Obama’s insurance plan ‘fix’ stirs confusion, ridicule at state level

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How the president's proposal may threaten ObamaCare

David Cutler weighs in on the health care adjustment

President Obama's "fix" for the wave of insurance cancellation notices going out as a result of ObamaCare is creating mass confusion for state-level insurance commissioners and companies who are unclear how they would implement the change -- if at all -- at this late stage.

"For three years, state insurance regulators have been working to adapt to the Affordable Care Act in a way that best meets the needs of consumers in each state," the National Association of Insurance Commissioners said in a statement. "It is unclear how, as a practical matter, the changes proposed ... by the president can be put into effect."

The statement was one of many complaints and outright cries for help at the state level after Obama announced Thursday that he's allowing insurance companies to sell policies that would otherwise be out of compliance with the Affordable Care Act for another year. The change was meant to address the concerns of millions of Americans who have lost their current insurance plans because they didn't meet the minimum standards under the law. Those individuals were being offered new plans, or being sent onto the troubled insurance exchanges, but in many cases were looking at more expensive options.

But the change presented by the president -- as well as a broader plan approved in the House on Friday -- could cause chaos for insurance companies and state commissioners. The president was meeting with insurance industry executives on Friday to address concerns that the industry has shown little hesitation with airing. The meeting was expected to include representatives from Aetna, Humana, Tufts Health Plan Foundation and Health Care Service Corporation.

The chief complaints are that changing the rules at this stage and allowing people to renew cheaper, lower-premium policies will upend the financial balance that the industry was trying to strike -- likely resulting in higher premiums for others.

"Premiums have already been set for next year based on an assumption of when consumers will be transitioning to the new marketplace," America's Health Insurance Plans' (AHIP) President and CEO Karen Ignagni said in a statement. "If now fewer younger and healthier people choose to purchase coverage in the exchange, premiums will increase and there will be fewer choices for consumers."

Plus there's the logistical matter of companies reaching out to customers who have already received cancellation notices and insurance commissioners reassessing rates and plans for 2014 which had already been set.

Some states were already balking at that task by Friday.

Washington state Insurance commissioner Mike Kreidler, within hours of Obama's announcement, said his state would not be making any changes.

"I know that many people who buy their own health insurance have struggled to keep their coverage. That is why we have worked so hard to make these significant changes," he said. "I do not believe his proposal is a good deal for the state of Washington.

Oklahoma Insurance Commissioner John D. Doak ridiculed the president's decision, saying Obama is "just passing the buck."

"How can the federal government make this decision without offering any guidance to the state insurance departments or the insurance carriers? Cancellation notices have already gone out. Rates and plans have already been approved. How is this supposed to work?" he said.

In state after state, where typically hundreds of thousands of cancellation notices have gone out, insurance commissioners are struggling to figure out how they might implement the administration's sudden change.

The president is being accused in some corners of making this announcement in order to shift the burden -- and blame -- to insurance companies and state commissioners. If people cannot renew their policies after the administrative "fix," then the president could argue that he tried, and was stymied by the states.

Republicans, though, also argue that Obama may not even be in his right to do this administratively. That's why they called a vote Friday afternoon on a bill that would do what Obama proposes administratively -- and then some.

The GOP-backed bill would not only let people extend their plans for another year, but also let other individuals who did not have such coverage opt to enroll in those plans as well. Obama has threatened to veto the bill.

As for the president's plan, Wendell Potter, a former executive at Cigna, told Fox News that some insurance companies might take up the president on his offer in order to make money off those policy holders.

He said the main reason the administration is doing this is because the federal exchanges aren't working. Eventually, he said, "I think it probably will and people will start when it does work find out that there are better policies."