Change to health law has unclear Minn. impact

President Barack Obama
President Barack Obama pauses as he speaks on the Affordable Care Act in the Brady Press Briefing Room of the White House while reporters do stand-ups on November 14, 2013 in Washington, DC.

Less than two months before the most important provisions of his health insurance overhaul are set to kick-in, President Barack Obama changed a critical rule of his signature domestic achievement. Facing defections among Congressional democrats, the president said people who have seen their current policies cancelled can keep their plans for another year.

Over the last few months, hundreds of thousands of consumers who buy their plans on the individual market have been told their policies are being cancelled or will be more expensive because they don't include benefits required by the Affordable Care Act, such as prescription drug coverage, maternity care and hospitalizations.

The cancellations led to accusations the president lied when he repeatedly promised people they could keep their plans if they liked them while he was selling the health care law almost five years ago.

"I completely get how upsetting this can be for a lot of Americans, particularly after assurances from me that if they had a plan that they liked they can keep it," Obama said.


Gloria Keogh of Burnsville, Minn., was among the more than 140,000 Minnesotans who learned earlier this year that her plan was going to cost more in 2014.

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While Keogh has never supported the health care law, she is pleased with Obama's announcement.

"Who wants to pay more? Not too many people," she said.

Nevertheless, there's still no guarantee Keogh will be able to keep that plan.

Obama's plan leaves it up to insurers and state regulators to decide whether these plans should remain available. Officials with the Minnesota Department of Commerce, which regulates insurance policies, aren't saying how they plan to handle the situation, but earlier this week, Gov. Mark Dayton said people should be able to keep their plans.

Dayton welcomed the president's decision even as he admitted the impact is unclear.

"I don't know enough of the details and the devil is always in the details, and when you get the federal government, it takes a little while to wade through it all and decipher it," he said. "That's why I want to look at it carefully."

Among the questions in Minnesota is how the president's decision will square with Minnesota insurance law which bans outright cancellation of health insurance, requiring plans instead to offer policyholders new terms instead.

The president's about-face presents a difficult choice for Minnesota's insurance plans, too: if the state gives them the option of keeping the old plans on the books, they may have to go through the actuarial and bureaucratic hassle of getting them reapproved by the state -- a tall order just six weeks before the year ends. If they don't, they may risk further frustrating already disgruntled customers.


Given the political climate in Washington, Geoff Bartsh, Medica vice president of public policy and government affairs said he was concerned the administration would change the rules.

"It's a huge change to the president's implementation of the health care law," Bartsh said.

But will Medica change course? Bartsh said the company hasn't made any decisions yet, partly because he isn't sure how they can get these plans reapproved before the end of the year and partly because it may only add to consumer confusion surrounding the law.

"An announcement like this really asks us to take a step backward," Bartsh said. "What you're doing is really delaying a problem that's occurring for some people today."

Bartsh said MNsure's low premiums reflect the insurer's assumption that a lot of healthy, currently insured people would be buying new plans on and off the exchange in 2014.

"That's one of the reasons the prices were able to be as low as they were," he said. "If all of a sudden the rules are changed and a lot of those healthy people are able to stay in their [old] products, ... the policies on MNsure aren't priced in accordance with what the health care needs are going to be for the people who buy their policies."

University of Minnesota professor Roger Feldman agreed. He said the change could hurt the economics of plans sold on the new insurance exchanges. "It would mean less enrollment and premium instability," he said.

Feldman said if people can keep their old policy that will drive up the cost of insurance sold on the exchanges, which generally have more comprehensive coverage.

Officials at MNsure, Minnesota's online insurance marketplace, said they were assessing the situation with the Department of Commerce.


Obama's about-face isn't entirely unexpected.

Since NBC News reported in October that the Obama administration knew that millions would lose their plans because they didn't include an array of benefits required by the new law, Republicans and Democrats in Congress have been calling on Obama to honor his promise.

Obama's announcement relieves some of that political pressure a day before the House of Representatives is supposed to vote on a bill that would reinstate the cancelled plans and go further by allowing new customers to enroll in those plans.

"He bowed to political reality," University of Minnesota political science professor Larry Jacobs said.

But the move also creates work and considerable uncertainty for insurers and state insurance regulators, with little time to sort through the issues. And it shifts the responsibility for appeasing unhappy policyholders to the insurers and the states. It won't look good if state officials and insurers decide not to renew these cheaper policies, Jacobs said.

"What [Obama] has done is thrown the states and the insurers under the bus," Jacobs said. "After all, insurers are the ones who are going to face potentially hostile consumers who've gotten cancellation notices."