The Obama administration will let health insurers renew existing health plans for another two years, administration officials said Wednesday, giving more details about the policy change reported a day earlier.
By extending the policy that long -- potentially letting consumers keep plans that aren't Obamacare-compliant until the fall of 2017 -- the administration says it should avoid another wave of dropped insurance policies.
"By the time it gets to 2016, I don't think under any circumstances there's going to be a wave of cancellation notices," an administration official told reporters on a conference call Wednesday.
"As we looked at the experience we had this year with the transitional policies, we determined the number of people in transitional policies is falling quite rapidly" but there are still people on those plans, an official said. "We wanted to give them the option of continuing with the coverage they have while at the same time requiring the issuers of these non compliant plans notify enrollees of their marketplace options."
The official added, "We're extending this to give people more opportunity to make a judgment about the kind of coverage that works best for them and their families."
President Obama took some serious heat last year when insurers started dropping millions of Americans from health plans that were no longer Obamacare-compliant, seemingly breaking his promise, "If you have insurance that you like, then you will be able to keep that insurance."
Consequently, he enacted an administrative policy change allowing insurers to extend existing plans on the individual and small-group markets for a year. The nonprofit RAND Corporation estimated that 500,000 fewer people would enroll in Obamacare-compliant plans, now that they had the option of keeping their old plans on the individual market. Counting the small-group market, as many as 1.5 million plans could now exist that are not Obamacare-compliant, according to the nonpartisan Congressional Budget Office.
After Mr. Obama enacted the policy change, the concern remained that it simply kicked the can down the road for a year -- that people would find themselves without insurance in the fall of 2014, rather than 2013, just ahead of the midterm elections.
By giving people two more years to adjust to the new marketplace rules and consider their new choices, the administration thinks that problem will dissipate. "We know there's a lot of movement in the market," an official said, noting that the 500,000 people on the individual market represents a relatively small portion of the population to begin with.
The administration also insisted the policy change had nothing to do with politics.
"The motivation here is to implement the law the way it should be implemented," an official said. "Phase-ins are helpful... they let people adapt to new circumstances."
Republicans, however, cast the move as politically-motivated. The Republican National Committee called it "an Obamacare delay for vulnerable Dems."
Rory Cooper, a spokesperson for House Majority Leader Eric Cantor, R-Va., said Wednesday in response to the policy decision, "When the next president unilaterally delays and cancels part or all of ObamaCare, there will be no complaints from Democrats, correct? Clearly, the president admits ObamaCare has failed by trying to hide its full effects from voters until he is safely out of office. They won't be fooled."
The Health and Human Services Department and Treasury Department announced the extension of that policy as part of a package of rules that will affect the insurance marketplace in 2015.
The other regulatory changes include an extension of the 2015 open enrollment period from two to three months. Open enrollment for 2015 starts on Nov. 15.