Another Obamacare Delay

If you like your plan, you can keep it — until 2016.

WASHINGTON, DC - JUNE 20: Health and Human Services Secretary Kathleen Sebelius gives brief remarks at the beginning of a news conference about Medicare at HHS June 20, 2011 in Washington, DC. Sebelius announced a new report showing that more than 5 million Americans with Medicare took advantage of one or more recommended free preventive medical benefits made available by the Affordable Care Act. Preventive care services include 'wellness' visits, bone mass measurements and cardiovascular, colorectal cancer and diabetes screenings. 
National Journal
March 5, 2014, 11:15 a.m.

The Obama ad­min­is­tra­tion said Wed­nes­day that in­surers can wait un­til 2016 be­fore can­celing plans that don’t com­ply with Obama­care.

The ad­min­is­tra­tion re­leased a host of fi­nal reg­u­la­tions that, among oth­er things, ease re­port­ing re­quire­ments for busi­nesses and al­low in­surers to keep selling in­di­vidu­al policies that don’t meet the law’s re­quire­ments. Those plans, which the White House first un­canceled in Novem­ber, can now last un­til 2016 or, in some cases, 2017.

Amid an up­roar from con­gres­sion­al Demo­crats, Pres­id­ent Obama first an­nounced in Novem­ber that he would let states and in­surers de­cide wheth­er they wanted to un­cancel plans that don’t cov­er everything the Af­ford­able Care Act re­quires. But that one-year trans­ition set up an­oth­er round of can­cel­la­tion no­tices for this Oc­to­ber — just be­fore the midterm elec­tions.

Un­der the ad­di­tion­al ex­ten­sion an­nounced Wed­nes­day, those can­cel­la­tion no­tices will come in Oc­to­ber 2016, al­though plans that of­fer early re­new­als could be ex­ten­ded in­to 2017. The ad­min­is­tra­tion doesn’t ex­pect many people to be af­fected at that point.

Ad­min­is­tra­tion of­fii­als denied any polit­ic­al mo­tiv­a­tion for the latest delay, though press ma­ter­i­als about the changes spe­cific­ally name-checked Demo­crat­ic sen­at­ors who are up for reelec­tion this year and have pushed for Obama­care changes — in­clud­ing Mary Landrieu, Jeanne Shaheen, Mark Ud­all, and Mark Warner.

Seni­or ad­min­is­tra­tion of­fi­cials es­tim­ate that about 1.5 mil­lion people are cur­rently covered by plans that would have oth­er­wise been can­celed. That num­ber will likely shrink even more by the time the latest ex­ten­sion ends, as people get em­ploy­er-based in­sur­ance, be­come eli­gible for Medi­care, or simply choose to buy a dif­fer­ent policy, po­ten­tially with help from Obama­care’s new tax sub­sidies. So of­fi­cials don’t ex­pect to see a big, polit­ic­ally dam­aging wave of can­cel­la­tion no­tices in 2016.

Un­canceling pre-Obama­care plans has a small but neg­at­ive im­pact on the law’s in­sur­ance ex­changes, the new mar­ket­places where in­di­vidu­als who buy in­sur­ance on their own can shop for cov­er­age.

The people most likely to hang on to a plan that doesn’t meet all ACA re­quire­ments, rather than switch­ing to an Obama­care-com­pli­ant policy, are typ­ic­ally healthy and reas­on­ably af­flu­ent. Al­low­ing those con­sumers to stay out of the ex­changes car­ries some risk of high­er premi­ums next year if those in­side the new mar­ket­places are sick­er than ex­pec­ted.

The health care law in­cludes a built-in safety mech­an­ism for that scen­ario, but the White House also an­nounced new con­straints on that pro­gram Wed­nes­day.

The ad­min­is­tra­tion said it won’t al­low the gov­ern­ment to lose money on the law’s risk cor­ridors — a pro­gram Re­pub­lic­ans have cri­ti­cized as a “bail­out for in­sur­ance com­pan­ies.”

In the risk-cor­ridors pro­gram, in­surers with a bet­ter-than-ex­pec­ted risk pool pay in­to a fund, and in­surers with a worse-than-ex­pec­ted ex­per­i­ence can draw down from that fund. The­or­et­ic­ally, if every­one’s ex­per­i­ence is worse than ex­pec­ted, the fund wouldn’t have enough money and the gov­ern­ment would pick up the dif­fer­ence. But the ad­min­is­tra­tion said it wouldn’t al­low that to hap­pen — the money that goes out will match the money that comes in, of­fi­cials said.

The new rules also form­al­ize a delay in next year’s open-en­roll­ment win­dow and ex­tend that win­dow by a month. En­roll­ment will be­gin Nov. 15 and run through Feb. 15. The delays push the be­gin­ning of the en­roll­ment win­dow — when people will get a look at their premi­ums — past the Novem­ber midterms, and the ex­ten­ded win­dow gives the ad­min­is­tra­tion more time to try to bring in more people.

The open-en­roll­ment delay also gives in­surers more time to fig­ure out their rates. Without it, they would have had to set their 2015 premi­ums quickly after the end of the cur­rent en­roll­ment win­dow, mean­ing they might not have had a full ac­count­ing of how many young, healthy people signed up at the last minute.

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