Health insurance issues place regulators in a difficult position

health insurance exchange problems

Health insurance regulations continue to cause problems

Insurance Commissioners throughout the U.S. have been placed in a difficult situation. Earlier this month, President Obama announced that insurance companies could continue to honor substandard health insurance policies rather than cancelling these policies because they do not comply with the standards of the Affordable Care Act. This is meant to create a transition period wherein consumers can have a reprieve from cancellations and insurers can better prepare to comply with federal law. The problem, however, is that many Insurance Commissioners have been tasked with determining whether or not states will have to comply with the new federal policy or not.

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In Montana, Insurance Commissioner Monica Lindeen has been meeting with insurance executives from the state’s largest providers. The Commissioner has been encouraging insurers adhere to their cancellation plans regarding substandard policies, suggesting that revoking the cancellations could have a significant impact on the state’s health insurance market. Lindeed suggests that healthy people in the state would likely remain with the substandard policies while the unhealthy seek out coverage through the state’s exchange. Because unhealthy consumers represent a significant financial risk, health insurance premiums may rise due to the fact that the exchange will be primarily populated by those with serious illnesses.

Other states work to address health insurance cancellations

In other states, Insurance Commissioners have refused to allow insurance companies to revoke cancellations. In Washington, some 290,000 people will have to purchase new health insurance policies, with at least half of these people being eligible for federal subsidies that can offset the cost of health insurancenr68kpthnl6B8D87GB687E9D8AA coverage. In California, Insurance Commissioner Dave Jones has been working with insurers, encouraging them to continue coverage for some 1 million consumers. Thus far, however, a fraction of that total, some 80,000 people, will be able to retain their substandard insurance policies.

Regulatory power differs from state to state

Insurance Commissioner Lindeen notes that the authority of regulators varies from state to state. In Montana, for instance, Lindeen does not have the authority to force insurers to revoke cancellations on health insurance policies. The Commissioner notes that political decisions, like that recently made by President Obama, could have a serious impact on the insurance market if their ramifications are not fully understood.

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