After President Obama last week announced that states would have the option of asking insurers to revive canceled health-insurance plans, Washington’s insurance commissioner immediately nixed the idea.
Commissioner Mike Kreidler explained his decision, saying Washington’s Healthplanfinder insurance exchange is working, and that allowing a bunch of people to re-up on plans deemed insufficient threatens the success of the new system.
The premise of the Affordable Care Act (ACA) is that nearly everyone has comprehensive insurance coverage through insurance plans or public programs, sharing the costs for medical care among the old and young, the healthy and ill. Kreidler had numerous questions and concerns about how changing the rules for insurance plans work work this late in the game.
So what did the rest of the nation do? The New York Times has a nifty graphic illustrating who’s doing what. It turns out seven other states have joined Washington’s thanks-but-no-thanks position, including New York, Vermont, Massachusetts, Indiana, Rhode Island, Maryland and Minnesota. Those open to extending the plans include Oregon, Hawaii, Texas, Florida, Utah, Wyoming, Arkansas, Tennessee, Kentucky, Ohio, Georgia, South Carolina and North Carolina.
The Times article notes that the division roughly lines up with whether the governor is a Democrat (like in Washington) or Republican, with a few deviations (including Democrat-led Oregon saying yes). From the Times:
Of the 13 states that have so far said they will allow consumers to renew canceled plans, all but four are led by Republican governors and have generally been opposed to the new health care law. Of the eight that have said they will not carry out the policy, six are in Democratic-led states, many of which have actively worked to put the law into effect and have argued that allowing such an extension could undermine its success. They include New York, which announced its decision Tuesday, and Massachusetts. Many other states, including California and New Jersey, are still weighing their options.
The other thing to keep in mind is the insurance companies also have to go along with the idea.
The companies have been sending out letters this fall canceling plans sold on the individual market that don’t meet the minimum requirements prescribed under the ACA, including coverage of 10 essential benefits such as prescription drugs and maternity care, capping deductibles and out-of-pocket expenses at $6,350 per person, and denying coverage to no one.
In Washington, plans were canceled for nearly all 290,000 people covered by the policies.
The only plans that weren’t canceled were those that were “grandfathered” or have been in existence since before March 23, 2010 when Obamacare became law. (In Washington, some plans with LifeWise Health Plan, a subsidiary of Premera Blue Cross, and Premera were grandfathered, but the insurer and state can’t at the moment agree on how many plans that includes — stay tuned as we sort that out!)
We at HeathCare Checkup blog couldn’t resist exploring the question of what would the insurers do if Kreidler had gone another way, or if Congress somehow came up with a way to mandate the plan extensions.
It turns out that in the same year that the ACA took effect, Washington’s insurance companies canceled and reissued insurance plans for almost everyone buying plans on the individual market. That meant they wouldn’t even have the option of grandfathering them if they wanted to, which seems to suggest they wouldn’t be racing to reissue plans canceled this fall.
But after asking the state’s larger insurers, it’s still not clear how they might react.
Rachelle Cunningham at Regence BlueShield kept the door open on reissuing the defunct plans, saying in an emailed statement:
Our health plans are in the process of working closely with state and federal regulators to understand and assess the implications for our members. If the Washington (Office of the Insurance Commissioner) were to change its position, we would be willing to do whatever it takes to support our members, including extending their current policies.
Ed Boyle with Group Health Cooperative was a bit more cryptic, saying by email:
If federal and state governments intend to change the health care coverage rules and the composition of federal and state marketplaces in 2014, we hope those changes will be done thoughtfully and with all stakeholders involved, to garner the best outcome. The collective goal should be to minimize any unintended effects, and avoid – as much as possible – further disruption for individuals and families who are already seeing significant change as a result of health care reform.
And finally Eric Earling at LifeWise and Premera sent this by email:
The (Office of the Insurance Commisioner’s) statement was pretty clear on what will happen in Washington. So, we remain focused on implementing federal healthcare reform as smoothly as possible for our customers based on the original timelines of the ACA.
On the topic of grandfathering, yes, Premera and LifeWise were the only health plans in Washington who retained grandfathered plans after the ACA was signed into law. We wanted our customers to have that option to stay on their existing plan if they wanted, since a number of them might find the balance of benefits and costs of their current plan more appealing than plans under the ACA, especially if they’re not eligible for federal subsidies.
President Obama was scheduled to meet with insurance commissioners Wednesday, as the The Washington Post reported, so expect updates soon on who will go along with the revived plans and those who won’t.
I tackled the issue of canceled plans with a story on Washingtonians affected by the situation. One of the people I interviewed was Fraser Ratzlaff, a 31-year-old Seattle resident who had catastrophic insurance for himself and his wife. Their plan was canceled, and the new one is more expensive. Ratzlaff is taking the situation in stride and plans to buy a new comprehensive plan. If he had declined coverage, he would face a $645 penalty based on his income.
“I’m not going to do that,” he said. “It puts my wife and me at risk, and it puts our family and friends at risk” because if either he or his wife got sick, their family and friends would want to help pay the bills.
He added (in a quote that didn’t make the article): “I’m going to do the responsible, adult thing.”