Obama's policy extension puts plans on the spot

President Obama's proposal to allow individuals with non-grandfathered plans to keep their policies through 2014 has left insurers in highly variable situations. At the very least, a state commissioner would need to allow the plans the option of carrying out the extension in their respective markets, and do it quickly, for the operational fix to be relevant.

Many managed care leaders are concerned about the confusion for members as well as the hurried time frame. For a policy to begin coverage on January 1, the member will need to re-enroll by December 15.

"We are moving quickly to understand the President's proposal and its implications for our members," says Daniel Hilferty, president and CEO of Independence Blue Cross, and MHE editorial advisor, in a statement. "We are also working with the Pennsylvania Insurance Department to determine the most prudent way to ensure that our customers have healthcare coverage and affordable options. We want to make this as easy as possible for our customers."

Independence Blue Cross is not able to comment on the private meeting on Friday between the president and a number of large insurance companies.

The president's proposal creates some risk, most notably the potential for adverse risk selection in the exchange markets. Those with non-grandfathered plans for 2013 are probably younger, healthier populations-exactly the people insurance carriers want to attract. In states with extended plans, the remaining exchange populations will likely include the formerly uninsured-possibly an older, sicker group.

Actuaries are scrambling now to figure out the new prices of the non-grandfathered plans under an extension. It's almost a given that the 2014 premiums will be higher than 2013.

If health insurers do get the go-ahead from their respective state commissioners, they will also have to move quickly to notify their members of the option to re-enroll. According to federal guidance, insurers must tell members:

-How their current non-grandfathered plan falls short of ACA standards;

-How they can access the marketplace exchanges;

-The fact that they might be eligible for subsidies in the exchanges; and

-That they also might find an ACA-compliant plan outside of the exchanges.

The Kaiser Family Foundation has indicated as many as 50% of those with individual plans are eligible for subsidies in the exchanges.

High premiums for 2015 and beyond could be the most obvious long-term issue, possibly driving plans out of the markets in a mass exodus.

The Commonwealth Fund anticipates as many as 3 million to 4 million individuals might choose to renew their non-grandfathered plans but it depends on state commissioners and health insurers both moving forward on the extensions. They are encouraged to offer extensions by the  White House but it is not a mandate.

healthcare.gov and many of the state-operated exchange platforms must improve their technology performance and user experience significantly if there is any hope of driving individuals and small businesses to sign up for plans.