Econintersect: The gridlock created for many who have individually purchased health insurance has been broken. An agreement emerging from a meeting at the White House last night (20 November 2013) gives state insurance commissioners control over determination of which insurance plans will be authorized in their states for 2014, without regard to any coverage requirements specified by Obamacare (PPACA, the Patient Protection and Affordable Care Act, often referred to as ACA).
With 36 states refusing to implement state insurance exchanges (HIX) a complex burden was placed on the federal system at HealthCare.gov – and the system has been largely a flop. With estimates that the government system is only 60-70% built and experiencing many operational problems during its first seven weeks, thousands of people have lost their health insurance when the replacement process is not working.
The situation has created a credibility problem for the president. This is well summarized by Arthur D. Postal in Life Health Pro:
The inability of people to access the website, plus the realization that the president’s commitment to allow everyone to “keep their existing policies if they like them” contradicts the law’s mandate that each insurance policy must contain certain essential benefits, has generated a major political problem for the president.
These essential benefits include providing insurance to people with pre-existing conditions, free preventative care, maternity coverage and other benefits. Also included is a requirement to provide contraceptives for women.
However, the realization that most existing policies didn’t include such benefits created a major practical problem as insurers notified thousands of affected consumers that their existing policies would be cancelled.
The PPACA provides that all non-compliant plans as of 23 March 2010 are grandfathered from that date forward. There are two reasons for the current problem of non-qualified plans being lost:
- Many health insurance policies are changed each year upon renewal or replacement.
- The law does not require that insurance companies must continue to maintain non-compliant policy offerings that are still eligible for grandfathering.
The agreement resulting from the meeting last night allows states, at their initiative, to continue to approve continuing policies for 2014 that are non-compliant with ACA.
The meaning of a headline that says: “States to decide which plans are PPACA-compliant” is not clear. The article describes the 2014 non-compliance problem resolution. It is not clear that determination of compliance in 2015 and future years has been relegated to the states.
Several states have said they will not generally extend non-compliant plans eligibility into 2014, including, Arkansas, California, Mississippi, Massachusetts and Vermont.
Ohter states are proceeding to authorize renewal of non-compliant policies for 2014. Among these are Maryland, Hawaii, North Carolina and Oregon.
Background:
The Manhattan Institute has published a study that documents the lowest premiums available across the U.S. before Obamacare and those available after. The results indicate that health insurance premiums will be substantially larger with ACA implemnetation.
Supporters of Obamacare cry foul, charging that invalid comparisons are being made between limited coverage policy premiums and policies with much better coverage.
A good summary of Limited Benefit Health Insurance Plans (largely non-c0mplaint with ACA) and Major Medical Insurance Plans can be found in the presentations at the June 13-15, 2012 Health Meeting of the Society of Actuaries, Trends in Limited Benefit Medical Plans – Society of Actuaries.
Sources:
- States to decide which plans are PPACA-compliant (Arthur D. Postal, Life Health Pro, 21 November 2013)
- Cancellation rules now a headache for state commissioners (Allison Bell, Life Health Pro, 15 November)
- More states push for policy extensions (Allison Bell, Life Health Pro, 18 November 2013)
- Other links given in “Background:”.