When it became clear that President Barack Obama’s often-repeated promise — “If you like your current health insurance plan, you can keep it” — could not be kept, the outrage from individuals whose policies were cancelled by their insurers and the protest from lawmakers in Congress who saw this development as the latest piece of evidence that the the implementation of the administration’s health care reform law was flawed forced the administration to make a change.
As originally written, the health care reform law stated that policies in effect as of March 23, 2010 — the day the Affordable Care Act was signed — would be “grandfathered,” meaning consumers would be allowed to keep those policies even if they do not provide the 10 mandatory benefits that all health insurance plans are required by the Affordable Care Act to provide.
However, regulations later written by the Department of Health and Human Services narrowed that provision. If any part of a policy was significantly changed since that date — including the deductible, co-pay, or benefits — the policy would not be grandfathered. The reasoning is that the Affordable Care Act was designed to eliminate “substandard policies that don’t provide minimum services,” as White House Press Secretary Jay Carney explained after the policy cancellations began to make news.
But in an announcement made Thursday, the president said that both policyholders whose plans had been purchased before the law was signed and those whose plans have changed could renew their insurance for another year even if they did not comply with the new consumer protections mandated by the Affordable Care Act..
The problem is that the president’s adjustment may not be plausible, as the National Association of Insurance Commissioners warned immediately after the statement was made. In order for the president’s fix to work, the insurance commissioners of each of the 50 states and the District of Columbia have to agree. For five states — North Dakota, Iowa, Illinois, Pennsylvania, and New Jersey — information is not available. However, in all other states but seven, insurance commissioners agreed to allow insurers to renew canceled policies. In fifteen states, terminated insurance plans will stay canceled, including the following three.
The state of California was an early supporter of the health care reform. Even after the Supreme Court struck down the provision making the expansion of Medicaid mandatory, California expanded its program so that individuals earning less than 138 percent of the federal poverty line, or about $15,000, will qualify. It also chose to build its own online marketplace — Covered California — unlike 36 other states, which defaulted to a federally facilitated or partnership exchange.
But the Covered California board chose not to allow policyholders whose plans had been purchased before the law was signed and those whose plans have changed after it was passed to renew their insurance through 2014 even if they did not comply with the new consumer protections mandated by the Affordable Care Act.
However, this ruling only concerns insurers offering polices on the exchanges. At the end of November, Covered California Executive Director Peter V. Lee cited two reasons for the board’s decision: the fact that extending the deadline offers no benefit to the consumer and that it may create confusion. More than 1 million Californians had their policies canceled.
California Insurance Commissioner Dave Jones strongly disagreed with the board’s decision. “Allowing existing policyholders to keep their health insurance for the duration of 2014 will not undermine the implementation of the ACA, but rather will give consumers more time to figure out what makes sense for their families,” he said.
As of November 19, California had enrolled approximately 80,000 people in private health plans and 135,000 more in Medi-Cal, the state’s Medicaid program.
Being that California is the most populous state in the country — with the most uninsured individuals at 7 million, or 15 percent of the United States’ total 48 million uninsured, a huge amount of diversity, and large pockets of poverty — the long-term success of its exchange will be a vital indication of the viability of the health care reform as a whole.
Due to the fact that California has so many uninsured residents and because a quarter of its population lives below the poverty line, enrollment numbers show higher-than-expected demand fits into the framework set out by health policy experts. The majority of new enrollees to the exchanges will likely be proportionally older and sicker, as well as more likely to have been without insurance for some time.
Washington also chose to build its own insurance exchange: On May 11, 2011, Democratic Gov. Christine Gregoire signed a law establishing the Washington Health Benefit Exchange. The state also chose to expand Medicaid, a decision that affected 2.9 percent of its residents. Washington’s state-run exchange has signed up 7,300 people, or nearly 7 percent of the state’s 110,000 projected participants.
Mike Kreidler, who has served as insurance commissioner in Washington state since 2000, has rejected the rule change that would have extended the cancelled policies into 2014. In a statement made November 15 — just after the president’s announcement — he said the administration and health care officials had spent three years working to implement the Affordable Care Act with the goal of building “a stable, fair and competitive individual health insurance market.”
He acknowledged in a statement that many individuals were “upset” by the termination notices they received from their health plans, but he expressed “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.”
His opposition to Obama’s proposal was rooted in a desire to keep the “consumer protections we have enacted” and ensure that health insurance costs remain down for all consumers.“We are staying the course,” Kreidler said. “We will not be allowing insurance companies to extend their policies. I believe this is in the best interest of the health insurance market in Washington.”
Massachusetts was already ahead of the curve. It’s had its state-sponsored health care system in place since 2007, serving as template for the national health care reform. Like the Affordable Care Act, so-called Romneycare was passed to increase the fraction of the population with health insurance by imposing mandates on employers and employees, and by subsidizing health insurance for middle-class families without employer plans.
The state’s experience predicted low early enrollment for the Affordable Care Act marketplaces. In the first four months of enrollment in Commonwealth Care — the Massachusetts health care exchange — enrollments numbered 15,560, a small portion of the 80,000 residents eligible for subsidized health care. Enrollment did not fully ramp up until almost a year after the rollout began.
In 2012, Democratic Gov. Deval Patrick certified the state’s health connector to act as its insurance exchange. The state did not chose to allow canceled insurance polices to be renewed.
“As you know, Massachusetts started health reform in 2006 and since then has seen remarkable success with nearly universal coverage of our residents with quality health insurance,” wrote the director of the state’s Department of Health and Human Services, Gary Cohen, in announcing the state’s decision. “In accordance with the ACA, some consumers, upon renewal, will need to change health insurance products to meet the metallic tier requirements. Again, unlike most other states, these changes are minimal and consumers will simply be offered a slightly modified plan.”
According to a survey conducted by The Wall Street Journal, 10 Democrat-led states and the District of Columbia will not allow renewals: Connecticut, Massachusetts, Minnesota, New York, California, Washington, New Hampshire, Vermont, Colorado, and West Virginia. In addition, Nevada, Nebraska, Oklahoma, Rhode Island, and Arkansas also said no.
However, nine Democrat-led states have agreed to Obama’s proposal, including Illinois, Kentucky, Missouri, and Oregon.
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