President’s message on Affordable Care Act impacts individual and small group plans

At the Small Business Association of Michigan, we have promised to keep you up to date and informed on news regarding the Affordable Care Act and its impact on your business and your employees.  Yesterday, there was a major announcement from the White House.  We are working hard to both understand the announcement’s implications and adjust for the future.

In an effort to repair damage to the Affordable Care Act roll-out, President Obama announced a plan to let insurance companies renew for one year the health plans for individual and small business customers whose policies would otherwise be terminated. See the letter to insurance commissioners.

Essentially, the message is that insurance carriers may extend through 2014 the policies that do not meet the minimum standards of the Affordable Care Act.  But it is nowhere near that simple.

The decision on whether or not to allow insurance carriers to extend these policies will be made on a state-by-state basis; having been left up to insurance commissioners to allow the “fix” to go forward.  Therefore, the first decision must be made by Michigan’s Department of Insurance and Financial Services Commissioner Ann Flood and then by individual insurance carriers.

From our perspective, this announcement from the White House leaves many unanswered questions and certainly complicates an already confusing world of individual and small group health insurance.  This decision must be reviewed from both a logical and logistical perspective.  For the President’s “fix” to work, carriers face many difficult decisions and little time in which to make them.  Carriers will have to breathe new life into old plans within 30 days. That involves figuring out how much these plans should cost; submitting the plans to the state for approval; communicating the new plans to individuals and groups, many that have already made changes; enrolling customers into new plans; setting up the billing process; and many other things that will be very difficult to do on a short time-frame.

Additionally, if a state and carrier decides to move forward and allow plans that have been, or were scheduled to be cancelled to renew, insurance carriers must tell policyholders that their plans do not meet the new minimum standards and must inform them about other options on the Exchange, including the availability of any subsidies. This sets up the very real possibility of adverse selection between the pools with the young and healthy keeping their current plans and those with pre-existing conditions selecting the plans under the ACA – that is a real problem for insurance carriers to reconcile.

We have been in touch with Blue Cross Blue Shield of Michigan and Blue Care Network and they are considering their options.  We received this message:  

“We monitored today’s remarks by President Obama, but we will need to review and understand the changes he is proposing in the ACA regulations before we are able to let you know the impact of those changes on coverage.  We will be notifying all of our members of how this will affect them in the near future. We ask that you to continue to monitor the media and our Blues blog at mibluesperspectives.com for more information. We will also notify all of our members of their options as outlined by the President.”

As this issue unfolds over the coming days and weeks, you can always count on SBAM to be your source for accurate and up to date information.