Insurance industry readied while Obama slept: Column
On Thursday, President Obama announced that he was giving insurance companies the option of continuing health insurance polices they have already canceled.
Given the political trouble he has been in over these cancellations, and much of the Obamacare rollout, that is smart politics. But that is the only thing smart thing about this.
The Affordable Care Act requires insurance companies to move almost all of their existing individual and small group health insurance policies from the old market to the new Obamacare compliant market as each policy renews in 2014. That has meant that an estimated 5 million individual policyholders have already received cancelation notices for January 1 in compliance with the new law. It also means that employers offering coverage in the small group market (less than 50 workers) are also getting notices that they must significantly change their policies as they renew.
A great many of these notices have informed policyholders that the Obamacare alternatives will cost more, have higher deductibles and perhaps smaller provider networks.
I received such a cancelation notice myself. Our policy, a "Cadillac" policy with unfettered access to every provider in the Blue Cross national network and comprehensive coverage for everything I can think of, will ultimately have to be replaced by a policy with a much smaller provider network, higher deductibles and at a cost that is 66% more than we are currently paying.
Perhaps the greatest irony in the Obamacare rollout; even though the Obama administration was clearly not ready to implement its signature domestic policy achievement, the insurance industry was.
It took the insurance industry months to get ready for Obamacare's rollout. They had to create entirely new insurance plans to comply with the new rules. They had to create new rate tables, reformat their provider networks in order to make these government mandate rich products more affordable and completely reprogram their computer systems to handle it all.
So, when the president said he was giving insurance companies the ability to continue polices they had to cancel under the law, he was asking them to reverse months of preparation. Under the rules Obama put in place, anyone wishing to have coverage on January 1, 2014 has to make his or her insurance plan selection by December 15, 2013. That is less than a month away.
To grant policyholders the opportunity to continue their policy, the administration is requiring each insurer to send each canceled policyholder a new letter that details the difference between their current plan and the new Obamacare plan through the U.S. Mail, give policyholders at least a couple of weeks to make up their minds and alert their insurer, then the carrier would have to reprogram their computer for entirely new rates, new policies, new claims paying information, new customer banking arrangements and new provider networks for the policyholder.
The Obama administration had three years to rollout Healthcare.gov and they have failed miserably at it. But the President is now telling the insurers to turn their product offerings and computer system on a dime in less than a month?
That puts the insurance company CEOs in a hell of a mess. They have two choices:
- Take on an incredible logistical challenge reversing months of preparation in less than a month and risk serious customer service issues in the process, or
- Take the heat for the president and play the bad guy that now says policyholders cannot continue with the insurance they like.
Presumably, the president thinks this takes him off the hot seat and throws this disastrously political "you can keep your insurance if you like it" hot potato to the already unpopular health insurance industry.
The president isn't getting much support for this from the National Association of Insurance Commissioners — a group about evenly divided between Democrats and Republicans.
In a statement, their president said:
"This decision continues different rules for different policies and threatens to undermine the new market, and may lead to higher premiums and market disruptions in 2014 and beyond. In addition, it is unclear how, as a practical matter, the changes proposed today by the President can be put into effect. In many states, cancelation notices have already gone out to policyholders and rates and plans have already been approved for 2014. Changing the rules through administrative action at this late date creates uncertainty and may not address the underlying issues."
Obama's announcement is nothing more than an obvious political move to toss the policy cancelation "hot potato" from his lap and into the lap of insurers that have done their job to comply with the rules the Affordable Care Act has presented them with.
As someone with 40 years of experience in the health insurance business, I really have to wonder just who is advising this president on how the insurance markets work. This administration has made one bad decision after another in their quest to "reform" health insurance and this latest move not only makes no sense but it has just created even more uncertainty and confusion for consumers who are losing the health insurance polices they like because of Obamacare.
Robert Laszewski is president of Health Policy and Strategy Associates and blogs at Health Policy and Marketplace Review.
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