In a bid to quell a growing political crisis, the Obama administration announced Thursday that it will give health insurers new flexibility to renew existing individual health insurance policies that do not comply with the Affordable Care Act.
The announced changes to Obamacare were a capitulation to the growing furor created by a combination of policyholders receiving cancellation notices from insurers and being unable to access the HealthCare.gov marketplace to buy new policies.
Forcing President Obama’s hand was the prospect of a vote in the House Friday on a Republican plan that would have allowed insurers to continue to sell non-compliant insurance plans into 2014. Many House Democrats were warning they would feel obligated to vote for the GOP plan. Senate Democrats were crafting similar plans to stem the outcry over policy cancellations.
The new guidance would allow insurance companies to “offer the option” of renewing non-Obamacare compliant plans to their existing customers, according to senior White House officials. The policies could be renewed for an additional year through Sept. 2014. According to the White House, non-compliant plans could currently only be renewed before Dec. 31, 2013.
The administration will be “suspending enforcement of market provisions” for those existing plans, the officials said. Several million individual health insurance policy holders were expected to have their existing plans canceled because they didn’t meet the minimum coverage requirements of Obamacare.
“The bottom line, insurers can extend current plans that would otherwise be canceled into 2014 and Americans whose plans had been canceled can choose to reenroll in the same kind of plan,” Obama said in a statement announcing the change.
The administration’s guidance does not allow insurers to sell non-compliant plans to new customers. In addition, insurers must provide two pieces of information to their customers: what benefits these non-compliant plans do not offer and what options the health reform law, such as the insurance marketplaces and financial assistance, makes available to them.
Unlike a proposal from some Senate Democrats, the White House’s plan would not require insurers to continue offering non-compliant coverage. The officials said it would be at the “discretion of insurers.” As for people whose plans have already been canceled, they said insurers “would have the ability to reach back out to these individuals.”
The officials said that the U.S. Department of Health and Human Services would send a letter to state insurance commissioners, explaining the administration’s decision and encouraging them to follow its lead.
The fix’s practical impact is uncertain because it requires the cooperation of insurance companies and state authorities.
Asked by TPM about the legal basis for the fix, the officials said that the administration was exercising “its enforcement discretion to allow for this transition.”
The health insurance industry trade group, America’s Health Insurance Plans, did not immediately respond to a request for comment on the new administration guidance.