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From Health Law Daily, November 14, 2013

Insurance companies allowed to continue noncompliant individual health insurance plans in 2014

By Paul Clark

Insurance companies who have sent cancellation notices to people with individual health insurance policies have the option to continue offering those plans in 2014, President Obama announced on November 14. Senior White House officials said that if insurance companies keep an existing plan for 2014, even if it doesn’t include the minimum essential benefits mandated under the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148), they have to notify consumers of what protections and new benefits the existing plans do not include. Insurance companies also have to let existing customers know about new health insurance options and possible premium subsidies that are available in the new federal or state-based health insurance exchanges.

The officials said that insurance companies may not enroll any new customers into these existing health plans. Also, the new policy does not require insurance companies to continue these policies.

At a briefing at the White House, President Obama said, “state insurance commissioners still have the power to decide what plans can and can’t be sold in their states. But the bottom line is, insurers can extend current plans that would otherwise be canceled into 2014, and Americans whose plans have been canceled can choose to re-enroll in the same kind of plan.”

Change based on HHS’ authority. At press time, the specifics of how this change would be implemented had not yet been made available, other than it will be based on HHS’ “administrative authority.” A fact sheet released by the White House noted “to protect against the potential impacts this change will have on premiums, HHS will adjust the temporary risk corridor program [see Final rule, 78 FR 15409, March 11, 2013] which is designed to stabilize premiums as changes are implemented.

The fact sheet also noted, Whether an individual can keep their current plan will also depend on their insurance company and State insurance commissioner – but today’s action means that it will no longer be implementation of the law that is forcing them to buy a new plan.

Insurance industry reaction. At least one state health insurance commissioner will not allow insurance companies to continue noncompliant plans. Mike Kriedler, insurance commissioner for the state of Washington, citing the insurance market reforms that have already been instituted in the state and the success of its state-run insurance marketplace, said that “we will not be allowing insurance companies to extend their policies.” He noted there are 46 individual health plans for sale in Washington’s exchange and 51 plans available outside the exchange.

Louisiana Insurance Commissioner Jim Donelon, who is also president of the National Association of Insurance Commissioners, said that the Obama administration’s 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.”

Karen Ignani, CEO of America’s Health Insurance Plans, a trade organization and industry group, said that “changing the rules after health plans have already met the requirements of the law could destabilize the market and result in higher premiums for consumers. Premiums have already been set for next year based on an assumption of when consumers will be transitioning to the new marketplace. If due to these changes fewer younger and healthier people choose to purchase coverage in the exchange, premiums will increase in the marketplace and there will be fewer choices for consumers.”

Congressional action. On Friday November 15, the House of Representatives is expected to vote on the Keep Your Health Plan Act of 2013 (HR 3350), which provides that “a health insurance issuer that has in effect health insurance coverage in the individual market as of January 1, 2013, may continue after such date to offer such coverage for sale during 2014 in such market” outside of the new health insurance marketplace. Under this bill, insurance companies could not only keep existing customers in the same plans that were not compliant with PPACA, but also offer them to new customers.

In the Senate, Sen. Mary Landrieu (D-La) and other senators are sponsoring the “Keeping the Affordable Care Act Promise Act” (S. 1642) under which an “individual may elect to continue enrollment under the health insurance coverage (offered in the individual market) in which such individual was enrolled on December 31, 2013 … unless such issuer cancels all coverage offered in such market and ceases operations as a health insurance issuer.”

Fumble. Obama did not apologize for taking on the challenge of health care reform, but he did apologize for the way roll-out has gone. “We fumbled the rollout on this health care law,” he said. Regarding problems with the rollout of HealthCare.gov, Obama said, “I was not informed directly that the website would not be working the way it was supposed to. Had I been informed, I wouldn’t be going out saying, boy, this is going to be great.”

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