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NM insurers say Obama’s health plan reversal too late

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His personal and political credibility on the line, President Barack Obama reversed course Thursday and said millions of Americans should be allowed to renew individual coverage plans now ticketed for cancellation under the health care law that is likely to be at the heart of the 2014 elections.

But the president’s announcement will have little effect in New Mexico, where thousands of cancellations coupled with offers of replacement policies, generally at a much higher cost, have sparked outrage.

Blue Cross and Blue Shield of New Mexico and Presbyterian Health Plan, which together offer individual coverage to 51,000 customers, have already announced products designed to keep customers in individual plans for most of 2014 and do not plan to change them.

Both companies also offer coverage on the federal health insurance exchange, along with New Mexico Health Connections and Molina Healthcare of New Mexico.

Lovelace Health Plan, which covers 2,900 individuals, is being sold to Blue Cross and Blue Shield. The company said in a statement, “We are in the process of reviewing the administrative action released today by President Obama.”

Elsewhere in the country the impact on consumers was unclear with both industry spokesmen and state insurance commissioners swiftly warning that higher prices could result from the president’s rapid turnaround.

Under pressure from consumers as well as congressional Democrats, Obama said the administration no longer would require insurance companies to jettison current individual and small group plans that fall short of the minimum coverage standards under the law, effectively shifting responsibility for cancellations to the industry itself. The change would be good for just one year, though senior administration officials said it could be extended if problems persist.

Speaking of the millions of people whose coverage is being scrapped, Obama said, “What we want to do is to be able to say to these folks, you know what, the Affordable Care Act is not going to be the reason why insurers have to cancel your plan.”

New Mexico Insurance Superintendent John Franchini said Thursday the state’s insurance companies have invested a lot of time and money to comply with the ACA. “It’s like sending an aircraft carrier out at 50 knots, then telling it to stop right there,” he said.

Franchini said most customers of individual plans will probably get better insurance at a lower price on the federal insurance exchange when tax credits available to individuals are factored in. That is assuming they can get onto the troubled exchange website to buy coverage.

“They have no chance right now because the exchanges are frozen” by technological problems, Franchini said. “That’s my biggest concern. We need a program in place to provide a soft landing for people if the exchange is slow to get started.”

Presbyterian has offered existing members of its individual plans a new policy that takes effect Dec. 1. It offers ACA-compliant coverage and will end for good Nov. 30, 2014. Their existing policies will be canceled.

“We’re not envisioning any change,” said Presbyterian Health Plan President Lisa Lujan. “We’ve been preparing for a couple of years now with these products.”

Some members say the one-year product is significantly more expensive than the plans they are losing. Lujan said Thursday the higher price reflects both the richer benefits the new plan offers and rising medical costs.

The 18,000 Blue Cross and Blue Shield members who bought individual plans before March 2010 will be able to keep them indefinitely under so-called grandfathering provisions of the ACA, though the premiums will change. BCBSNM will change the renewal date to Dec. 1 of the policies of another 10,000 individual plan customer who bought after March 2010. Those policies will not be renewed after Nov. 30.

Woeful rollout

Obama spoke at a news conference where he repeatedly took responsibility for the woeful rollout of the health care program known by his name. Officials disclosed on Wednesday that fewer than 27,000 enrollments were completed in 36 states in the first month of operations for Healthcare.gov.

Including enrollment of more than 79,000 in the 14 states with their own websites, the nationwide number was 106,000 for October sign-ups. But that is still far fewer than expected and a mere fraction of the cancellation notices that have gone out because of the law – more than four million according to an Associated Press survey.

Obama’s approval ratings in polls are also ebbing, and he readily conceded that after recent events, the public can legitimately “expect me to have to win back some credibility on this health care law in particular and on a whole range of these issues in general.”

The president also sought to shelter from political fallout any congressional Democrats who echoed the promise he repeated often when the legislation was under consideration in Congress – that anyone who liked his or her coverage would be able to keep it. “They were entirely sincere about it,” he said of the lawmakers. “It’s not on them, it’s on us.”

Higher premiums

Shortly after Obama spoke, the major industry trade group, America’s Health Insurance Plans, warned in a statement that prices might rise as a result of his new policy. “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,” it said.

A few hours later, the head of the National Association of Insurance Commissioners added a fresh word of caution. Louisiana Insurance Commissioner Jim Donelon, president of the group, said Obama’s proposal could lead to higher premiums and market disruptions next year and beyond.

“In addition, it is unclear how, as a practical matter, the changes proposed today by the president can be put into effect. In many states, cancellation notices have already gone out to policyholders and rates and plans have already been approved for 2014,” he added.

In California, where more than 900,000 cancellations have been sent out, Insurance Commissioner Dave Jones called on insurers to extend the policies being scrapped.

But in Washington, his counterpart, Mike Kreidler, said he won’t allow that to happen. “I have serious concerns about how President Obama’s proposal would be implemented and more significantly, its potential impact on the overall stability of our health insurance market,” he said in a statement.

Until the president made his announcement, the administration had been assuming that individuals currently covered by plans marked for cancellation would switch to alternatives offered in government-established exchanges.

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