President Obama to insurers: No bailout
By: Kyle Cheney and Jennifer Haberkorn
November 18, 2013 09:53 PM EST
President Barack Obama had some bad news for the insurance company CEOs who met him at the White House: His “fix” might cost them.
Obama asked the CEOs to reinstate millions of Americans’ health insurance plans that were cancelled because they fell short of coverage requirements under the law, according to two executives who attended the session Friday.
The president offered the execs some sweeteners, but admitted they won’t necessarily add up to enough to cover the full brunt of added costs that the changes to the insurance market could create.
The president’s proposed “fix” to the wave of plan cancellations was to allow insurance companies to extend the plans for a year, but those extensions are voluntary, so he needs the industry to buy in.
Obama’s frank talk with the CEOs raises the stakes for the short-term solution and is a reminder that as much as the health care law is the president’s signature achievement, he still needs industry buy-in for it to succeed in the long run.
“As the president emphasized, there is not an unlimited amount of money out there for the government to do that [make up for extra costs],” said Jim Roosevelt, CEO of Tufts Health Plan, one of more than a dozen insurance company leaders who attended the 90-minute meeting.
The White House did not respond to questions about the meeting with insurers. White House officials said last week that the talks were “productive” and had addressed the next steps in working with states and state insurance commissioners.
Obama will allow insurers to keep offering the cancelled plans to people who had them even if the coverage doesn’t meet Obamacare standards.
But that proposal is voluntary — and the health insurance industry, along with some state insurance commissioners, have said it could destabilize the law’s new health insurance exchanges. They worry that healthier people will stay in these extended plans, leaving sicker people in the exchanges, which would drive up costs.
“I think that like anything else, there are limited finances available,” Dr. Mario Molina, CEO of Molina Healthcare in California, said of the ways to mitigate insurers’ losses for renewing plans. “I think the best thing we can do to mitigate risk is getting … as many people enrolled as possible. There is no substitute.”
The 2010 health law had several tools aimed at helping insurers through some of the fiscal bumps in the new markets. To address the industry concerns about additional costs if they revive the canceled plans, administration officials said last week they would tweak one of those tools — called “risk corridors” — to give them more help. But Obama made clear that the financial support has a limit, according to the two health executives and several other industry sources who were briefed on the meeting.
Republicans had warned of a costly bailout.
Sen. Marco Rubio (R-Fla.) said last week he plans to introduce legislation to stop the government from making payments to plans with higher than expected costs. “Our legislation will … protect … taxpayers from potentially having to bail out the insurance industry,” a spokesman said.
Obama and insurers also had in-depth conversation about ways to bypass the balky HealthCare.gov enrollment system. People can enroll directly with insurers, but they can’t easily check on eligibility for subsidies. Direct enrollment would ease the burden on HealthCare.gov and also allow insurers a greater role in the sign-up process.
Roosevelt said insurers want to “use our expertise in enrollment to solve some of the problems that HealthCare.gov has had by telling people that they … can go directly to the insurer to enroll.”
The administration says it expects 80 percent of people signing up to go through the website. Of the other 20 percent, some will encounter troubles with the website but some will be using paper or phone enrollment by choice. Those options, as well as direct enrollment, were always available, even before the extent of the HealthCare.gov problems became clear.
Roosevelt said that Obama said he expects HealthCare.gov to be operational for “80 percent” of people seeking health insurance. The other 20 percent, he said, were expected to rely on call centers and in-person assisters to shepherd them through the process.
The problems with the website magnified the plan cancellation crisis because it’s so hard for people to go online and check their alternatives in the exchanges. Some would get subsidized in the exchange, but those subsidies won’t be available if they stay in current plans.
In the White House meeting, the president acknowledged that insurance companies are businesses and need to stay afloat, but stopped short of promising to make them whole after his administrative fix.
Obama led much of the 90-minute discussion, which went deep into the details of risk corridors and other details.
“His understanding of the process has grown a lot in the last three months and he’s much more conversant in the details,” Molina said. But he said too much of the debate has been reduced to scant detail and sound bites — some of which has gotten the White House into trouble. “When the president said, ‘If you like it, you can keep it,’ I think he meant in general terms — you can, as long as it’s an adequate policy. When you try to reduce it to a sound bite, you lose some of the details,” Molina said.
The Obama administration said insurers discussed the “next steps” in implementing the administrative fix for the cancellations— working with state leaders and insurance commissioners.
Roosevelt said the president and insurers acknowledged that the cancellation flap was partly of their own making.
“[Obama] did not say, ‘What the hell are you doing issuing these cancellation notices?’” Roosevelt said. “But if we had realized that there would not be an easy way for people to reassure themselves by quickly enrolling in a plan, there probably would’ve been a lot more interaction” among insurers and government officials. He added that the cancellation notices were written with standard industry language but failed to account for how jarring it would sound to the people who received them.
Obama was accompanied by chief of staff Denis McDonough, Office of Health Reform Director Mike Hash, Medicare chief Marilyn Tavenner, senior health policy adviser Chris Jennings and Valerie Jarrett, White House senior adviser.