Legislation

Obamacare's Latest Shift Extends Old Plans to Late 2016


White House officials announced what they called adjustments meant to “provide a smooth transition for consumers and insurers” as the Affordable Care Act takes effect. The changes are also meant to defang some of the criticisms of the health law.

First, those who remain in old policies that don’t meet Obamacare’s standards will be able to renew them as late as Oct. 1, 2016, if their state insurance commissioners allow it. That group was given a one-year reprieve after cancellation notices last fall sparked a public-relations nightmare for the administration.

About half a million Americans remain in those policies, according to Rand Corp. estimates cited by the White House. They would have gotten cancellations this fall, potentially setting off more recriminations weeks before the midterm elections. Now the administration is hoping most will trickle into more comprehensive plans voluntarily by 2016, which seems likely given how much turnover there is in the individual market.

“By the time it gets to 2016, I don’t think anybody expects there’s going to be a wave of cancellation notices,” said an administration official who insisted on anonymity. The changes also let small businesses in noncompliant plans renew as late as October 2016 and leave the door open to further extensions. Bottom line: People in old plans determined to stay in them won’t get breakup letters from insurance companies until the final months of Obama’s term, or possibly later.

Officials said the changes came in response to concerns of consumers, insurers, employers, and others, and they denied political motives. But one point they stressed took aim at another common criticism of Obamacare. The risk corridor program, a mechanism meant to even out the risk pool that Senator Marco Rubio (R-Fla.) has repeatedly mischaracterized as a bailout for insurers, will be budget neutral.

Risk corridors collect money from insurers that have lower-than-expected claims and gives money to those with higher-than-expected claims. That may actually make the government money, according to the Congressional Budget Office’s most recent estimate. By declaring preemptively that risk corridors won’t cost the government money, the White House is attempting to defang Rubio’s talking point.

The changes might give more fodder to opponents who say the White House is changing rules on the fly. But one official briefing reporters suggested that the changes are intended to provide much-needed certainty: ”Unlike last year, we’re putting out the policies early, they’re clear, people can rely on them. I think we have turned the corner on that.”

John_tozzi
Tozzi is a reporter for Bloomberg Businessweek in New York.

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