Seeking to defuse a growing political furor as millions of Americans receive cancelation notices from health insurers, the Obama administration will not require insurance companies to upgrade existing individual plans to meet the requirements of the federal healthcare law for 2014.
The announcement comes a day after the administration reported that just 106,000 Americans enrolled in private plans through the law’s health insurance exchanges through Nov. 2. A number of Democrats have signaled they would support legislation to address the cancelations and the troubled rollout of the exchanges.
“This fix won’t solve every problem for every person, but it’s going to help a lot of people,” President Barack Obama said in announcing the change during a White House briefing Thursday.
But the change, which administration officials said can be done without legislation, could create new problems for insurance companies by upending assumptions about who will purchase plans through the exchanges, according to the industry’s trade group, America’s Health Insurance Plans.
The change is, in essence, an extension of the grandfather clause that was part of the Patient Protection and Affordable Care Act. Under that provision, individuals can keep plans they had at the time the law was enacted in 2010 (unless the insurer had made significant changes to the plan). The administration now says the exemption will allow consumers to keep any plan they’re currently enrolled in—provided their insurance company continues to offer it.
“We put a grandfather clause into the law, but it was insufficient,” Obama said. “That’s something I deeply regret because it’s scary getting a cancelation notice.”
Insurance companies will have the discretion to decide if they want to continue offering the non-complying plans for 2014. They’ll also need to get permission from state insurance commissioners. Given that there are fewer than six weeks left until those plans would take effect, this could prove a formidable logistical hurdle to overcome.
Insurers that choose to take advantage of the change also will have to follow two rules. They’ll have to notify consumers what benefits their plans exclude that would otherwise be required under the Affordable Care Act. In addition, they must tell consumers that they have other options available to them through the exchanges.
“Changing the rules after health plans have already met the requirements of the law could destabilize the market and result in higher premiums for consumers,” AHIP President and CEO Karen Ignagni said in statement reacting to the policy. “Premiums have already been set for next year based on an assumption of when consumers will be transitioning to the new marketplace. If now fewer younger and healthier people choose to purchase coverage in the exchange, premiums will increase and there will be fewer choices for consumers.”
The change is unlikely to placate Republicans who have repeatedly sought to repeal or cripple the controversial healthcare legislation. But Obama took action after a growing chorus of Democrats, including former President Bill Clinton, called for allowing current individual policies to be renewed.
The House is expected to vote Friday on a bill, sponsored by Rep. Fred Upton (R-Mich.) that would allow insurance companies to continue selling all policies currently on the market in 2014 regardless of their adherence to ACA requirements. It would also stipulate that any policy sold by insurers satisfies the individual mandate.
CO-OPs poised to expand to three more states
Consumer Operated and Oriented Plans were originally expected to be established in all 50 states under the Affordable Care Act. But after funding was slashed by $1.4 billion for CO-OPs as part of the fiscal cliff deal at the end of last year, many pending applications were dropped.
That left 23 such not-for-profit plans operating nationwide. Currently, only one CO-OP, CoOportunity Health, operates in more than one state (Iowa and Nebraska). CO-OPs are nonprofit health plans that are supposed to be guided by the concerns and needs of consumers rather than profits.
But that could change soon. Three other plans—Kentucky Health Cooperative, Montana Health CO-OP and Minuteman Health (Massachusetts)—have submitted plans to the CMS to expand operations into a neighboring state. If approved, that would mean consumers in West Virginia, New Hampshire and Idaho would be able to purchase CO-OP plans.
Partnership seeks to expand exchange enrollment in Vermont
Vermont Gov. Peter Shumlin and the Vermont Association of Hospitals and Health Systems announced a partnershipTuesday to encourage greater participation the state’s health insurance exchange. According to figures released by the federal government this week, just 1,325 individuals had chosen an insurance plan through Vermont Health Connect as of Nov. 2. Under the partnership, hospitals across the state will help train outreach workers, provide onsite enrollment and distribute information about the online marketplace.