By REED ABELSON and ABBY GOODNOUGH
President Obama’s effort to quiet a political uproar by suggesting on Thursday that consumers should be allowed to keep their current health plans met significant resistance from many insurers and state regulators, who said they had not been consulted in advance about the proposal, doubted it could work and feared it might seriously damage the new insurance marketplace.
After the president announced the proposed changes, insurance regulators participated in a heated conference call, according to one regulator, where many expressed deep unhappiness about the proposal.
Some on the call felt "the president kind of threw us under the bus today," the regulator said on the condition of anonymity because the discussion was supposed to be private.
What emerged from the call was a strongly worded statement warning of the possible effects of the president’s proposal.
"This 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," said Jim Donelon, Louisiana’s insurance regulator and the president of the National Association of Insurance Commissioners.
In Washington State, where the new state-run exchange has been a success, Mike Kreidler, the insurance commissioner, issued a harsh response, saying he would not do as Mr. Obama had urged and allow the state’s insurers to extend policies into 2014.
"I do not believe his proposal is a good deal for the State of Washington," he said. "In the interest of keeping the consumer protections we have enacted and ensuring that we keep health insurance costs down for all consumers, we are staying the course."
Under the new policy, the White House said insurers would no longer be required under the Affordable Care Act to upgrade existing coverage for people who were now enrolled. People would be allowed to keep their policies even if they did not provide all the benefits and protections required by the 2010 health care law.
How insurers would sell these existing policies, and at what prices, will have to be determined by insurance regulators and insurance companies. Many insurers did not ask that rates for existing policies be approved by state regulators because the policies were supposed to be discontinued at the end of the year.
"As a pragmatic matter," said a White House official, "it will be up to insurance commissioners and states."
Insurers and regulators worry that under the new proposal, too many people will continue their old plans. These policies are likely to be less expensive than coverage in the exchanges because the benefits are not as great and they were sold to a generally healthier group. Insurers priced their policies for 2014 based on the assumption that everybody would have to be in the new market, and they and regulators worry that their costs will be much higher if only older and sicker people enroll in the new plans.
Health insurers also said the result could be much higher costs — and therefore higher prices for consumers — than expected.
"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," said Karen Ignagni, the president of America’s Health Insurance Plans, a trade group in Washington.
In California, another state with a well-functioning marketplace, health plan officials also expressed opposition to the idea. "Reversing course now could cause a significant disruption in the marketplace," said Patrick Johnston, the chief executive of the California Association of Health Plans. "The entire underlying premise of the A.C.A. — balancing costs of the young, old, sick and healthy — has been left adrift with this announcement."
Amid the outcry, a few regulators expressed some support for the idea while others withheld comment until they had more time to digest it.
California’s insurance commissioner, Dave Jones, said he had already forced two companies, Blue Shield of California and Anthem Blue Cross, to delay the cancellation of policies for about 220,000 customers for a few months to allow them more time. His support for the president’s proposal could put him at odds with the officials running the state marketplace who want as many people as possible to enroll in one of the new plans.
Insurers also expressed concern about the cost of reinstating policies that had already been purged from their computers and that had not been included in negotiations with doctors and hospitals. Carl McDonald, an analyst with Citigroup, said the president’s plan created an "enormous administrative burden" for insurers and predicted many would choose not to extend coverage.
"The complexity of trying to uncancel millions of canceled individual policies with only six weeks left in the year is staggering," he wrote in a report.
Insurers who are new to the market could be particularly hurt by the proposal, with many people choosing to stay with their existing plans because they are less expensive rather than shop on the exchange. Consumer-operated plans, called co-ops, were set up to compete with existing insurers and must rely solely on attracting new customers.
Some insurers, like Aetna, seemed more supportive of the proposal as a way of relieving the anxiety of customers who panicked when they received letters informing them that their policies were being canceled.
Others agreed. "We had a lot of customers who are confused and concerned," said Patrick J. Geraghty, the chief executive of Florida Blue, who said state officials there had already committed to working with insurers to develop a way for individuals to continue their coverage. "It was the right thing to do," he said.
Susanne Craig and Robert Pear contributed reporting.
Source: The New York Times
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