jump between plans?
The Affordable Care Act guarantees health insurance to people who are sick and currently denied coverage. But the system is not designed to allow people to stay with bare bones plans, then jump to better coverage when they have an emergency. For insurance to work, some people have to pay more and use fewer medical services.
What would insurance companies do?
The insurance companies struggled to put prices on the 2014 individual market plans, given that no one knows for sure who will be signing up – namely, will young and healthy people join the insurance pool in meaningful numbers? Changing the rules midstream disrupts their projections and adds a large dose of uncertainty for pricing decisions. Additionally, companies are supposed to propose their 2015 prices in the spring, a process that becomes doubly difficult if the old plans live on.
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In this state, where by last count 77,000 residents have enrolled in Healthplanfinder, “we are in a unique position,” Kreidler said on Wednesday. “We were smart enough to set up our own exchange and expand the Medicaid program. We’re having a relatively high degree of success.”
Before today’s announcement, Kreidler had this message for Congress — which now applies to the president: “Please don’t mess it up for us. We’re doing the right thing for the citizens of our state.”