Obama, State Insurance Officials Discuss Policy Cancellation ‘Fix’

On Wednesday, President Obama convened a meeting with leaders and members of the National Association of Insurance Commissioners to discuss their concerns about the cancellation of some consumers' health plans and the administrative "fix" that Obama unveiled last week, the Washington Post reports (Sun/Kliff, Washington Post, 11/20).

Under Obama's plan, insurers in 2014 would be allowed to continue to sell policies even if they do not meet minimum coverage requirements under the Affordable Care Act. The plan -- which ultimately will be implemented by insurers and state regulators -- triggered a debate among stakeholders and insurers, who argued that it would increase premiums and jeopardize the newly reformed market.

On Friday, President Obama and several White House advisers convened a meeting with 15 insurance executives to discuss implementation strategies for the fix. They conferred about HealthCare.gov and a proposal to allow insurers to enroll consumers directly into plans. The executives unanimously agreed after the meeting that they are willing to work with the Obama administration to address the cancellation issue, while protecting the financial viability of the new market (California Healthline, 11/20).

NAIC Meeting

Obama sought to alleviate the officials' concerns that his policy change would raise premiums and create problems for the insurance market. HHS Secretary Kathleen Sebelius and top White House domestic policy, health care and legal advisers attended the meeting.

However, an NAIC statement issued after the meeting indicated that some members still had concerns with Obama's plan, Reuters report. The statement noted that the NAIC delegation "stressed ... that different rules for different policies would be detrimental to the overall insurance marketplace and could result in higher premiums for consumers, without addressing the underlying concern of gaps in coverage."

NAIC President and Louisiana Insurance Commissioner Jim Donelon noted that the policy change is "creating a level of uncertainty that we must work together to alleviate" (Rampton/Krauskopf, Reuters, 11/20). He said White House officials and the NAIC delegation agreed that the issue is complex and that states likely would make different decisions to address it (AP/Miami Herald, 11/20).

The White House in a statement echoed Donelon's comment and reiterated its pledge to work with state commissioners to maintain protections for consumers and ensure that the insurance markets are competitive. The statement added, "States have different populations with unique needs, and it is up to the insurance commissioner and health insurance companies to decide which insurance products can be offered to existing customers next year" (Reuters, 11/20).

States Split on Issue

Since Obama's announcement, nearly half of all states have publicly stated their positions on the policy change, with many pledging to comply with the proposal, The Hill's "RegWatch" reports (Goad, "RegWatch," The Hill, 11/20).

According to the Wall Street Journal, regulators in states that have largely opposed the ACA -- like Florida, North Carolina and Texas -- have said they will allow insurers to reinstate policies that have been discontinued. Meanwhile, at least five states -- Massachusetts, Minnesota, New York, Rhode Island and Washington, which have been supportive of the law and established their own health insurance marketplaces -- have rejected the policy change (Martin et al., Wall Street Journal, 11/20).

On Wednesday, Virginia officials said they do not believe they have the regulatory authority to implement the plan (Washington Post, 11/20).

Insurers Face Challenges in Implementing Plan

Insurers selling policies in states that have agreed to comply with Obama's directive face several barriers, such as a tight deadline to reinstate the policies, identifying and informing consumers whose plans were canceled and determining what to charge for the one-year coverage extension.

According to the Journal, some insurers already had started reassigning or laying off underwriters because the ACA prohibits them from basing premiums on consumers' medical histories. However, those insurers now are rehiring or reinstating those personnel to determine the cost of the policies that must be restored (Wall Street Journal, 11/20).

Unclear How Many Consumers Would Be Affected by Administrative Fix

Meanwhile, the number of individuals who stand to benefit from Obama's administrative fix will be contingent upon whether states with the largest number of policy cancellations -- such as California -- and insurers agree to move forward with the plan, Kaiser Health News reports.

However, it is unclear specifically how many people would benefit, in part because it is not known how many of the 14 million people who purchase their own insurance received cancellation letters. According to estimates from the Associated Press, about 4.2 million people received the letters, with the majority of those living in California, Georgia, Florida and Washington (Appleby, Kaiser Health News, 11/21).