(The Tennessean) The state's largest health insurer, BlueCross BlueShield of Tennessee, announced Friday afternoon that it plans to extend coverage for plans that had been deemed invalid under federal health reform.

President Obama, facing criticism even from fellow Democrats over problems with the health care law, said Thursday that companies can continue providing coverage for a year under policies that do not comply with new requirements. However, the option would only apply to existing customers of those plans, and would not be extended to new customers.

That left insurance companies and individual states to determine how to respond to the President's decision.

Earlier this month, BlueCross BlueShield had said it was planning to notify 66,000 policyholders that their current coverage was being canceled on the policy's anniversary date, because it did not meet new federal guidelines under the Affordable Care Act.

On Friday afternoon, the company had this response:

"At BlueCross, we've always believed people should be able to choose the plan they think best meets their needs, so we support this effort to let our individual members and small business customers keep their existing coverage," the statement read. "To make this change as quickly as possible, we'll need to work closely with our state regulators to update our policies and review rates to keep these plans available to existing members and small groups."

A timeline was not available for when details might be communicated to policyholders.

Awaiting final state decision

Earlier on Friday, Tennessee's insurance commissioner said insurers will likely be allowed to continue to offer plans that don't comply with changes mandated by health care reform in 2014, but that the state is reviewing what needs to happen to make that change.

Before making a final determination, Commissioner Julie Mix McPeak said the state is awaiting additional guidance from the U.S. Department of Health and Human Services to ensure state officials have all the information needed to implement the change.

A final decision by the state is expected early next week.

McPeak added that many insurers themselves may decide on their own not to continue to offer the canceled policies. Resurrecting them might be difficult technologically, and doing so may not be economically viable.

"We need to check with stakeholders — the insurance companies — to see if it's even possible for them to retool their systems," McPeak said. "But I am excited that Tennesseans may have another choice in the marketplace."

House passes alterate plan

Meanwhile on Friday afternoon, the U.S. House approved legislation to let insurance companies sell individual coverage to all comers, even if it falls short of standards in "Obamacare." That differs from the President's proposal, which would only offer the extension to existing policyholders.

Brushing aside a White House veto threat, the Republican-controlled House voted by a healthy bipartisan majority Friday to weaken a core component of "Obamacare" and permit the sale of individual health coverage that falls short of requirements in the law.

In all, 39 Democrats broke ranks and supported the legislation, a total that underscored the growing importance of the issue in the weeks since millions of cancellation notices went out to consumers covered by plans deemed inadequate under government rules.

The final vote was 261-157 as lawmakers clashed over an issue likely to be at the heart of next year's midterm elections. The measure faces an uncertain fate in the Senate, where Democrats seeking re-election in 2014 are leading a move for generally similar legislation.

The vote came as Obama arranged a meeting at the White House with insurance company CEOs, and as the industry and state insurance commissioners began adjusting to an abrupt change in policy he announced on Thursday.

The cancellation issue is only part of the woes confronting the president and his allies as they struggle to sustain the health care law.

Obama has repeatedly apologized for a dismal launch , which consumers in 36 states were supposed to use beginning on Oct. 1 to sign up for new coverage. The website is so riddled with problems that the administration disclosed earlier this week that fewer than 27,000 signups have been completed — a number that Republicans noted is dwarfed by the flood of cancellations issued due to the law.

In addition, there already are signs of resistance among state insurance commissioners, who would have to agree to allow Obama's proposed change to take effect. At the same time, industry officials and commissioners alike warn that premium prices could rise beginning with 2015 coverage plans if the changes go into effect.

Tennessean reporter Chas Sisk and the Associated Press contributed to this report.

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