President Barack Obama's administrative fix for health insurance cancellations that have angered millions of Americans seems simple enough—allow insurers to extend their plans for another year. But for the insurance industry, reversing cancellations this far along is anything but simple.
"It is unclear how, as a practical matter, the changes proposed today by the President can be put into effect," said Jim Donelon, the president of the National Association of Insurance Commissioners in a statement. "Changing the rules through administrative action at this late date creates uncertainty and may not address the underlying issues."
Over the past month, insurers have sent nearly 5 million cancellation notices for plans on the individual and small- business market that did not meet the new Obamacare standards. The administrative fix will allow those plans to be extended for another year, despite not meeting benefit requirements under the Affordable Care Act.
But the fix is voluntary, putting the onus for renewing the plans on individual insurers and state regulators to approve the policies. The problem lies in trying to set new prices and approvals for the canceled plans that expire on Dec. 31, under an extremely compressed time frame.
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"We support efforts to allow people to keep what they have," said an Aetna spokesperson in a statement. "However, we will need cooperation and expedited approval from state regulators to remove the barriers that would make it difficult to make this change in such a short period of time."
"State regulators will need to allow us to update our policies and secure appropriate rates so we can get these plans back in the market," the spokesperson said.
For coverage starting on Jan. 1, insurance customers need to enroll in a plan and pay their premium by Dec.15. Insurance industry consultant Robert Laszewski, of Health Policy and Strategy Associates, said it's near impossible for insurers to complete these steps in just one month.
"This means that the insurance companies have 32 days to reprogram their computer systems for policies, rates and eligibility, send notices to the policyholders and then enter those decisions back into their systems without creating massive billing, claim payment and provider eligibility list mistakes," he said.
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Stan Hupfeld, former CEO of Integris Health, Oklahoma's largest health system, agreed. Obama's new fix "is possible, but the logistics of doing it with just a few days left in the policy year are extremely difficult. We've put [insurance companies] in an untenable situation. This is sort of a Hail Mary pass—in the end, [the fix] shifts the blame and makes [the insurance companies] the culprits," he said.