President Obama’s plan to reverse insurance cancellation notices has created odd bedfellows: States that have been most resistant to the Affordable Care Act have been the first in line to embrace the proposal.
Meanwhile, some states that have ardently supported the law are opposing Obama’s plan.
The president announced last week that he would allow insurers to renew plans that do not comply with the health-care law through 2014, giving some consumers an extra year to keep policies that otherwise would have been canceled. While the proposal was aimed at solving a problem that was threatening the president’s credibility — he had repeatedly promised that people who liked their plans could keep them — the move raised a slew of questions for state officials, who must give the go-ahead before insurers reissue the plans.
Regulators in five states — Massachusetts, Minnesota, Rhode Island, Vermont and Washington — have said they will not allow insurers to renew the non-compliant plans through 2014. All five states have Democratic governors and have enthusiastically backed the health-care law by setting up their own marketplaces and opting to expand Medicaid, the state-federal health program for the poor and disabled.
“I strongly support the Affordable Care Act, and I know the president wants it to succeed,” said Mike Kreidler, Washington state’s insurance commissioner. “I’m supporting the president in making the Affordable Care Act work in the state of Washington.”
Kreidler and other regulators said they have two concerns about the president’s proposal. First, allowing these plans to continue would mean some consumers would carry coverage that is less robust than the health law intended. Second, they are worried about the impact on the insurance exchange. The people who currently get low premiums in the individual market are likely to be healthier — and allowing them to keep policies not sold through the exchange could raise premiums for people purchasing coverage in the new marketplace.
“States are somewhat concerned about their marketplaces and whether this would lead to some younger, healthier people renewing their old coverage,” said Sara Collins, vice president for coverage at the Commonwealth Fund. “That’s the biggest risk, just in terms of disruption.”
Another wrinkle: Some states that support the Affordable Care Act decided to etch some of its insurance regulations into state law. Thus, while the federal government has said it won’t penalize insurers that don’t meet federal regulations, the new state rules remain in force.
“The states that have been positive to the Affordable Care Act are more likely to have adopted the federal requirements into state law or regulation,” Tim Jost, a law professor at Washington & Lee University, said. “They’re more likely to be locked in on enforcement.”
Conversely, the states that have opposed the health law have done little to enforce the Affordable Care Act’s new protections.
To be sure, the states backing the president’s proposal are somewhat diverse politically. Hawaii and Kentucky, which have Democratic governors and state-run marketplaces, have decided to allow insurers to renew policies through late 2014. But so have Florida and Texas, which have Republican governors and have declined bo set up state-run exchanges or expand Medicaid.
Texas is among a handful of states that has said it will not take any action to enforce the health law’s insurance rules, such as the requirement that insurers accept all customers. That means the federal government will have to monitor Texas health plans to see if they are following the law.
“Because Texas is not enforcing the Affordable Care Act, it remains to be seen how President Obama’s executive order will impact the marketplace and consumers,” said John Greeley, a spokesman for the insurance department. “Whether a company offers or withdraws a policy is a business decision for that company.”
States relying on the federal marketplace, HealthCare.gov also might be more inclined to take the president up on his proposal because problems with the Web site have prevented many residents from enrolling in plans.
“States like Florida that are using the federal site might have a stronger incentive,” Collins, of the Commonwealth Fund, said. “If residents are getting cancellation notices but can’t shop, that would be part of the reasoning.”
Many states are expected to decide whether to adopt the president’s plan later this week or early next week.
“They know they need to make decisions very quickly,” says Matt Eyles, an executive vice president at the consulting firm Avalere Health. “They would hope to have it wrapped up before Thanksgiving, although there might be obstacles with figuring out what they’re able to do under state law and regulation.”