Rule Change on Health Insurance Rattles Industry - Consumers Rush to Sign Up for Coverage to Take Effect in New Year

 

From The Wall Street Journal:

 

Monday is the final day for consumers to get new health coverage that takes effect when the new year arrives, leaving thousands of people racing to sign up in time—and health insurers trying to figure out whether the federal health law will work in the way they had hoped.

 

The number of Americans enrolling continues to fall short of the goals the Obama administration has laid out, which is a problem for the White House.

 

It also represents a problem for the insurance industry, which calculated that the prospect of millions of new customers brought their way by the Affordable Care Act and its coverage requirements would make up for any disruption that came along with the law. Karen Ignagni, the industry's top representative in Washington, spent the weekend managing the fallout after the administration overhauled its approach to people who buy coverage on the individual market.

 

The insurers Ms. Ignagni represents as head of the industry's main lobbying group, America's Health Insurance Plans, got late notice Thursday night of the new rules: People dumped by their insurers could buy bare-bones "catastrophic" plans or get a hardship exemption from having to buy health insurance at all. Those were customers Ms. Ignagni's members were counting on to buy fuller coverage.

 

In an interview Friday at AHIP's offices, Ms. Ignagni expressed concern about any erosion of the "individual mandate" requiring most Americans to carry health insurance or pay a penalty.

 

That is the rock to which Ms. Ignagni's members have clung these past four years because it would bring new customers to her industry's product.

Thursday's action "was of particular concern because we were worried about the message with respect to individuals having a path around the mandate; that was the first time that the administration had said anything like that," she said.

 

A few hours later, President Barack Obama said the move was aimed only at a "very specific population" and wouldn't affect the "overwhelming majority" of Americans.

Having failed to kill the Affordable Care Act when it was being debated in Congress, AHIP members are now pushing, tweaking and giving a little in hopes of getting a bit more. If the law works as it was designed to, insurers would reap billions of dollars in new policies. If it doesn't, the industry—and Ms. Ignagni, its polished, richly paid representative—will share in the blame.

The pace of enrollment was picking up ahead of the Monday deadline. The federal agency running HealthCare.gov, the health-insurance website serving 36 states, said nearly 750,000 people visited the site over the weekend through noon Sunday.

Adding in enrollments from the 14 states running their own health-insurance exchanges, Mr. Obama has predicted that the law would result in millions of people getting coverage in the new year.

But enrollment still looks to fall well short of projections by the Congressional Budget Office, which said in May that some seven million people would get private coverage under the law in 2014 with an additional nine million added to Medicaid rolls.

Sen. Joe Manchin (D., W.Va.), who has called for a year's delay to any penalties for people who don't have coverage, said Sunday on CNN that he wasn't worried about fixing the computer problems. "I'm worried about having a product that the market will buy. And we're not letting people shop," he said.

The administration has stressed, and reiterated Sunday, that consumers have until March 31 to buy coverage for 2014 and avoid any penalty.

Saving the mandate and making the law work for insurers is the job of the 59-year-old Ms. Ignagni (pronounced "ig-NAH-nee"). She is one of the most ubiquitous lobbyists in Washington, with a pay package worth about $1.7 million, according to the organization, and a frequent presence on Capitol Hill, the White House and on television. Her official biography trumpets her appearance on 35 separate lists of "most influential," "most powerful" people.

A registered Democrat with roots in organized labor, Ms. Ignagni likes to stress that AHIP is a diverse coalition of for-profit insurers, local nonprofit ones, companies specializing in employer-provided insurance and others dealing only in Medicare and Medicaid.

It is all part of her effort, supporters and critics alike say, to portray an industry that is deeply unpopular with many consumers "in terms of people…as opposed to putting it in terms of return on equity," says Gary Claxton, a vice president and health-insurance expert at the Henry J. Kaiser Family Foundation, a health-care think tank.

A former staffer on the U.S. Senate Labor and Human Resources Committee in the early 1980s, Ms. Ignagni has also sought to project a sincere desire for negotiation and compromise, even as some of her most powerful members have dug in their heels. Yet she and her staff also portray insurers as victims of a politically tinged policy initiative that has gone off the rails in exactly the ways their experts forecast.

"All the issues we're talking about today were the issues we flagged three years ago," said Ms. Ignagni, who is a native Rhode Islander and daughter of a firefighter.

One of her warnings proved prescient when the federal HealthCare.gov site had a disastrous rollout. After the president and his officials pressed insurers to help people who were stymied by the website woes, Ms. Ignagni negotiated a deal under which AHIP members agreed to accept payment by Jan. 10 for coverage starting Jan. 1.

"Our board was really worried what would happen if [new enrollees] didn't post the check in time," she said, adding that she was "proud" of her members for "taking the initiative" despite the worries.

In 2009, AHIP contributed some $100 million to fund U.S. Chamber of Commerce ads opposing an insurance overhaul, a contribution that didn't become public for a year, a period during which insurers trumpeted their commitment to a health-care overhaul.

The insurers also organized thousands of insurance-company employees to protest at congressional town-hall meetings across the nation. The protests made the nascent health overhaul a galvanizing force for the new tea-party movement.

John E. McDonough, a professor at the Harvard School of Public Health and Senate adviser during the health-law drafting, said he once asked Ms. Ignagni why people didn't know AHIP had paid for the ads. "And she said, 'Nobody asked me,' " he recalled.

"I don't know how many health insurance plan employees were sent to town-hall meetings, but at that point the employer communities were raising concerns," Ms. Ignagni says today. "In 2009, we were registering strong concerns about the economics" of the administration's proposal, she said.

But in 2010, when the bill became law, she said, "we mobilized our best people…to provide thoughtful advice."