President Obama's plan to reverse insurance cancellation notices has created an odd-bedfellows alliance, with states that have most resisted the Affordable Care Act the first in line to implement the change.
The first signs of opposition to the White House proposal, meanwhile, have come from the law’s most ardent supporters, suggesting an early split between the state and federal officials who have so far worked on the Affordable Care Act hand-in-hand.
The president announced last week that he would allow insurers to continue renewing plans that do not comply with the health-care law through 2014, giving some consumers an extra year to stay on plans that would have otherwise been cancelled.
Before health insurers can go ahead and re-issue those plans, they need the sign off of state regulators, some of whom have already announced their opposition to the proposal.
Regulators in five states -- Massachusetts, Minnesota, Rhode Island, Vermont and Washington -- so far have said they will not allow insurers to renew non-compliant plans through 2014. All five states have Democratic governors, are running their own marketplaces, and opted to expand Medicaid under the health law.
“I strongly support the Affordable Care Act, and I know the president wants it to succeed,” Mike Kreidler, Washington state’s insurance commissioner said. “I’m supporting the president in making the Affordable Care Act work in the state of Washington.”
Kreidler and other regulators say that their worry over the president’s proposal is twofold. First, allowing these plans to continue would mean some consumers would carry coverage that is less robust than the health law intended. Many of the plans currently sold in the individual market do not include reform-mandated benefits,
Second, health law supporters worry about the impact on the insurance exchange. The people who currently get low premiums in the individual market are likely to be healthier and keeping them out of the exchange could raise premiums for everyone else 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," Sara Collins, vice president for coverage at the Commonwealth Fund, said. "That's the biggest risk, just in terms of disruption."
Another wrinkle to the story: Some states that support the Affordable Care Act decided to etch some of the insurance regulations into state law, to conform to all the different requirements that local health plans face. While the federal government has said it won't penalize insurers who don't meet federal regulations, these new state regulations are still left standing.
“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.”
The opposite is true in the states that have opposed the health-care law, and done little -- or in some cases, absolutely nothing -- to enforce the Affordable Care Act's new protections.
To be sure, the group on board with the president's proposal is a bit more diverse than the opponents. Hawaii and Kentucky, two states with Democratic governors running their own marketplaces, are both allowing insurers to renew policies through late 2014. So are Florida and Texas, the largest states to pass on both the state-run exchange and the Medicaid expansion.
Texas is among a handful of states that has said it will not take any action to enforce the health law's new insurance rules, such as the requirement that insurers accept all customers. That leaves the federal government, then, to check in on Texas health plans and make sure they're up to snuff.
Since Texas has refused to implement the health law's new regulations, it has also said it would not stop non-complaint plans from selling in its market. That was true before the president's announcement, the Texas Department of Insurance says, and afterward.
"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," TDI spokesman John Greeley said. "Whether a company offers or withdraws a policy is a business decision for that company."
States on the federal marketplace might be more inclined to take the president up on his proposal, largely because those receiving cancellation notices are having trouble using the HealthCare.gov Web site.
"States like Florida that are using the federal site might have a stronger incentive," Collins, of the Commonwealth Fund, says. "If residents are getting cancellation notices but can't shop, that would be part of the reasoning."
Many states are still in limbo but observers expect them to make a decision later this week -- or, at the latest, early next.
"They know they need to make decisions very quickly," says Matt Eyles, an executive vice president at 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."