State allows insurers to renew canceled health policies
LANSING — Michigan will heed President Barack Obama's call to allow state health insurers to extend policies that fail to meet requirements of the federal health care overhaul.
Department of Insurance and Financial Services Director Ann Flood said Friday the one-year extensions will offer more opportunities to consumers who buy their own insurance and a reprieve from policy cancellations planned on Jan. 1.
The decision comes after the faulty launch of a federal health care website in October — on which 1,300 Michigan residents picked a plan during the first month of sign-ups — and amid the potential cancellation of 225,000 policies in Michigan that fall short of the law's minimum coverage standards.
Flood said her department weighed "possible disruptions to the market against benefits to consumers" and determined it was preferable to give consumers "a choice" and the federal government "time to fix problems with the site."
"It's about making sure that come Jan. 1, 2014, our Michiganders have coverage for health care," she said.
Nationally, more than 4 million people who buy their own insurance have gotten cancellation notices, because their plans don't meet requirements of Obama's health law.
The cancellations have angered some policy holders, many of whom will see their monthly premiums and deductibles rise sharply under new plans. They also fly in the face of promises Obama made repeatedly when he said people who liked their current health insurance policies could keep them under his health insurance reforms.
Last week, Obama announced proposals that would temporarily allow those people to keep their insurance, but it ultimately will be up to each state to decide whether that can happen. The response to Obama's plea has been mixed, with many states running their own health care exchanges saying they will not follow his advice and will let the older policies expire.
Blue Cross Blue Shield of Michigan, the state's largest insurer, said Friday it's continuing to let older policies lapse and move people into new ones that comply with the new law. But the company is keeping one individual health plan, known as Keep Fit, available as a fallback option through next year. Of about 175,000 members in the company's individual market, about 47,000 have that plan.
Blue Cross Chief Executive Daniel Loepp said the recommendation to keep other plans open for another year "adds a great deal of complexity" after spending two-and-a-half years aligning its plans with the new law's requirements.
"This was not an easy decision for us, but it's a responsible decision," Loepp said. "We understand that many people are upset that federal law set forth the need to transition out of their old plans. But it's responsible to our members to promote insurance affordability. Avoiding 30 percent rate hikes and helping people find the subsidies they are eligible for is our effort to help our members during this time of tremendous change."