Obama’s ex­ten­sion of non-ACA health plans riles in­sur­ers

Modern Healthcare - - NEWS - By Paul Demko

The Obama ad­min­is­tra­tion’s po­lit­i­cally minded de­ci­sion to al­low con­sumers to stay in health plans that are not com­pli­ant with Oba­macare stan­dards through 2016 re­ceived a cool re­sponse from state reg­u­la­tors and in­sur­ers. They ex­pressed con­cern that this lat­est change could desta­bi­lize the fledg­ling state and federal ex­change mar­ket­places by rob­bing ex­change plans of health­ier en­rollees.

The change, an­nounced last week, is just the lat­est in­tended to make im­ple­men­ta­tion of the federal health­care over­haul less oner­ous for con­sumers and more po­lit­i­cally palat­able go­ing into the 2014 elec­tions. But it’s un­clear how many in­sur­ers and state reg­u­la­tors will go along. In ad­di­tion, the ad­min­is­tra­tion ar­gues that the num­ber of people who choose to con­tinue in non­com­pli­ant plans will dwin­dle be­cause they can’t re­ceive federal pre­mium sub­si­dies and many will find that Oba­macare-com­pli­ant plans are a bet­ter deal.

“There is broad agree­ment that if more young and healthy in­di­vid­u­als choose not to par­tic­i­pate in the new mar­ket­places, it could lead to higher pre­mi­ums for those con­sumers that re­main in the ex­changes,” Karen Ig­nagni, pres­i­dent and CEO of Amer­ica’s Health In­sur­ance Plans, said in a writ­ten state­ment. “That is why it is cru­cial that suf­fi­cient steps be taken to sta­bi­lize the mar­ket, and we are cur­rently re­view­ing the new changes to the pre­mium sta­bi­liza­tion pro­grams to as­sess their im­pact on af­ford­abil­ity for con­sumers.”

Brian Hamm, pres­i­dent of the

“It is cru­cial that suf­fi­cient steps be taken to sta­bi­lize the mar­ket, and we are cur­rently re­view­ing the new changes to the pre­mium sta­bi­liza­tion pro­grams to as­sess their im­pact on af­ford­abil­ity for con­sumers.”

—Karen Ig­nagni, pres­i­dent and CEO of Amer­ica’s Health In­sur­ance Plans

Na­tional As­so­ci­a­tion of In­sur­ance Com­mis­sion­ers, ex­pressed sim­i­lar skep­ti­cism. “This de­ci­sion al­lows dif­fer­ent rules for dif­fer­ent poli­cies, which threaten to un­der­mine the new mar­ket­place,” said Hamm, North Dakota’s in­sur­ance com­mis­sioner. “Cre­at­ing two tiers of plans—the com­pli­ant and non­com­pli­ant—could re­sult in higher pre­mi­ums over­all and mar­ket dis­rup­tions in 2015 and be­yond.”

Un­der the ex­ten­sion, in­sur­ers can con­tinue of­fer­ing plans that do not meet the health­care re­form law’s es­sen­tial ben­e­fits pack­age. They can keep an­nual and life­time ben­e­fit caps, they can charge women higher rates than men, and they can charge people with pre-ex­ist­ing con­di­tions higher pre­mi­ums than healthy

people. It’s not pos­si­ble to know at this point how many people or plans will be af­fected by the change. But it seems likely that it will be a rel­a­tively small seg­ment of the in­di­vid­ual in­sur­ance mar­ket. That’s in part be­cause only 26 states re­sponded to the ad­min­is­tra­tion’s pre­vi­ous ex­ten­sion by al­low­ing re­newals of non­com­pli­ant plans in 2014, ac­cord­ing to a sur­vey by the Na­tional As­so­ci­a­tion of In­sur­ance Com­mis­sion­ers. Fewer states are ex­pected to ap­prove the new Obama re­newal.

In ad­di­tion, some in­sur­ers opted not to ex­tend non­com­pli­ant plans. In Ore­gon, Moda Health Plans and Pa­cific-Source Health Plans—which rep­re­sent about 40% of the in­di­vid­ual mar­ket in that state—chose to al­low re­newals only through March 2014.

The new two-year ex­ten­sion won’t cause any im­me­di­ate con­ster­na­tion for in­sur­ers, be­cause they will have time to in­cor­po­rate the change into their pre­mium prices for 2015 ex­change plans. In­sur­ers don’t need to sub­mit those plans to the federal govern­ment un­til June. “At least you can then build that into your pric­ing for the next cou­ple of years,” said Hans Leida, a prin­ci­pal and con­sult­ing ac­tu­ary with Mil­li­man. “It’s a big­ger deal for 2014 be­cause the in­sur­ers did not know that was a pos­si­bil­ity when they set the rates.”

The two-year ex­ten­sion for non­com­pli­ant plans wasn’t the only change the ad­min­is­tra­tion an­nounced last week. Among oth­ers:

■ The open en­roll­ment pe­riod for 2015 will run from Nov. 15 to Feb. 15, one month longer than pre­vi­ously an­tic­i­pated.

■ The thresh­old for the federal govern­ment’s rein­sur­ance pro­gram will be re­duced from $60,000 to $45,000 per ben­e­fi­ciary. That pro­gram is de­signed to pro­tect in­sur­ers sell­ing prod­ucts through the ex­changes from ex­tremely sick, ex­pen­sive cus­tomers. For 2015, that level will rise to $70,000.

■ The risk cor­ri­dor pro­gram will be ad­justed on a state-by-state ba­sis. That’s de­signed in part to mit­i­gate losses in states that al­low re­newals of non­com­pli­ant plans. The risk cor­ri­dor pro­gram pro­vides sub­si­dies to in­sur­ers that lose sig­nif­i­cant money on ex­change cus­tomers and col­lects pre­mi­ums from com­pa­nies that make sub­stan­tial prof­its. The pro­gram is ex­pected to be budget neu­tral.

■ States that want to run their own ex­changes for 2015 will have un­til June 15 to get their plans ap­proved by the CMS. Pre­vi­ously, the dead­line was Jan. 1. Cur­rently, 14 states and the District of Columbia are run­ning their own on­line mar­ket­places.

■ Some unions, uni­ver­si­ties and other groups that self-in­sure will be ex­empt from pay­ing the so-called belly­but­ton tax—$63 a per­son this year—to bankroll the rein­sur­ance fund.

■ An­nual cost-shar­ing lim­its— de­ductibles, co­pays and coin­sur­ance—will be in­creased for ex­change plans in 2015. For in­di­vid­u­als, those lim­its will rise to $6,600 from the cur­rent $6,400 and for fam­i­lies to $13,200 from the cur­rent $12,700.

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