Sample Letters Discussing Health Plan Cancellation Fix Revealed
On Thursday, the Obama administration revealed sample letters that insurers will be required to send to individuals seeking to renew health policies that do not meet the minimum benefit standards under the Affordable Care Act, The Hill's "Healthwatch" reports.
Last week, President Obama announced an administrative fix that would allow U.S. residents who have received policy cancellation letters to keep those policies if their state regulators and insurer decide to continue offering such plans (Viebeck , "Healthwatch," The Hill, 11/21).
Among other things, the letters will be required to warn recipients that policies "will NOT provide all of the rights and protections of the health care law." For example, the letters must inform consumers that policies might not:
- Cover essential health benefits or limit annual out-of-pocket spending;
- Guarantee the policy's renewal;
- Meet standards for premiums, allowing companies to charge more based on factors like gender or a pre-existing condition; and
- Prevent discrimination based on a customer's health status.
The letters must clearly state that consumers still can choose to purchase a plan through the new federal or state insurance marketplaces, the cost of which might be offset by a federal subsidy. The sample text states, "The Marketplace allows you to choose a private plan that fits your budget and health care needs. You may also qualify for tax credits or other financial assistance to help you afford health insurance coverage through the Marketplace."
Insurers must also provide the HealthCare.gov website address and the toll-free number for the federal insurance marketplace (Shear, New York Times, 11/21).
A White House blog post announcing the letters said, "These notices tell consumers they have new options and rights to get quality, affordable health insurance. And they tell consumers what protections they would give up to keep the plan they have." It added, "In short, they give consumers the information they need to make the best choice, which may be keeping their old plans."
White House spokesperson Josh Earnest said, "The administration believes that this kind of education is actually really important" (Howell, "Inside Politics," Washington Times, 11/21).
Policy Change Puts Insurers at Legal Risk
Also in related news, legal experts say the Obama administration's administrative fix could put insurers at risk of lawsuits by consumers for failing to meet the law's standards, National Journal reports.
Under the ACA, insurers are required to cover a set of 10 "essential benefits" and are barred from imposing lifetime caps on coverage. Although the Obama administration can choose not to take action if an insurer continues to offer plans that do not meet those requirements, legal experts say it does not change the law, and thus consumers could sue insurers for providing what essentially is illegal coverage.
Chris Holt and Laura Collins, policy analysts at the conservative American Action Forum, said, "An insurer who continues to provide a policy that does not comply with the ACA's requirements and denies payment for an ACA-covered procedure in keeping with the policy could be sued by the enrollee."
Jonathan Adler, a law professor at Case Western Reserve University, said, "If I was an insurance company, I'd be very worried about this." He added, "The law is still the law."
Nicholas Bagley, a law professor at the University of Michigan who has been more sympathetic towards the ACA, said, "I know enough to be able to say with some confidence that the insurers have reason to be worried" (Baker, National Journal, 11/21).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.