State Insurance Commissioners Are Split on the Obamacare Fix

State Insurance Commissioners Are Split on the Obamacare Fix

After President Obama announced his plan to solve the Affordable Care Act's cancelled policy problem, state insurance commissioners immediately began weighing in on whether they would permit insurers to continue offering plans that don't meet the standards of the health care law. The states are split, and not by party lines: so far Washington, Arkansas, and the National Association of Insurance Commissioners have declined, while California, Florida, and Kentucky have said they're all for it. Minnesota is a maybe. Whereas insurance companies are motivated by profits and Congressional Republicans are motivated by politics, state insurance regulators are motivated by policy.

Washington state, a Democratic stronghold that enrolled 7,000 people through its state-run exchange last month, was one of the first to explicitly say they would not allow insurers to un-cancel plans. Commissioner Mike Kreidler, who Sarah Kliff at The Washington Post describes as "one of the most liberal regulators," has decided to "stay the course." In a statement released this afternoon, he said (emphasis added):

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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.

I do not believe his proposal is a good deal for the state of Washington. In the interest of keeping the consumer protections we have enacted and ensuring that we keep health insurance costs down for all consumers, we are staying the course. 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.

As Kliff notes, this is an attempt to not undermine Obamacare, even if it goes against what Obama asked for this morning. Arkansas' Democratic Insurance Commissioner Jay Bradford has also passed on today's fix, though in his states most plans are already available through most of 2014. 

As some, including the insurance industry, have noted, most insurers already had an option to allow people to keep their plans through most of next year via early renewals. States like California banned that option, but in Arkansas 95 percent of plans have taken advantage of that renewal loophole, Bradford told the Arkansas Times. He also told the Times that, for now, his office is not considering extending that into 2014 (which, through early renewals, would allow people to potentially keep their plans until October 2015). He said:

It's just too late to change that track at this point in time.. . I think it would be confusing to change this at this late hour. Most people have made a decision. If I send out another bulletin and ask the companies...give them another decision to make…I don’t think that would be in our best interests. We’ve set our anchor on this and we ought to probably just go forward with it. 

Meanwhile Florida, which also allows the loophole, Insurance Commissioner Kevin McCarty managed to put the onus on insurers that haven't voluntarily extended coverage to do so now. His office issued the following statement

​Most health insurers in Florida have already voluntarily extended coverage for affected policyholders through 2014. However, for those companies that did not, the Office pledges to work with any company that chooses to continue coverage in accordance with the President’s transitional policy, and to facilitate the continuation of coverage for Floridians.

Even California, the home of the most successful exchange in the country, which banned the early renewal loophole because it undermined the law, has decided to allow the one million people who've lost their plans in that state to keep them. Insurance Commissioner Dave Jones told the Fresno Bee

"I've asked Covered California to take this action immediately so that health insurers are free then from this contract provision and can follow the president's request, and my request, that they allow their existing customers to renew their policies into 2014," Jones, a staunch supporter of the federal health law, said in a conference call from San Francisco.

Still, opting out of the fix seems to be the default stance of insurance commissioners. The National Association of Insurance Commissioners released a statement today that read (emphasis added):

This decision continues different rules for different policies and threatens to undermine the new market, and may lead to higher premiums and market disruptions in 2014 and beyond.

In addition, it is unclear how, as a practical matter, the changes proposed today by the President can be put into effect.  In many states, cancellation notices have already gone out to policyholders and rates and plans have already been approved for 2014. Changing the rules through administrative action at this late date creates uncertainty and may not address the underlying issues.

The statement was written by Louisiana's Republican Insurance Commissioner Jim Donelon. But despite being a Republican in a state with a government that hasn't embraced Obamacare, Donelon—who also didn't support Obamacare— has at least acknowledged the benefits of the law to his state's uninsured. In September, Donelon said he thought the roll-out would go smoothly, according to The Times Picayune. "I think there will be a gradual uptake from shoppers, and it will become more and more popular as people learn they may qualify for a tax credit or a subsidy and the only way to access that is to buy your coverage through the exchange," he said. His main concern at the time was the complexity of the system, which he called "mind boggling." 

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But despite the Insurance Commissioner association's stance, at least one state is actively considering what the fix would mean for them. Minnesota's Democratic Governor Mark Dayton said the president "deserves great credit for keeping his promise to the American people," according to the Star Tribune. The state's Department of Commerce is working on implementing the plan, though there's no word yet on what the state's four major insurers think of that. 

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