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President’s Cancellation ‘Fix’ Likely To Affect A Limited Number Of Consumers

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A week after President Barack Obama urged insurers to renew policies that don’t meet all the requirements of the health law, it remains unclear how many people might be affected by the proposed fix.

That’s because regulators in at least a half dozen states say they won’t allow insurers to do it and many more have yet to decide.  Even if states give insurers a green light to reinstate the policies for a year, many insurers say they’re not sure if they can pull it off in time and no one knows how many customers who received the cancellations will want to renew.

“The president’s plan is certainly not a guarantee” that people who received discontinuation notices earlier this fall will now be able to renew, said Chris Jacobs, senior policy analyst with the Heritage Foundation, a conservative think tank in Washington.

The vast majority of insured Americans are unaffected by the furor over the cancellation notices — or by the president’s effort to reinstate the policies — because they get their coverage through their jobs. The cancellations went to people who buy their coverage directly from insurers, an estimated 5 percent of the population.

But they hit a nerve, in large part because of the president’s campaign promise that Americans could keep their insurance if they liked it.

In his comments last week, Obama made the extensions optional, effectively placing the onus on state regulators and insurers. After a meeting with a group of state regulators at the White House Wednesday, the administration affirmed that the decision ultimately rests with state authorities.  “States have different populations with unique needs, and it is up to the insurance commissioner and health insurance companies to decide which insurance products can be offered to existing customers next year,” it said in a statement.

States that will allow renewals include Oregon, Florida, Kentucky, Texas, Georgia, North Carolina, Arkansas and Ohio, many of which already allowed insurers to “early renew” existing policies into next year. Early renewals allowed insurers to hold onto some of their customers and temporarily sidestep adding new benefits – and costs — to the policies, and likely reduced the number of cancellation notices sent.

“A huge chunk of people” were offered such early renewals, said Carrie McLean, director of customer care at ehealthinsurance, a private website that offers health insurance from 200 carriers. The practice was so common that ehealth included a website link so users could check if their carrier was offering early renewals.

Several Democratic-led states that embraced the health law have offered the strongest pushback. They cite the law’s protections and concerns that allowing renewals could result in fewer young and relatively healthy policyholders in the new marketplaces. States refusing to allow the renewals include California, Washington, Minnesota, New York, and Massachusetts. Indiana, led by Republicans, has also rejected the fix.

California’s decision Thursday not to allow the renewals is particularly significant, since it had 900,000 cancellations — more than any other state.  Its new online market, called Covered California, had required participating insurers to discontinue plans that didn’t meet the law’s standards, except for a limited number that had been in effect before the health law was enacted in March 2010.  Executive Director Peter Lee said Monday the move was an attempt to protect consumers from subpar policies – and to ensure that healthy people would use the new marketplace.

“We were quite concerned that (without such a contractual rule) we would have a large set selling bad coverage in the month of November that would then carry through to 2014,” Lee said.

Regulators in other states say they are still weighing the decision.

In his career, Gregg has developed specialized expertise in “consumer-driven” and high deductible health plans with HSA and HRA strategies, and sold the first HSA plans issued in Virginia through Assurant Health. He is an expert in analyzing plan design data and has served as account executive for national accounts such as Coca-Cola Enterprises and Tenet HealthCare. Gregg utilizes a strategic approach to establish goals based on each client’s unique culture and competitive environment, and measuring results against jointly established criteria. Gregg Kennerly is a Principal at Advanced Benefit Strategies of Virginia, LLC.
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