November 15, 2013
After Obama Meeting, Insurers Question Plan’s Workability
By REED ABELSON and SUSANNE CRAIG
A day after they were caught off guard by President Obama’s proposal to prevent cancellation of insurance policies for millions of Americans, top executives of some of the biggest insurance companies emerged from a meeting at the White House on Friday, expressing mixed feelings about whether the idea could work in every state.
The hastily called meeting was an attempt by the White House to address the growing frustration of the nation’s insurers over the administration’s fumbling of the health care law. It came just a day after the president announced on television that insurers could now continue coverage for people whose policies were being canceled because they did not meet the new law’s standards.
The cancellations had left the president vulnerable to assertions that he had gone back on an often-repeated promise that consumers could keep their current plans if they were happy with them.
Mr. Obama met with chief executives from more than a dozen of the nation’s largest companies in the Roosevelt Room for more than an hour in a session that insurers said was wide-ranging. Other issues discussed included a suggestion being floated by some in the insurance industry that they be allowed to enroll people directly, rather than through HealthCare.gov, the government’s troubled website. But the insurers said the president had agreed that fixing the site’s remaining problems was a critical priority.
The insurers, many of whom expressed anger that the president had not consulted them before Thursday’s announcement, said they had come away from the meeting willing to work with the White House on the cancellation issue and still protect the financial viability of the new insurance marketplaces. They did not discuss in detail how the president’s goal might be achieved.
The participants included executives of WellPoint, Aetna, Cigna, Humana and Kaiser Permanente, as well as several nonprofit Blue Cross plans.
After the meeting, Karen Ignagni, president of America’s Health Insurance Plans, the industry trade group, said only that it had been “very productive.”
Under the White House proposal, which would affect the 10 million or so people who already have individual policies, insurers would no longer have to cancel policies for 2014 that failed to meet the Affordable Care Act’s standards. The final decision on whether to allow insurers to continue selling those plans is up to insurance regulators in each state.
At the meeting, insurers emphasized their concerns that the president’s proposal could actually lead to higher insurance prices in 2015 and beyond by skewing the mix of customers in the new insurance marketplace. In other words, people who now have cheaper insurance — because their plans have fewer benefits — may still choose to keep them, rather than buying the new policies. Generally, those people are thought to be younger and healthier.
Insurers emphasized that the new insurance markets would need to have a balanced mix of people, including the young and healthy. They and White House officials discussed ways to address the insurers’ concerns that the balance would be disrupted if more people than expected kept their old coverage throughout the year as well.
The White House acknowledged that making the changes the president was suggesting would be challenging. “We believe that insurers certainly can generate letters, just like they did already, to their customers that advise them of this new opportunity if they choose to make that opportunity available to them, and if there is time to do that,” said the White House spokesman, Jay Carney. “So we’re obviously going to be working with insurers and working with states on this matter. But we believe there is time, and we believe it’s a solution to a problem that has clearly arisen that the president wants addressed.”
Even if the insurance industry and the president find common ground, thousands of consumers may still not be able to renew their old policies.
Insurance policies are typically policed by the states, which will have a powerful voice in how all of this is resolved.
Already, some states, including Washington and Arkansas, have said they will not allow insurers to extend policies that do not comply with the guidelines established by the minimum standards set by the Affordable Care Act. Rhode Island also announced on Friday that it would not go along. “After reviewing the president’s announcement, we have decided to continue in the direction we are going and therefore will not be adopting the option made available to us by the president,” state officials said.
Some other states, notably Florida, are going to allow renewals. In New York, officials were hashing out a plan on Friday to deal with the change in policy, and an announcement could come early next week.
Logan Harrison, chief deputy commissioner of the Indiana Department of Insurance, said his state had not decided how to proceed but the fact that they were having to scramble to do anything was maddening.
“This is absurd,” he said. The president, he said, made a “purely political decision” that punts his problem squarely into the laps of state insurance commissioners. “It’s unfair to us and our citizens.” A number of other state officials, both Democrats and Republicans, echoed Mr. Harrison’s frustration but were not willing to speak on the record.
This issue is arguably the biggest headache for the dozen or so states — from New York to California — that have their own exchanges, some of which are working reasonably well. “We did everything Obama wanted, and this is the thanks we get,” said one high-ranking official in a state with its own exchange. “I can’t tell you how fed up we are.”
Insurance commissioners who had not decided how to proceed Friday were kicking around various compromises, according to officials who declined to be identified because of policies against speaking to the news media.
Some states where the cancellation numbers are not high are hoping they can work with the insurance companies to call consumers and walk them through their options. There is no guarantee that people with old policies will have them renewed at current rates, and some states have considered approving the renewal of old policies, allowing insurance companies to charge 10 percent or 15 percent more. “It’s easy, so I like it,” said one state official who asked not to be named.
Sandy Praeger, the Kansas insurance commissioner, is still trying to work out how to deal with the roughly 9,000 people in her state who received cancellation policies. No matter what happens next, she said, the consumer will get the short end of the stick.
“Insurance is complicated to start with,” she said. “This, in the best-case scenario, would be a problem, but in the political climate we are in, it is a nightmare for the consumer.”