By now, it is very clear that the health insurance marketplaces have had some glitches. To add to the confusion, health payers have started issuing cancellation letters to thousands of Americans whose insurance policies do not comply with the Affordable Care Act, and will expire at the end of the year. This additional issue on the already stumbling healthcare.gov website is making matters worse for the Obama administration.
As the ‘tech surge’ for fixing healthcare.gov goes into full steam, Obama administration has another plan up its sleeve – to allow consumers to stay on their existing plans and get them renewed, even if they don’t fully comply with the Obamacare mandates. These plans can stay active for an additional, giving Obama stalwarts enough room to fix the broken parts fully and get the exchange live without any hassles.
However, adoption of the extension is a state decision and several states have decided not to extend. Additionally, the extension has not gone over well with the industry experts and health payors. Not all health plans are willing to accept this strategy, and industry experts feel that this change will just add more confusion to an already convoluted model of purchasing health insurance. Let’s take a closer look into the idea in the President’s mind, and how the top stakeholders are reacting to his whim, in the states that have elected to allow the extension.
Q1. What’s the exact idea behind Obama’s move to allow the renewal of existing policies?
A. Obama wants to allow people already covered by a health plan to be able to extend their coverage by one year. For instance, policies expiring in 2014 can be extended until 2015, if the consumer desires. However, insurance carriers have to disclose the shortfall between the renewed coverage and the corresponding Obamacare coverage that the consumers are foregoing.
Q2. If implemented, which group would be most affected by this strategy?
A. Individuals who have received cancellation notices in the last few weeks are the most affected by this strategy. They will be allowed to retain their plans and stay covered for another additional year. Small employers plans, which do not meet ACA guidelines can be extended for one more year.
Q3. What’s the reaction of Consumers on this announcement?
A. The response has been generally encouraging. Individuals and families are happy that they won’t have to go through the gauntlet for another year. However, a downside to this strategy is that those families who renew their existing plans will not qualify for subsidies, as they are not purchasing through the health exchanges.
Q4. Who decides if I am eligible for renewal, the government, the state, or the insurers?
A. Basically, the decision lies with the state regulators and the insurers. Neither the administration nor CMS can take this decision. As of now, there are mixed reviews from both parties, meaning that not all would go along this strategy of Obama administration.
Q5. What has been the reaction of insurers?
A. While the reaction has been mixed, the one common notion across all of the health plans is that they want to learn more about this strategy. Once they understand the fine print, a clearer disposition would be affected. For instance, Blue Cross Blue Shield of North Carolina says that it is interested in this suggestion, but would want to learn more before committing to anything. On the other hand, Florida Blue is ready to go along this plan, giving a relief to nearly 350,000 of its customers.
Q6. How are state regulators reacting to this idea?
A. Just as the insurers, there is a mixed response across the states. While some states, such as Washington, feel that this extension might lead to an overshooting of existing premiums and compromise of customer protection, states like Florida and Kentucky are ready to allow the extension.
Q7. When will all the uncertainties be clarified, and will the consumers actually renew?
A. Based on popular response, all these uncertainties should go away soon, and experts estimate that several consumers would love to get the chance to extend their policies. Due to failing federal healthcare software solution, several plans are receiving distress calls for renewal. Based on this demand, industry experts feel that consumers will push for this golden chance, especially those who are not eligible for subsidies off the new marketplace.
As December 1 nears and Obama administration works to deliver its promise of an error free healthcare.gov marketplace, this plan will gather momentum. It is evident that no matter how hard the administration tries, the website will not be fully functional as it requires a lot more work. In that case, it would be wise for the administration to lift some load off the health insurance marketplaces and distribute it to state regulatory authorities and health payors. However, it remains to be seen how many state regulatory authorities and insurers will be able to sacrifice for the greater good of health insurance marketplaces.