By now you’ve probably heard about the Obama Administration’s compromise over the policy cancellation uproar. The fix that Obama has offered is that health insurance companies can extend existing plans for one more year, allowing them to continue to exist in 2014. This has been incorrectly reported in some media outlets as allowing carriers to continue to sell existing policies for another year, but that is not the case. [Allowing the sale of existing non-ACA-compliant plans is one of the provisions of Fred Upton’s Keep Your Health Plan Act, which passed in the house on Friday but isn’t likely to pass the Senate and will be vetoed by Obama if it makes it that far.]
So how does Obama’s compromise impact Colorado’s individual market? The President is not saying that health insurance carriers must extend existing policies into 2014, only that they can if they want. This doesn’t really change anything in Colorado, it just calls attention to the fact that this is an option. That option in Colorado’s individual market has been there all along – it was up to each carrier to decide whether to allow existing policies to extend into 2014. (This has been vilified by supporters of the ACA who saw it as a tactic that the insurance industry was using to get around the ACA requirements).
Some states have forbidden health insurance carriers to extend existing policies into 2014. Colorado is not one of them. In early September, we posted a description of how six of the major health insurance carriers were dealing with the transition to 2014. Four of the six (Anthem Blue Cross Blue Shield, Cigna, Humana and United HealthOne) are allowing insureds the option of keeping their existing plan until it renews in 2014, or renewing early – near the end of 2013 – in order to keep their plan until near the end of 2014. Two others (Kaiser Permanente and Rocky Mountain Health Plans) are terminating existing policies and switching insureds to ACA-compliant plans as of January. Regardless of what carrier you have, you also have the option of shopping around, via Connect for Health Colorado (the state’s exchange) or off-exchange, for an ACA-compliant policy from any carrier you choose – you do not have to accept early renewal or an automatic switch to an ACA-compliant plan from your current insurer.
Carriers in the individual market in Colorado that are allowing existing policies to extend until their 2014 renewal date (either the regular renewal date or a new one created by an early renewal option in late 2013) have already sent out letters to their insureds informing them of their options. These are not cancellation letters (those will come in 2014, when the policy is up for renewal). The carriers that are terminating their existing policies did send out cancellation letters, informing insureds of their options in the new marketplace and the ACA-compliant plans that the carrier is offering for 2014. Obama’s announcement basically means that those carriers have the option for a do-over, if they want to take it. But they do not have to.
This doesn’t really change anything in Colorado. The Colorado Division of Insurance allowed each carrier to decide whether or not it was going to allow existing policies to extend into 2014, and/or offer early renewals so that insureds could keep their existing policies throughout most of 2014. Carriers made those decisions months ago, determining rates for both early renewal on existing plans as well as rates for 2014 plans. Obama’s announcement might make carriers that originally opted to cancel existing policies at the end of the year reconsider their decision, but there’s not a lot of time for all the actuarial work that would be involved.