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State Leaders, Insurers in No Rush to Embrace Obama Fix for Canceled Health Policies

By Rebecca Adams, CQ HealthBeat Associate Editor

November 15, 2013 -- State officials and insurers continued to react cautiously last week to the Obama administration’s plan to let health insurance companies extend policies that were slated for cancellation under the health care law.

Meanwhile, administration officials said they are still trying to finish fixing technical problems with the transmittal of enrollment data to insurers from, the federal exchange website that handles health marketplace applications for 36 states.

And President Barack Obama met behind closed doors with top insurance company executives in what he said was a “collaborative” discussion about his proposed fix.

Most state insurance commissioners have said they are still assessing what would be involved in implementing President Barack Obama‘s recent invitation to continue insurance policies that otherwise would have to be cancelled when they are up for renewal in 2014 because the policies do not comply with the benefit requirements of the 2010 health care law (PL 111-148, PL 111-152). Insurers would not be required to continue the plans and insurance commissioners would not be able to force them to do so, under the fix.

Obama’s proposal threw a sharp focus onto state insurance commissioners, governors and legislators, as well as insurance companies. Some states may have to pass new laws to allow the change.

That is probably the case in Maryland, for example, where Democratic Gov. Martin O’Malley is considering pushing for a bill to allow insurers to keep in place policies that don’t comply with the law’s benefit rules. O’Malley would also make the effective date retroactive to the president’s announcement.

In Virginia, though, insurance bureau officials tweeted that they are “reviewing whether to allow insurers to renew existing health plans per Obama idea. No decision today.”

A few insurance commissioners, led by Washington state, have said they would not allow plans that don’t meet the benefit requirements to operate next year. Others, such as regulators in large states like California and Florida, said they found the idea acceptable.

In yet other states, such as Texas, insurance regulators said they are not closely tracking insurers’ decisions because the companies do not need state approval to continue the plans.

And in some states, such as Georgia, regulators who have criticized the law are encouraging insurers to extend the policies but say they have been doing so for months. They’ve done that by asking insurers to renew policies that would expire next year early, before Dec. 31.

Whether insurers will actually decide to keep the policies in effect is another matter and one that led to the meeting including Obama and top insurance industry officials.

Obama administration officials had announced last week that they are exploring ways to provide more money to insurers through the risk corridor program, which limits insurance companies’ losses and profits. The president also recently said that insurers would have to tell customers whose policies are extended that the insurance plans do not include all of the benefits required by the law and that more comprehensive, subsidized alternatives might be available for some people in the new marketplaces.

“What we’re going to be doing is brainstorming on how do we make sure that everybody understands what their options are,” said Obama before the meeting on Friday. “Because of choice and competition, a whole lot of Americans who’ve always seen health insurance out of reach are going to be in a position to purchase it. And because of the law, we’re also going to be able to provide them help even if they are still having trouble purchasing that insurance. But they’ve got to know what those options are in order to be successful.”

Obama said that the White House is “going to be soliciting ideas from” insurers.

Gary Claxton, co-director of the Program for the Study of Health Reform and Private Insurance at the nonpartisan Kaiser Family Foundation, said that he believes that insurers will try to gauge what their competitors in different states will decide to do and take similar action. He predicted that many will continue the policies, “because you have a problem for your customers who are really in a situation where they can’t adequately consider a replacement for what they had” because of technical problems with

Centers for Medicare and Medicaid Services officials said on a call with reporters late last week that they are making progress with the troubled federal exchange website. The administration has further driven down the website’s error rate to 1 percent, down from 2 percent last week and 6 percent much of the time soon after the Oct. 1 launch.

Jeff Zients, the management expert who is overseeing the website repair effort, celebrated the fact that the system had not been shut down this week except for routine maintenance at night, unlike last week, when the administration was faced with unexpected outages.

Zients said that this week, technicians have made 60 improvements to the website and that since the launch, the administration has crossed off more than 200 high-priority problems on a list of fixes that were needed. The administration plans to tackle 50 more issues next week and will add capacity to the site this weekend.

As those fixes are made, however, more problems could crop up, Zients acknowledged. “It’s likely that we will find additional glitches and experience intermittent periods of sub-optimal performance,” he said.

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