WASHINGTON — President Obama may have secured a measure of political relief for himself by allowing substandard insurance policies to be renewed for another year. But his abrupt about-face has triggered confusion and uncertainty for insurance companies and hundreds of thousands of policyholders, whose efforts to obtain coverage were thrown into limbo.
Obama’s announcement on Thursday caught health plan executives by surprise. It was a major policy rollback with complex implications for health insurance markets, upsetting carefully laid plans to move people from weak insurance to stronger insurance, as the 2010 Affordable Care Act requires.
While insurance executives met with Obama at the White House on Friday to review implications of the shift, policyholders across the country who have received termination notices because their plans do not meet new standards were frustrated and baffled.
Their options will now depend on which state they live in, and whether their insurance company decides to act on Obama’s request and delay the switch to more comprehensive coverage.
Some were still upset that Obama broke his original promise, that people who liked their existing plans would be able to keep them under his law. The president’s belated effort to honor that promise this week did little to soothe the anger of New Hampshire attorney Kysa Crusco, a 37-year-old mother of two. “The president told me that if I like my health insurance, I could keep it. And that shouldn’t have an expiration date,” said Crusco, who has been covered under a nonconforming plan that did not cover maternity care. That fit her needs because, she says, she doesn’t plan to have more children.
Crusco received a cancellation notice from Anthem Blue Cross last week, and now she is uncertain what she will do.
“This is going to be up to the state and health insurance companies now,” Crusco said. “It’s really upsetting. I have no idea what my cost is going to be. I have no idea whether I’m going to be able to keep my doctors.”
Consumer anxiety has been heightened by continued problems with the federal health insurance website, healthcare.gov, that have prevented millions of Americans from signing up for new coverage. The website is in place for residents of 36 states that have not launched their own online marketplace, including New Hampshire and Maine.
Administration officials are racing to repair the site to handle demand for replacement health insurance. The site also must handle millions of uninsured consumers who have until March 31 to comply with the Affordable Care Act’s mandate that most Americans obtain insurance.
The disastrous rollout of the health law, which was meant to address the patchwork nature of health insurance, has instead opened up more fissures and inequities between states.
Leveling the playing field is an important goal of the Affordable Care Act, with its mandate that nearly all Americans buy insurance of fairly uniform quality. Forcing young, healthy premium-payers into a big insurance pool balances risk and costs, reducing the relentless upward pressure on premiums.
Pushing people out of weak, patchy coverage in the individual market into better coverage at group rates on the online marketplace, meanwhile, will be a better deal for millions of policyholders — especially those in the lower- and middle-income brackets who qualify for government subsidies. That is why insurance experts see Obama’s decision Thursday as a step backward from meaningful market reform.
The move “continues different rules for different policies and threatens to undermine the new market, and may lead to higher premiums and market disruptions in 2014 and beyond,” Jim Donelon, president of the National Association of Insurance Commissioners and the insurance commissioner of Louisiana, said in a statement.
By Friday evening, insurance commissioners in New Hampshire, Ohio, Florida, Kentucky, Oregon, and California had said they would adopt Obama’s plan and allow insurance carriers and their customers to retain substandard plans for another year.
Other states, including Rhode Island, Vermont, and Washington, rejected Obama’s plan and said they will require that consumers obtain coverage that meets the Affordable Care Act requirements. The new standards require coverage of things like preventive care, maternity care, and prescription drugs. Maine and Connecticut are undecided and plan to continue discussions next week.
In California, where more than 1 million consumers have been notified of cancellations, the insurance commissioner is allowing the extension but insurers are opposed to the idea, said Edwin Park, vice president for health policy at the Center on Budget and Policy Priorities, a left-leaning nonprofit in Washington.
Allowing healthy people to keep substandard plans and remain outside the insurance risk pools of local Affordable Care Act markets probably will drive up premiums, Park said. That presents a cascading effect for future years. “We’re not sure how this is going to play out, in terms of the effect on premiums in 2015,” he said.
In a letter to the Massachusetts congressional delegation, Governor Deval Patrick said on Friday the state is “unlikely to need or to use the additional time” allowed by Obama because the state’s health plans and consumers have prepared for the transition, thanks to Massachusetts’ first-in-the-nation health reform in 2006.
Andrew Dreyfus, president and chief executive of Blue Cross Blue Shield of Massachusetts, said “adopting the president’s position [in Massachusetts] would create problems rather than solve problems.” Insurers and the state would have to recalculate premiums and benefit levels.
“There’s no reason to turn the clock back,” Dreyfus said.
In New Hampshire, 22,000 residents are expected to receive cancellation notices over the next month. The state’s insurance commissioner said those people need more time to navigate the troubled healthcare.gov website.
“The glitches in the federal marketplace have caused great concern for those New Hampshire citizens who get coverage through the individual market,” said Commissioner Roger Sevigny. “While many will ultimately qualify for federal subsidies, they have not been able to fully understand their options or to confirm enrollment in marketplace plans due to the technical problems with the website.”
In an example of the confusion in New Hampshire, the Obama administration reported this week that 269 Granite State consumers have identified an insurance plan they will enroll in through the federal online marketplace. But Anthem Blue Cross has not confirmed any of those online shoppers, according to a person familiar with the New Hampshire marketplace who did not want to be named because of political sensitivities.
Obama’s move Thursday did achieve the short-term effect of preventing a full-scale revolt among Democrats in Congress, although divides remain.
Thirty-nine Democrats — including Representatives Ann McLane Kuster and Carol Shea-Porter of New Hampshire — joined Republicans on Friday in approving a House bill to allow insurers to maintain subpar health plans during 2014. The measure also would allow insurance companies to sell even more of those substandard plans during that year, which would further undermine the broader purpose of the Affordable Care Act.
“I support good-faith efforts to ensure that people who like their current plans are able to stay on them for another year,” Kuster said in a statement. “The Affordable Care Act is not a perfect law and I am committed to improving it.’’
On Friday, Obama convened a group of insurance executives, including Tufts Health Plan chief executive James Roosevelt Jr., for a meeting at the White House. Roosevelt did not respond to a Globe request for comment.
“Obviously, because of the problems with the website some folks have been blocked from seeing the well-priced benefits that are available in the marketplace,” Obama told reporters at the start of the meeting. “What we’re going to be doing is brainstorming on how do we make sure that everyone understands what their options are.’’