Obama defers to states with policy extension fix

The Obama Administration's latest triage for health reform is largely a punt to states on insurance policy cancellations, and could bring consequences of its own.

Six weeks after Healthcare.gov opened with little functionality and after a flood of consumer complaints about health plan cancellations, President Obama announced that the administration will give state insurance commissioners the option of letting insurers continue recently-cancelled plans through 2014, while still encouraging consumers to peruse public marketplaces.

"I'm offering an idea," Obama said at a press conference. "We put a grandfather clause into the law, but it was insufficient" to guarantee the pledge of letting consumers keep their existing health plans, Obama said.

The cancellations have come in tandem with usability and health plan data management problems on Healthcare.gov -- problems Obama said would eventually be evaluated as part of federal IT reform.

"Even a week into it, the thinking was these were glitches that needed patches," but Healthcare.gov's problems are really "systemic," Obama said.

"We fumbled the rollout on this healthcare law," Obama said. "But the game's not over." This time next year, "people are going to say it's working well and it's helping a lot of people."

The day before Obama's announcement, the Department of Health and Human Services released preliminary enrollment data showing that more than 106,000 Americans selected health plans on public exchanges across the country and almost 400,000 were found eligible for Medicaid during the first month of enrollment.

Healthcare.gov, the federal exchange operating in 36 states, reported about 26,700 health plans selected, yet HHS officials and Obama Administration say the website still needs a lot of work.

"IT procurement is a systematic problem we have across the board," Obama said. "The federal government does a lot of things really well. One of the things it does not do well is information technology procurement."

As far as making an promises for November 30, Obama said it will certainly be performing better than it is now, but will likely continue improving beyond December.

"I think it is not possible for me to guarantee that a hundred percent of the people a hundred percent of the time going on this website will have a perfectly seamless, smooth experience."

Some people are still going to need enrollment assistance, which is why Obama said he also wants to see the application process made easier, with more "English rather than bureaucratese."

And, he added: "We can always make this law work better. It is important to understand, though, that the old individual market was not working well. It's not a place worth going back to."

The question is how many states will take the Obama Administration up on the offer and how many insurers will want to extend sunsetting policies. Already, the California insurance commissioner has secured an agreement with Anthem and Blue Shield of California to extend policies set to be phased out Jan. 1, 2014 until March, to coincide with an extended open enrollment.

Meanwhile, the healthcare industry is watching the insurance exchange saga while working on so many other initiatives, from ACOs to ICD-10, and insurance representatives in Washington see some problems that the extensions could lead to.

"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," America's Health Insurance Plans CEO Karen Ignagni said in a media release. "Premiums have already been set for next year based on an assumption of when consumers will be transitioning to the new marketplace. Additional steps must be taken to stabilize the marketplace and mitigate the adverse impact on consumers."

State insurance commissioners may not entirely embrace the idea either. 

"It is unclear how, as a practical matter, the changes proposed today by the President can be put into effect," Louisiana insurance commissioner Jim Donelon, president of the National Association of Insurance Commisioners, said in a media release. "In many states, cancellation notices have already gone out to policyholders and rates and plans have already been approved for 2014. Changing the rules through administrative action at this late date creates uncertainty and may not address the underlying issues."