Publisher's note: The author of this post is Dan Way, who is an associate editor for the Carolina Journal, John Hood Publisher.
Insurance provider says president's move creates actuarial challenges
RALEIGH - Blue Cross Blue Shield of North Carolina officials are scrambling to determine the impacts of accepting President Obama's one-year delay in canceling policies that have been deemed illegal under the Affordable Care Act, also known as Obamacare.
Nearly a half million North Carolina residents are scheduled to lose health insurance plans due to Obamacare. BCBSNC, the dominant provider of individual coverage in the state and one of only two carriers offering plans on the federal exchange in North Carolina, said it is examining costs before making a decision.
"What we would essentially be looking at if we choose to take this option is that we would have separate pools of insured customers," said Michelle Douglas, BCBSNC public relations manager. One pool would be grandfathered from the new state exchange and another non-grandfathered business continuing on 2013 plans.
"So that does pose some challenges from an actuarial perspective, and that's what we're looking at," Douglas said.
Figuring the cost of compliance with the last-minute workaround is "going on as we speak, frankly," Douglas said.
"That's what it all boils down to, can you offer these plans to customers under these circumstances in a responsible way, and that's probably what every health insurer in the country is doing today," she said.
"There was no mandate per se that plans be reinstated. Essentially what this does is offer health insurers and insurance commissioners the option to allow people who had coverage in place as of Oct. 1 of this year to keep that coverage for another year," said Douglas.
"Let's call it a grace period," she said. "It's not a permanent change."
Meanwhile, figures released Wednesday
by the federal government show only 1,662 North Carolina residents selected a federally approved insurance plan on the heavily regulated federal health exchange during the month of October. Some experts are wary that even that flaccid number may be exaggerated.
Nationally, only 106,185 people selected plans off the Affordable Care Act marketplaces, and 75 percent of those were on state exchanges, not the deeply flawed federal web site healthcare.gov. The goal was to have 500,000 sign up last month, and 7 million by the end of March 2014, so only 1.5 percent of the end target was reached in October.
"They were dismal, and really they were inflated," Devon Herrick, senior fellow and health economist at the Dallas, Texas-based National Center for Policy Analysis, said of the October numbers.
"Those were people who signed up and selected their plan, but didn't necessarily enroll in that plan or pay for that plan," Herrick said. "That's about a fifth of what the administration had hoped would sign up at this time ... and it does not bode well."
Even the federal government can't verify the "very preliminary" numbers, he said.
"I had heard early on that there were complaints that the insurance company executives had that they weren't even sure if people applying were real people. They were getting John Does and things like that," Herrick said.
"It may well be that they know how many people are theoretically signed up but can't tell if they're real customers because no money has changed hands," he said.
Estimates vary, but at least 4.5 million people and perhaps "a magnitude of that" will lose their health coverage in the next few months, he said, because their plans did not include the expanded coverage required by Obamacare.
Many learned that replacement plans were much higher priced, with larger co-pays and deductibles. The backlash has seen Obama's poll numbers dip, and a double-digit lead over Republican challengers enjoyed by Democratic U.S Sen. Kay Hagan, an ardent supporter of the law, vanish in her 2014 re-election campaign.
"The replacement coverage has only signed up one person for every 40 who is thought to lose their coverage. That suggests that we will start the year out with more people uninsured than we had last year despite the new health care law," Herrick said.
"It's not reassuring, although I'm not sure if this means the whole program is imploding as much as just muddling along," he said.
"We have been notified of the termination of 183,821 policies, covering 473,724 lives. There may be more, but those are the numbers based on the information provided to us by the insurance companies at our request," said Kerry Hall, a spokeswoman for state Insurance Commissioner Wayne Goodwin.
"I have been, and remain, deeply concerned about North Carolinians who may lose or cannot access health insurance, and I appreciate any effort by the federal government to help us address cancellations of coverage," Goodwin said in a prepared statement released Thursday afternoon.
"Given the president's announcement, my staff and I are gathering information and analyzing the options available to us at the state level to best protect North Carolina consumers," Goodwin said.
BCBSNC is still attempting to verify that requested cancellations were removed from the site and that things such as mistaken double enrollments were rectified, and probably won't release internal enrollment statistics until the end of the enrollment period, Douglas said.
The federal website remains "a little temperamental" and makes verification difficult, she said.
"I wouldn't say that the number is necessarily surprising," Douglas said. "After having a very, very slow and rocky start, I think the site did start to move more people through as we moved into October, but still nothing close to what everyone was hoping for."
"Changing the rules after health plans have already met the requirements of the law could destabilize the market and result in higher premiums," AHIP President Karen Ignagni said in a prepared statement
Obama's plan would result in "higher average medical spending among those purchasing new coverage, additional program costs for the federal government, and higher health insurance premiums in 2015," the American Academy of Actuaries said in a statement
"I think it's important to be clear that we had already been actively exploring these options to provide relief to our customers who might be losing a plan that they liked," Douglas said.
"So having some additional flexibility could help insurers like us take steps to protect our customers for another year," she said.
"Obviously the timing will eventually be a challenge. But I think many insurers are very motivated to do what we can do to help our customers. We've heard from them that they are concerned about losing plans they like and having a difficult time accessing a subsidy on the exchange," Douglas said.
If BCBSNC decides to accept the option to renew an existing 2013 plan for 2014, rate increases would be based solely on medical trends, just as in the past, and subject to state Insurance Department approval.
"I think in most cases it would not be at the same premium, but it would be a premium that was based on pre-ACA factors rather than what a lot of people thought was an increase based on their plan having to be compliant with the ACA," Douglas said.
Herrick is skeptical about Obama's proposal, made in response to lost health plans and rising premiums, a revolt among Democratic senators who voted for the law but now face angry voters in the 2014 mid-term elections, and a scolding from former President Clinton that Obama should keep his promise to Americans that if they like their health plan and doctors they can keep them.
"It's next to impossible to force insurers to unrescind a policy they already canceled trying to comply with the law," he said.
"If the president wants to keep his promise, Congress needs to modify the Affordable Care Act law to allow insurance companies to sell these policies that people apparently liked," Herrick said.