President Obama’s administrative fix for canceled and changed health care policies has Minnesota regulators, officials, insurers and the state’s health exchange scrambling Thursday to figure out what to do.
It may not even be possible for Minnesota’s insurers to reverse the advances they’ve made in coverage before the individual mandate of the Affordable Care Act goes into effect on Jan. 1.
So far, the long-term effects of the president’s announcement are unclear.
Responding to mounting political pressure from both friends and foes, Obama announced on Thursday a yearlong reprieve for individuals whose plans were changed or canceled because of Obamacare requirements. Read what Minnesota’s congressional delegation had to say about the move here.
Minnesota has at least 140,000 such plans, which would be good through 2014 and potentially into 2015 if the president’s plan proves workable.
The relaxed regulations apply only to those with old coverage, not to individuals purchasing new plans, which must meet mandated benefits requirements. Under the new policy, though, insurers must point out benefits that are missing from the old plans and point consumers toward better coverage.
White House officials said shortly before Obama’s announcement that health companies and insurance regulators have the option of not complying, but that would mean all plans in a state would have to conform to the higher coverage standards that caused the cancellations in the first place.
Minnesota law dictates that plans can’t be canceled, but at least 140,000 individuals received change notices because of the more stringent requirements of the law that would have gone into effect in Jan. 2014.
The Thursday move is the latest in a long string of enormous changes to the health insurance landscape both nationally and in Minnesota over the past three years.
Gov. Mark Dayton — and officials from the MNsure health exchange and the Commerce Department, which regulates insurance — say they’re evaluating how Minnesota should move forward.
“Our Department of Commerce and MNsure staff are presently analyzing the details of the president’s pronouncement and will have more detailed information later about its effect on Minnesotans,” Dayton said in a statement praising Obama’s move.
Dayton’s positive comments — he thanked Obama for Thursday’s announcement — point to Minnesota adopting the policy.
Roger Feldman, a professor in the University of Minnesota’s School of Public Health, said he would be surprised if officials don’t go through with it.
But experts and insurance industry representatives agree that the move is generally negative. They also question how much it actually will help Obama since the extension only lasts a year. Administration officials, however, have said that the requirements could be pushed off again at that time.
“This whole thing was just ugly, and that’s because these people want a free lunch. People want … all of the benefits of a reformed insurance market with none of the cost,” said Jonathan Gruber, an MIT economist who did modeling for Minnesota’s exchange. “Basically, [Obama’s] doing as little shooting in the foot as he can given the pressures that he’s facing.”
It’s important to note, though, that many experts and officials were speaking based on hypothetical situations since few details have come to light at this point. Many assumptions were predicated on Minnesota enacting the policy and the insurance companies and regulators being able to comply.
Exchanges, including MNsure, are counting on enrolling many healthy people to offset the cost of covering more sick people under the federal health reform law.
Experts say that Obama’s move Thursday could prevent many of them from entering exchanges, therefore skewing the risk mix.
That means premiums, which are already set for 2014, are likely to get hiked in 2015, Gruber said.
“It’s going to blow it up,” said Feldman, the U of M expert. “The people who are in these policies are the folks who survived all the underwriting, no pre-existing conditions and all those other good things that were necessary to get coverage, so they’re going to be a healthy group.”
“I can’t say how bad it’s going to blow it up, but it’s going to damage the actuarial calculations for sure,” he added, “maybe just dent them a little bit.”
Administration officials said they would tweak a risk-adjustment program to ward off potential premium impacts.
But state insurance regulators are concerned whether they can even move forward.
“It is unclear how, as a practical matter, the changes proposed today by the President can be put into effect,” National Association of Insurance Commissioners President Jim Donelon said in a statement. “Changing the rules through administrative action at this late date creates uncertainty and may not address the underlying issues.”
At a more fundamental level, it’s unclear how Minnesota will be able to move forward in the state’s current regulatory climate.
Plans already spent between six months and a year getting their products ready for sale. Rates for those products have already been set and OK’d by the Commerce Department. Minnesota health carriers have adjusted their plans to meet the law’s new requirements, and the old plans no longer exist.
Feldman said resurrecting old insurance plans would likely require special regulatory approval from the state Commerce Department, but it’s unclear how such a move would be made. The department didn’t return calls for comment, but responded in a statement.
“The Minnesota Department of Commerce is closely working with state and federal officials on the president’s announcement and executive order and how it will affect the State of Minnesota,” spokeswoman Anne O’Connor said.
Industry concerns go beyond whether or not implementing the reversal is feasible.
“It’s unfortunate that this announcement creates additional confusion for consumers in what is an already really confusing situation,” said Eileen Smith, spokeswoman for the Minnesota Council of Health Plans, which represents major Minnesota insurers.
“Making sure consumers have coverage in place on Jan. 1 continues to be our top priority,” she said. “We are scheduling a meeting with our regulators to discuss what the president’s announcement means here in Minnesota.”