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Health Insurance Requirements Delayed Two Years by Obama Administration

By Rebecca Adams, CQ Roll Call

March 5, 2014 -- The Obama administration recently announced that consumers may remain for another two years in insurance plans that don't meet the health care law's benefit requirements, yet another in a series of delays or adjustments of large swaths of the president's signature legislative achievement.

That move will give state regulators and insurers the option of renewing plans until policy years that start no later than Oct. 1, 2016—which would be well after this year's mid-term elections and into the heat of the next presidential campaign. The new postponement could push the continuation of that non-compliant coverage into 2017.

Administration officials also told reporters on a conference call that they do not anticipate any other big changes throughout the rest of the open enrollment period. A White House official who was asked whether the March 31 deadline would stick said that "no major changes are anticipated at this point."

The official, speaking on background, said there "could always be small issues" that need tweaking, but that the White House is hoping to provide certainty to insurers and other industry officials.

Insurers, hospital officials and others would welcome predictability in the health care law (PL 111-148, PL 111-152).

In addition to the extension of noncompliant insurance policies, the White House shifted the deadlines for consumers to sign up in order for coverage to take effect on Jan. 1, delayed requirements for employers to cover their workers, have not yet launched the website for small businesses to enroll their workers in new marketplaces, and had to delay the submittals to states of enrollments of people who appear to qualify for Medicaid, among other issues.

Republicans quickly criticized the two-year extension of policies that do not meet the health care law's standards.

"Once again, the Obama Administration has shown it will do whatever it takes to hide the true impact of ObamaCare from the American people—at least until after the next election," said Senate Finance Committee top Republican Orrin G. Hatch of Utah, in a statement. "After so many missed deadlines, delays and unilateral changes, you have to ask what is working with this law?"

The two-year delay may have more of a political impact in its assistance to endangered Democrats rather than a practical one. The Obama administration went out of its way to say that several Democrats facing tough elections contributed thoughts to the policy changes.

They thanked many by name, including Sens. Mark Warner of Virginia, Mary L. Landrieu of Louisiana, Jeanne Shaheen of New Hampshire, and Mark Udall of Colorado.

The White House also lauded Reps. Timothy H. Bishop of New York, Elizabeth Esty of Connecticut, Carol Shea-Porter of New Hampshire, Gary Peters of Michigan, Scott Peters of California, Ann McLane Kuster of New Hampshire, Kyrsten Sinema of Arizona, Ann Kirkpatrick Arizona, and Ron Barber of Arizona.

In the House, Majority Whip Kevin McCarthy of California said the announcement "is so blatantly political it goes beyond the pale." And Energy and Commerce Chairman Fred Upton of Michigan accused the Obama administration of ducking responsibility. "The administration cannot run fast enough away from its broken promises," Upton said.

But House Minority Leader Nancy Pelosi, D-Calif, called the move "a vision of smart, common-sense action from the Obama Administration to make this law work better for consumers and better serve small businesses" in a statement. She also criticized the House passage of legislation (HR 4118) that would delay the law's individual mandate penalties.

The delay came as part of a wide-ranging package of final rules and a bulletin that was recently released by the departments of Treasury and Health and Human Services (HHS). The regulations also finalize increased payments to insurers through the risk corridors and reinsurance programs, which are intended to compensate insurers who offer plans to individuals and small businesses.

Those insurers fear that some healthy people who would have enrolled in new plans that meet the health care law's tougher benefit rules may instead choose to stick with their old, noncompliant policies. The older policies may be cheaper for healthy individuals.

The plan to extend non-compliant policies builds on an offer that President Barack Obama made last November. He said that insurance plans that would otherwise end because they do not meet the standards of the health care law (PL 111-148, PL 111-152) could continue for an additional year, into 2014.

Obama had previously said that people who liked their plans would be able to keep them, so the administration felt political pressure to allow the plans to stay in place.

So far, 27 states plus Puerto Rico and Guam have taken the president up on the offer, according to state officials and the National Association of Insurance Commissioners.

The impact on the number of consumers is difficult to estimate. A White House official said that the number of people affected will dwindle by the time the extension ends. Gary Claxton, a vice president with the nonpartisan Kaiser Family Foundation, agreed that the impact of the policy change will be modest because the number of people affected will decline over time.

Currently, about 500,000 individuals are in those types of policies, according to a RAND Corp. study cited by the administration. The White House also will allow plans for small businesses that do not comply with the health care law to continue. About 1.5 million people are in both types of plans.

State regulators and individual insurers may decide not to allow extensions, or if they do, they may not publicize the decisions. Consumers then might not realize they have the option of sticking with their plans.

"At the end of the day, this is going to be a state judgment as to what's good for marketplaces there," said Chris Jennings, a former White House official who was not involved in the decision making in recent days, in a separate interview. "We still don't know how individual states will react nor do we know even within those states what impact it will have on the marketplaces...There'll be a very differential group of states who'll do different things and have different populations to start with."

Insurers were not happy. Officials with the America's Health Insurance Plans (AHIP) trade association said they are studying the rules to see if the changes to the risk corridors program will make up for any losses insurers may see if healthier people stick with their old, noncompliant plans.

"There is broad agreement that if more young and healthy individuals choose not to participate in the new marketplaces, it could lead higher premiums for those consumers that remain in the exchanges," said AHIP President and CEO Karen Ignagni. "That is why it is crucial that sufficient steps be taken to stabilize the market, and we are currently reviewing the new changes."

The regulations announced last week also finalized a proposal to give states more than an additional six months, until June 15, to decide if they want to run their own marketplaces next year.

Also, the rules made official a change in the date of the next open enrollment to Nov. 15, 2014, through Feb. 15, 2015.

And the rules exempted multi-employer plans, including Taft Hartley union plans, from having to pay a tax in 2015 that goes to help offset health insurers' expenses for treating high-cost medical cases. In another provision, the rules limited out-of-pocket costs for individuals in 2015 to $6,600 and $13,200 for families, up from $6350 for individuals and $12,700 for families this year.

Most of those changes were previously forecast in statements by administration officials and proposed regulations.

The administration also said they plan to allow small business employees a choice of plans in 2015. But they are considering the idea of proposing in a later guidance and rule-making that state insurance departments have the option of delaying that provision, which has already been delayed once.

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