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.