The Obama administration's decision Wednesday to allow people to keep insurance plans that don't comply with the Patient Protection and Affordable Care Act
for an additional two years was quickly criticized by ACA opponents as a midterm-election-year ploy, even as administration officials were denying politics was involved in the decision.
Regardless of the motivation, the change likely will irk insurers
hoping to sign up as broad a spectrum of the public, especially healthy people, as possible in compliant plans offered on exchanges.
“Plans need to know the parameters in which they have to work so they can make the best decisions for the consumers they serve moving forward,” said Jeff Drozda, CEO of the Louisiana Association of Health Plans, which counts both large payers and small regional plans as its members.
Last month, during an earnings call, Humana
expressed disappointment in the number of enrollees it had from the exchanges at that point and blamed the company's woes on the transitional policy, for example.
“We believe this change will result in an overall deterioration of the risk pool and ACA-compliant plans as more previously underwritten members have stayed with their current carriers rather than enter the exchanges,” Humana President and CEO Bruce Broussard
Administration officials Wednesday, confirming media reports that started surfacing early this week, announced insurers could renew noncompliant policies that begin on or before Oct. 1, 2016. That means some customers can stay on these plans into 2017.
This is an extension of a decision made in November when the president gave states the ability to allow noncompliant policies to continue. Originally these plans were only meant to last until October 2014, right before midterm elections in November.
High-ranking administration officials who spoke on background to reporters Wednesday insisted multiple times that the potential backlash of thousands of people receiving policy cancellation notices right before heading to the polls played no part to the extension.
Instead, they said, the extension gives 500,000 consumers in these plans time to make the choice of staying in their current policy a little longer or joining a new marketplace plan. They added that it's likely all of these consumers will make the switch to a compliant plan by 2016, but if they do not, HHS now has the discretion to extend the transitional policy for a third year.
The more than 20 states that chose not to allow consumers to keep noncompliant plans will now have another opportunity to do so as long as the plans are still active, they said. People now in compliant plans can't go back to ones that don't meet the standards.
Beyond any administration concern about midterm elections, concern about the tax penalty these individuals were facing likely also played a role in the decision, said one ACA observer. Before the new extension, if a person didn't have a compliant ACA plan by the end of the enrollment period in 2015, he or she would have been hit with a levy worth up to 2% of income when filing taxes in 2016.
“Without the extension, a lot of people may get hit with the tax penalty and that could lead to a political fallout,” said Ning Liang, co-founder of a new website that helps people compare and sign up
for ACA-compliant plans on HealthCare.gov.
The change is likely to provide scant political cover to Democratic congressional candidates facing broad attacks over the administration's healthcare policy, some said.
“I think, at this point, consumers have wised up and are asking some demanding questions,” said Peter Pitts, president of the Center for Medicine in the Public Interest. “This extension further demonstrates the disingenuous nature in how certain political candidates are presenting the Affordable Care Act to their constituents”
“The problem is you can't unshoot the gun,” said David Hogberg, a healthcare policy analyst at the National Center for Public Policy Research. “People are going to remember that the administration violated a very serious promise that people could keep their plans and I suspect Republicans will use that to no end this November.”
The extension gives Republicans one more change to the Affordable Care Act to criticize. Grace-Marie Turner, president of the Galen Institute, a conservative research organization, noted that her organization has tracked at least 19 changes made, most by executive order, to the ACA since it became law. Follow Virgil Dickson on Twitter: @MHvdickson