Between 25,000 and 30,000 Hawaii residents whose medical plans were set to be canceled Jan. 1 may be able to continue in their policies for another year.
President Barack Obama announced Thursday a policy reversal that allows insurers to temporarily keep individuals in health plans that were slated to be scrapped because they did not meet minimum benefit requirements under the Affordable Care Act.
The immediate impact on consumers was unclear, though industry spokesmen warned that higher prices could result from the president’s rapid turnaround.
The act required health policies to include benefits such as prescription drug coverage, pediatric vision and pediatric dental. Insurers had to revise existing policies or eliminate them altogether to conform to the new law.
Under pressure from consumers as well as congressional Democrats, Obama said the administration no longer would require insurance companies to jettison current individual and small-group plans that fall short of the minimum coverage standards under the law, effectively shifting responsibility for cancellations to the industry itself.
It will now be up to individual companies to decide which plans remain for sale, subject to the approval of state insurance commissioners.
Hawaii Insurance Commissioner Gordon Ito said the state is discussing the impact of the president’s decision and evaluating the next course of action.
Hawaii Medical Service Association, the state’s largest medical insurer, said it already informed 12,409 individual plan members that their medical plans won’t be available after Dec. 31.
"We are working with the state government to make the best decision for our members and the state of Hawaii," said Elisa Yadao, HMSA senior vice president for consumer experience, in a statement.
Kaiser Permanente, the second-biggest health insurance company, notified about 11,000 individual plan members that their current plans will be withdrawn because they do not comply with the new law.
"We are still digesting the new information. I honestly cannot tell you what this means for us," said Kaiser spokeswoman Laura Lott in an email. "I’m sure we’ll have to work with our national folks and local regulators to explore all the options."
Hawaii’s smaller health insurance companies had to modify their plans to meet the new requirements under Obamacare and are now unsure what to do.
The Hawaii Medical Assurance Association changed health plans for 40,000 members to meet the new requirements.
"Obama is unpredictable. I don’t know what he’s going to come up with next or how regulations are going to be written or what changes he’s going to make to reverse the (plans that have been canceled)," said Reg Baker, HMAA’s chief operating officer. "Until we see the regulations on how he’s going to implement his next newest promise, I’m not comfortable predicting the future."
Howard Lee, president and chief executive officer of UHA (University Health Alliance), which has 53,000 members, said, "All individual and small-group markets are affected. Many plans had to be refiled with the (Department of Commerce and Consumer Affairs) in order to conform with the ACA. Being that our rates have been filed and we’re all set to go on Jan. 1, this will cause more confusion in the market."
HMAA and UHA ran advertisements in the Honolulu Star-Advertiser in September to inform their customers that they can stick with the insurance plans they have rather than use the coverage offered under the online marketplaces created by Obamacare. HMAA and UHA chose not to be part of the online marketplace.
Shortly after Obama spoke, the major industry trade group, America’s Health Insurance Plans, warned in a statement that prices might rise as a result of his new policy. "Changing the rules after health plans have already met the requirements of the law could destabilize the market and result in higher premiums for consumers," it said.
A few hours later the head of the National Association of Insurance Commissioners added a fresh word of caution. Louisiana Insurance Commissioner Jim Donelon, president of the group, said Obama’s proposal could lead to higher premiums and market disruptions next year and beyond.
"In addition, it is unclear how, as a practical matter, the changes proposed today by the president can be put into effect. In many states, cancellation notices have already gone out to policyholders, and rates and plans have already been approved for 2014," he added.
Under Obama’s new policy, insurance companies will be required to inform consumers who want to keep canceled plans about the protections that are not included under those plans. Customers will also be notified that new options are available offering more coverage and, in some cases, tax credits to cover higher premiums.
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The Associated Press contributed to this report.
