Despite Obama’s pledge, future of cancelled insurance policies not certain in NC

Posted by John Murawski on November 14, 2013 

  • Why are many policies more expensive under the Affordable Care Act?

    The federal law prohibits turning away customers with pre-existing conditions, many of whom could not find coverage and are expected to get insured next year. Insurers raised rates to pay for medical services to this new contingent of customers.

    The law also requires insurance to cover 10 essential benefits that have been optional in the past and purchased at extra cost. The essential benefits include maternity care, mental health, pediatric dental and pediatric vision – whether the individual or family buying the policy wants those benefits or not.

President Barack Obama’s pledge to allow canceled health insurance policies next year is in limbo in North Carolina, as insurers and state regulators scramble to figure out if health plans for 2014 can be priced at levels that insurance companies can live with.

It could take several days for the N.C. Department of Insurance and insurance companies to agree if thousands of lapsed polices can be offered next year at prices acceptable to regulators and insurance companies.

The costs of those policies are expected to increase, but insurance companies do not want to get bogged down in protracted negotiations with regulators. More than 473,000 people in North Carolina have lost their health insurance because of plan terminations, the state insurance department said.

“We will need cooperation and expedited approval from state regulators to remove barriers that would make it difficult to make this change in such a short period of time,” Coventry Health Care of the Carolinas said in a statement. “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.”

Coventry, one of two insurers offering subsidized coverage in North Carolina under the Affordable Care Act, sent 13,100 cancellation letters in North Carolina in recent months.

Blue Cross and Blue Shield, the state’s largest health insurer, canceled 151,640 health plans in North Carolina because they did not meet the minimum standards of the new federal health law. Many of those policies cover multiple people.

The letters went to customers who purchased individual plans, or modified their individual plans, after March 2010, when the Affordable Care Act was enacted. Nearly half of Blue Cross’ 375,000 individual policyholders were affected.

The crisis led to President Obama apologizing to the nation for misleading consumers with promises that they would be able to keep their old insurance policies. Some customers received notices saying their premiums would double, or even triple, under more comprehensive coverage required by the new health law.

George Schwab of Charlotte said he’d like to keep his current policy as long as he needs it.

“I want it back not just for a year, not just until after the election,” he said. “He promised everybody unequivocally they could stick with their policy.”

Customers who purchased individual health insurance plans before the effective date of the health law can stay on those plans, but their rates are not guaranteed.

Most people are not directly affected, however, because they already have health insurance through their employer, Medicaid or Medicare.

N.C. Insurance Commissioner Wayne Goodwin issued a brief statement saying he and his staff are gathering information and analyzing options on how to proceed under Obama’s option to extend 2013 policies for a year.

If Goodwin and insurance companies agree to extend 2013 policies next year, the insurers would submit proposed rates and regulators would approve them under an expedited procedure.

Those affected by the spiking costs are primarily people whose incomes are too high to qualify for federal subsidies. But even some who qualify for subsidies in 2014 say they prefer this year’s, unsubsidized plans to next year’s insurance options.

Amy Nammack-Weiss of Chapel Hill said her insurance costs would have doubled under the new law. Federal subsidies would keep her family’s premium flat, at about $660 a month, but her total out-of-pocket spending cap would increase significantly, from $5,400 to $12,700.

“I want to keep my plan,” she said. “I’ve looked at four other plans, and they had all kinds of co-insurance and payments-per-doctor’s visit. You have to be careful because not all doctors have a contract to take patients on every plan.” Staff writer Karen Garloch of The Charlotte Observer contributed.

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