Mike Kreidler, Washington state’s insurance commissioner, is a good Democrat. He’s supported President Obama and the president’s signature federal health-care law, the Affordable Care Act, every step of the way.
But the two Democrats parted company Thursday.
The day began with a surprise announcement by Obama, under increasing political pressure from both Republicans and Democrats, that he was changing the law’s rules to allow insurers to keep discontinued insurance plans.
As local insurers scrambled to react, Kreidler whipsawed them once again with a counter-announcement that Washington — this Washington, the one where the law’s rollout was going quite smoothly, thank you — would not go along.
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“In the interest of keeping the consumer protections we have enacted and ensuring that we keep health insurance costs down for all consumers, we are staying the course,” Kreidler said. “We will not be allowing insurance companies to extend their policies.”
Obama’s proposal, he said, is not a good deal for the state of Washington.
His aim, Kreidler elaborated in an interview later in the day, was to come out “early and strong and make it real clear” what Washington would do, to calm confusion and even panic on the part of insurers or residents.
Officials of the Centers for Medicare and Medicaid Services, the agency that oversees the ACA, could not be reached for comment.
The furor, fueled by political opposition, began with Obama‘s promise, first made years ago, that people who liked their insurance plans could keep them.
Most people in Washington and other states are covered by group plans that, for the most part, won’t change much because they meet the requirements of the federal law, which seeks to guarantee certain benefits in all private plans. But a minority — about 4 percent of those with insurance in Washington — hold individual policies.
Most of those 290,000 people have received cancellation notices because their plans don’t cover certain services such as prescription drugs or maternity care, have high limits on out-of-pocket expenses or in other ways don’t meet the standards of the new law.
About half those people, Kreidler’s office estimates, will qualify for subsidies to help pay for premiums if they buy a plan through the state exchange, Washington Healthplanfinder. But those who simply face larger premiums — albeit for more comprehensive coverage — have been vocal, here and elsewhere.
Kreidler said he and commissioners from other states have been watching warily as the political pressure on Obama has mounted, and proposals began hatching in Congress to allow noncompliant plans to continue.
“I said, I’m sure reason will take hold and we won’t see this happen,” he said.
The president’s announcement, Kreidler said, came as a complete surprise. “My jaw dropped,” he said. “Really, I had no clue.”
In an early-morning conference call before Obama’s announcement, Kreidler said, commissioners of both red and blue states agreed that the practical difficulties of implementing such a change would be daunting, if not impossible.
“That is the real challenge — you just couldn’t implement these changes, whether you support the ACA or not, so late in the game,” he said.
Even so, commissioners in some other states, including California and Florida, will keep the discontinued plans.
Washington’s individual market has seen major upheaval before. In 1999, shortsighted regulations caused insurers to experience serious losses, and they pulled out of the market for nearly a year.
Following Obama’s new rules, Kreidler said, “would be very disruptive to our insurance market,” and could even threaten companies’ solvency, since plans are priced based on assumptions about who will sign up.
Allowing insurers to keep their old plans, which under old rules were free to reject anyone with serious health conditions, could skew the market such that new plans would be less likely to enroll healthy people, he said, causing premiums to go up drastically.
“Insurance only works if you have a robust pool of good and bad risk,” he said.
Kreidler, who served 16 years in the Legislature and one term in Congress, is an elected insurance commissioner, unlike most of his colleagues. So he really just said no to the Democrat in chief?
“I wouldn’t say I’m opposing the president,” said Kreidler. “But his solution here is one that is seriously problematic.”
What got Obama into hot water was a simple sentence, first uttered years ago and again recently: “If you like your plan, you can keep it.”
In the past few days, with pressure on Capitol Hill and local officials intensifying, Republicans have promised legislation that would not only allow people to keep their plans, but allow new people to buy them. Democrats, too, feeling political heat, have urged a fix.
Thursday morning, saying he had fumbled the ball, Obama capitulated. He said he would allow states to keep the old plans, and urged insurance commissioners around the country to work to make that happen.
Nationally, insurers had already signaled that such a change would be difficult and possibly destabilize the market.
“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,” said Karen Ignani, president of America’s Health Insurance Plans, a trade group. “Premiums have already been set for next year based on an assumption of when consumers will be transitioning to the new marketplace.”
If the changes caused fewer younger and healthier people to buy insurance in exchanges, she said, premiums would increase and choices narrow.
After Obama’s announcement, the National Association of Insurance Commissioners (NAIC) reacted, noting the “anxiety of the residents of our states” whose plans had been canceled.
NAIC President Jim Donelon, a Republican and Louisiana’s insurance commissioner, said that anxiety has been heightened by troubles with the federal exchange. But Obama’s last-minute change in the rules could make things worse, said Donelon, who noted that the NAIC from the beginning has opposed having two sets of rules.
“This decision continues different rules for different policies and threatens to undermine the new market, and may lead to higher premiums and market disruptions in 2014 and beyond.”
For the most part, insurers had a measured response to Kreidler’s stand.
Group Health Cooperative said insurers must follow Kreidler’s lead. “Based on our understanding of the Commissioner’s direction, there will be no changes allowed to previously discontinued Group Health Individual plans,” the insurer said.
Premera Blue Cross said: “The … statement clearly states how Washington state will respond and we will remain focused on implementing federal healthcare reform as smoothly as possible for our customers.”
Rachelle Cunningham, spokeswoman for Regence BlueShield, said the company was still assessing Kreidler’s announcement.
Dr. Bob Crittenden, Gov. Jay Inslee’s senior health-policy adviser, said: “The uncertainty that’s come from this whole effort has come from the slowness of the federal exchange.
“ The key problem we have with our health reform is not us — the biggest problem is the federal exchange and people losing confidence in that.”
In a statement, Inslee urged people to explore their options on Washington Healthplanfinder.
“We also want to make sure that the people of our state have meaningful health insurance that will cover them when they get sick or end up in the hospital or find they need ongoing prescription drugs, and we know the plans we have in Washington will do that,” Inslee said.
Washington’s exchange board, which earlier challenged Kreidler’s decisions to reject some insurers’ plans from the exchange, doesn’t have jurisdiction in this case, because the plans in question would not be inside the exchange, said Washington Health Benefit spokesman Michael Marchand.
Freelance writer Amy Snow Landa contributed to this report. Carol M. Ostrom: firstname.lastname@example.org or 206-464-2249. On Twitter @costrom