17 Nov 2013

Obamacare Insurance Policies Cancellation Fix: Not Easy to Understand For Ordinary Mortals

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Law Professor Jonathan H. Adler, who posts at Volokh, is just not as intelligent as Barack Obama. Consequently, he cannot understand how the president simply waving his hand at a press conference, and announcing that he does not intend to enforce his own federal law can practically serve as a solution which will preserve insurance policies cancelled as a result of the Obamacare law. You have to be as intelligent as Barack Obama to understand the operation of the dialectic in the interaction between these things.

Yesterday, the President announced a purported fix to the problem that, under the PPACA [aka Obamacare], insurance companies are not allowed to renew policies that fail to comply with PPACA requirements, even if consumers like their existing plans. …

According to the President’s announcement, insurance companies will be allowed to renew policies that were in force as of October 1, 2013 for one additional year, even if they fail to meet relevant PPACA requirements. What is the legal basis for this change? The Administration has not cited any. … According to various press reports, the Administration argues it may do this as a matter of enforcement discretion (much as it did with immigration). In other words, the Administration is not changing the law. It’s just announcing it will not enforce federal law (while simultaneously threatening to veto legislation that would authorize the step the President has decided to take).

Does this make the renewal of non-compliant policies legal? No. The legal requirement remains on the books so the relevant health insurance plans remain illegal under federal law. The President’s decision does not change relevant state laws either. So insurers will still need to obtain approval from state insurance commissioners. This typically requires submitting rates and plan specifications for approval. This can take some time, and is disruptive because most insurance companies have already set their offerings for the next year. It’s no wonder that some insurance commissioners have already indicated they have no plans to approve non-compliant plans.

Yet even if state commissioners approve the plans, they will still be illegal under federal law. … Given this fact, why would any insurance company agree to renew such a plan? It’s nice that regulators may forbear enforcing the relevant regulatory requirements, but this is not the only source of potential legal jeopardy. So, for instance, what happens when there’s a legal dispute under one of these policies? Say, for instance, an insurance company denies payment for something that is not covered under the policy but that would have been covered under the PPACA and the insured sues? Would an insurance company really want to have to defend this decision in court? After all, this would place the insurance company in the position of seeking judicial enforcement of an illegal insurance policy. If there’s an answer to this, I haven’t seen it . … It’s almost as if the Administration has not thought this through.

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