Insurers: Reinstating plans creates unnecessary problems

Even though President Barack Obama has allowed insurers to reinstate canceled policies that did not comply with the healthcare reform law, some insurers have chosen to move forward with their cancellations.

Blue Cross Blue Shield of Michigan, for example, has refused to recall its cancellations, explaining Obama's one-year extension merely "complicated an already confusing time of change," CEO Daniel Loepp wrote in an opinion piece for the Detroit Free Press.

"Blue Cross worked for nearly three years to reconstruct our entire line of individual health plans to meet the government's benefit requirements," Loepp said, adding that the company's responsibility is to "follow the law and help our customers and members adjust to the massive changes the law demands we all make."

The Michigan insurer isn't the only company to continue with plan cancellations. Blue Cross Blue Shield of Alabama also said it wouldn't reinstate the plans that no longer comply with the reform law, explaining that backtracking on the cancellations would raise costs and increase risks, reported the Montgomery Advertiser.

"The temporary reinstatement of policies that are non-ACA compliant would create dual classes of policyholders and destabilize the state's insurance market and the risk pools associated with these health plans," the company said. "The ultimate impact would be higher healthcare costs for all of our customers, now and in the near future."

Meanwhile, insurers that are switching gears on their previously canceled plans face time-sensitive hurdles. "My fear from the day the President's message was out there was the logistical challenge this would create," Nick Moriello, CEO of Delaware-based Health Insurance Associates, told the News Journal.

That's because consumers who received a cancellation letter won't get automatically enrolled in a new plan next year. Rather, insurers have to reach out to the affected consumers and tell them they must sign up again, even if it's for the same coverage. "We don't have a lot of time to reach these people," Moriello said. "If you do nothing, your plan ends."

Additionally, insurers can increase rates for the newly reinstated policies with state approval, which they must obtain before sending out letters to consumers who were going to lose their plans.

For instance, Blue Cross and Blue Shield of North Carolina asked regulators to approve 16 percent to 23 percent rate hikes for its extended individual plans, FierceHealthPayer previously reported.

To learn more:
- read the Detroit Free Press article
- see the Montgomery Advertiser article
- check out the News Journal article