Indiana says insurers can’t reinstate canceled policies

Indiana will not allow health insurers to reinstate customers’ policies that were canceled due to new requirements of Obamacare, the state insurance department announced Wednesday morning, saying that would “create logistical chaos” and “destabilize” Indiana’s individual insurance market.

The announcement, which affects an estimated 108,000 Hoosiers who have had their policies canceled, comes in response to President Obama’s request last week that state insurance commissioners let insurers reinstate policies that they had decided to cancel for 2014.

“President Obama has asked that Indiana compel insurance companies who choose to do business in our state to reinstate carefully phased-out policies at a moment’s notice,” Indiana Insurance Commissioner Stephen Robertson said in a statement. “Such an action would seriously destabilize Indiana’s insurance market and create logistical chaos, fueling even more uncertainty for Hoosiers.”

Indiana is the eighth state that has announced it will not allow insurers to reinstate canceled policies. According to the Atlantic Information Services, another five states have said they have allowed insurers to do so.

However, some Hoosiers still have the option of renewing their canceled policies for 2014, as long as they do so before Dec. 31. The state already has given insurers the go-ahead to do so, if they wish to offer that option to customers. Those customers could extend the terms of their 2013 policies until nearly the end of 2014. Only at the end of the 2014, then, would customers have to buy new policies that adhere to the new Obamacare rules.

The state's ruling announced on Wednesday would apply to customers whose policies had been canceled, and who waited until 2014 to buy coverage for that year.

Obamacare, known as the Affordable Care Act, requires insurers to accept all comers, regardless of their health status, forbids lifetime maximums for medical claims, and requires that health plans cover “essential” benefits and pay for at least 60 percent of all projected medical claims.

The Indiana Department of Insurance estimated that roughly 60 percent of all individual health insurance customers have policies that do not meet Obamacare’s new requirements, which triggers a provision in the Affordable Care Act rules that requires them to be canceled by Jan. 1, 2014.

But on Nov. 14, Obama suspended that requirement, saying neither he nor the law would be the reason for policy cancellations.

“What we’re essentially saying is the Affordable Care Act is not going to be the factor in what happens with folks in the individual market,” Obama said at his Nov. 14 press conference. He added, “I, the president of the United States, and the insurance model of the Affordable Care Act is not going to be getting in the way of you shopping in the individual market that you used to have.”

But because health insurance is regulated by the states, not the federal government, Obama’s plan required the cooperation of both state insurance commissioners and the health insurers themselves. So far, most have made no decision.

One issue is logistics. Robertson noted that his offices conducted months-long discussions with insurance carriers before approving their rates and policy contract language for 2014. Those rates were approved before a July 31 deadline set by the Obama administration.