What a mess; I sure hate it. Extending Health Plans a Tall Order - Five States Reject Obama's One-Year Request, as do Some Insurers; For Others, a Race Against Clock

From The Wall Street Journal:

Many people whose existing health-insurance policies were canceled due to the new federal health law won't be able to extend them, despite President Barack Obama's request that insurers allow them to do so.

Some carriers say they may not or won't reinstate canceled policies because of a lack of time to make changes and other obstacles. Others say the one-year extensions would come with higher rates. At least five states—New York, Washington, Massachusetts, Minnesota and Rhode Island—have rebuffed Mr. Obama, meaning insurers can't reinstate policies there even if they do so elsewhere.

  

And even in states that have given the green-light, insurers face logistical challenges. Insurers say problems range from identifying and contacting canceled enrollees to working out what to charge, since rules vary from state to state.

In some cases, insurers already had begun the process of reassigning or laying off underwriters because the health law bars insurers from taking medical history into account when setting prices. Now carriers are bringing underwriters back and are trying to work out how much reinstated policies would cost under the new rules.

 

"It's a major challenge," said Howard Mills, chief adviser for the insurance-industry group at Deloitte and a former superintendent of insurance for New York. "The fix is very much an open question at this point."

"Time is running out, if there was even time to begin with," said Hans K. Leida, an actuary at Milliman Inc., a consulting firm.

 

Blue Cross & Blue Shield of Alabama said Wednesday it wouldn't reinstate policies to 87,000 customers with canceled policies. A one-year continuation of those plans "would create dual classes of policyholders and destabilize the state's insurance market," the company said. It also would result in higher health-care costs and create "significant legal and financial risks to our policyholders, the state and our company," the company said.

 

McLaren Health Plan Inc., based in Flint, Mich., says it doesn't plan to revive canceled plans for 1,000 small-group employers. The insurer can't determine how to price them under the health law, said Ed Harden, vice president of sales.

 

Blue Cross & Blue Shield in North Carolina says it wants to renew canceled policies, but would seek rate increases of as much as 24%, in part to accommodate new fees and taxes required by the health law—a move that could send existing holders to the federal exchange to search for a better deal. Despite the increases, consumers would still save money by keeping current policies, said Patrick Getzen, the insurer's chief actuary. "There still should be a significant difference in price" between the plans getting a second life and those compliant with the federal health law, Mr. Getzen said.

 

Florida Insurance Commissioner Kevin McCarty has been working on a plan with the state's largest insurer, Blue Cross & Blue Shield of Florida, to extend 40,000 policies that expire in January, with no rate increases. But the insurer may file for increases for 270,000 other policies that previously had been slated for nonrenewal in June, July and August 2014, a strategy the state believes would give it adequate time to assess any proposed increases.

 

What we discussed with Florida Blue is trying to get their rate changes in here as early as possible so they can give consumers choices before the open-enrollment period closes" in late March, Mr. McCarty said.

 

Cigna Corp., which terminated about 1,500 policies in Connecticut and South Carolina, said it was in discussions with regulators in those states to bring them back. And WellPoint Inc. spokeswoman Kristin Binns said the carrier had teams analyzing the best course of action in each of the 14 states where it is active. She said its choices would likely vary state-by-state, depending on what regulators decide.

 

"There's a lot of work to do in a very short period of time," said Matthew Wiggins, a spokesman for Aetna Inc., one of the insurers with the largest multi-state presences on the exchanges.

 

State officials are divided over whether to go along with the administration's request. A handful of commissioners met with Mr. Obama Wednesday in what they described as a cordial conversation that touched on the diversity across the states, but some prominent commissioners had declined to participate.

 

So far, regulators in more than 20 states have said they are allowing carriers to renew some policies that would otherwise be canceled, including Florida, North Carolina, Texas and Virginia—states that are hostile to the health law and chose not to set up their own exchanges.

 

New York, Washington, Massachusetts, Minnesota and Rhode Island are operating their own exchanges and have sided with actuaries who warn that keeping a number of healthy people out of the exchanges and on old plans could harm the exchanges in their first, critical year of operation.

 

Internal disputes are erupting in some places. District of Columbia Insurance Commissioner William White was fired hours after he criticized the president's proposal, making his comments without approval from Mayor Vincent Gray's office.

 

In California, Insurance Commissioner Dave Jones wants to reinstate policies; exchange director Peter Lee has doubts. That dispute will be discussed Thursday at the monthly board meeting of Covered California, the state-run exchange.

 

The mixed messages have confused consumers, and are leaving some little time to shop for new plans. Chris Wilsey learned in September that his $388 monthly policy with Blue Cross & Blue Shield of North Carolina would be canceled by year's end, and he was offered a $939-per-month replacement plan.

 

Last week, Mr. Wilsey, a self-employed business consultant in Raleigh, chose a new plan starting Dec. 1 with Coventry Health Care, with a monthly premium of $350 that he said is roughly comparable to his old plan.

 

He would have preferred keeping his current plan. But BCBS of North Carolina won't be able to tell him what his specific rates will be for weeks—so he opted for Coventry. "Blue Cross lost me as a 13-year customer. I felt like I had to take the sure thing for the short term and worry about the long-term later," said Mr. Wilsey, 51 years old, whose policy covers him, his wife and two young children.