Nebraska state officials and insurance companies continued Monday to discuss whether 100,000 or more people covered by individual health insurance will have the option of extending their current coverage into 2014.
Among the issues: What would policyholders have to pay to extend their 2013 policies rather than buy new policies under the Affordable Care Act? President Barack Obama last Thursday said states could have that option.
And, more fundamentally, can the Obama administration adopt a “transitional policy” to allow 2013 insurance to comply temporarily with the law, which was enacted by Congress and signed by the president in 2010?
The situation is complicated enough that a federal official already is discussing ways to help insurance companies if the extended 2013 policies end up as money losers.
Nebraska Insurance Department Director Bruce Ramge said Monday the department “continues to evaluate federal and state law on the issues raised by President Obama's press announcement.”
Officials at Coventry Health and Blue Cross Blue Shield of Nebraska said they were studying the issues and haven't decided whether to seek state approval to extend the policies.
The two companies sent notices earlier this year to their individual insurance customers saying that the 2013 policies would end and they could choose new policies under the law, also known as Obamacare.
Officials in Iowa said fewer than 1,000 people face a similar choice because most individual policies in Iowa remain in effect until later in 2014.
Congress also is discussing the issue after receiving complaints about millions of Americans whose 2013 individual policies are being canceled and who would have to buy new Obamacare-compliant policies to continue coverage.
Obama's announcement last week came in response to the negative reactions about the cancellations.
Since then, some states have decided to allow companies to extend policies, and some have said the companies can't extend the policies. State officials regulate the health insurance industry, reviewing policies to make sure the rates are reasonable and raise enough so the company can pay claims.
Policies that comply with the Affordable Care Act are supposed to include “essential benefits” covering a wide range of medical expenses. Many of the new policies have higher monthly premiums and out-of-pocket expenses, although many people also qualify for subsidies that would reduce their costs.
Obama's announcement stemmed partly from his earlier pledge that people who like their insurance policy could keep it under the new law. Most of the individual policies didn't comply with the law's requirements, and insurance companies spent more than a year crafting replacement policies.
But extending the 2013 policies would require the companies to recalculate monthly premiums and receive fast approval from state insurance regulators, a process that usually takes months.
One of the insurers' concerns is that if too many people with high claims extend their coverage, the policies could lose money and weaken the insurers' finances.
A letter went out last week to state insurance directors from Gary Cohen, a director in the Center for Medicare and Medicaid Services, which oversees the health care law.
Cohen noted the concern over the financial impact of extending the 2013 policies under Obama's option. He encouraged state agencies to adopt the same policy and said the Affordable Care Act includes a program known as the “risk corridor” that might figure into the situation.
Starting next year and lasting into 2016, the risk corridor is intended to apply if insurers miscalculate their Obamacare-compliant policies' premiums.
If an insurance company's premiums fall short of covering costs, the program pays the insurer. If the premium dollars far outweigh costs, the insurer pays into the program.
In case it's needed because of the 2013 extension option, Cohen wrote, “We intend to explore ways to modify the risk corridor program final rules to provide additional assistance.”