Obamacare Policies Change for 2015 to Add Flexibility

Photographer: David Paul Morris/Bloomberg

About 4 million people have enrolled in new health plans offered through insurance exchanges under the Affordable Care Act, while between 500,000 and 1.5 million people remain in plans that don’t comply with the law, according to the Congressional Budget office. Close

About 4 million people have enrolled in new health plans offered through insurance... Read More

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Photographer: David Paul Morris/Bloomberg

About 4 million people have enrolled in new health plans offered through insurance exchanges under the Affordable Care Act, while between 500,000 and 1.5 million people remain in plans that don’t comply with the law, according to the Congressional Budget office.

With midterm congressional elections bearing down, the government changed its regulation of Obamacare to give consumers and states more flexibility to decide on their health plans, insurers more time to sign up customers and taxpayers a chance to avoid more costs.

The changes, announced yesterday by the U.S. Health and Human Services Department, will smooth enactment of the Patient Protection and Affordable Care Act, administration officials said. Republicans accused President Barack Obama of making them to help congressional Democrats survive an unpopular law.

Americans with health coverage that predates Obamacare can stay on their plans for two more years, insurers will have an extra month to enroll customers next winter and states will get more time to decide whether to manage the law themselves, officials said. Also, a program aimed at covering financial losses for insurers will be adjusted to help ensure it doesn’t cost taxpayers, the Obama administration said.

“These policies implement the health-care law in a common-sense way by continuing to smooth the transition for consumers and stakeholders and fixing problems wherever the law provides flexibility,” Kathleen Sebelius, the U.S. health secretary, said in a statement.

Republicans have made clear they will try to make the troubled roll-out of the Affordable Care Act the defining issue of the November congressional elections, focusing on canceled plans, delayed features, the administration’s accommodations for insurers and employers and computer errors that prevented many Americans from signing up at the beginning last October.

‘Vulnerable Democrats’

“Each and every delay of Obamacare is an admission that the Democrats’ signature law is hurting Americans and an obvious attempt to try to save the jobs of vulnerable congressional Democrats come November,” Senator John Thune, a South Dakota Republican, said in a statement.

“If the president were half as concerned about the American people as he is about helping his Democrat colleagues up for re-election, he would scrap this entire law and start over with bipartisan reforms that will actually help decrease health-care costs and expand care,” Thune said.

The Obama administration said it developed the policies “in close consultation with members of Congress” including 13 Democratic lawmakers specifically named in the HHS statement. Among them were four U.S. senators who are running for re-election this year, including Senator Mary Landrieu of Louisiana, a top target for Republicans, and Representative Gary Peters, who is running for an open Senate seat in Michigan.

Enrollment Numbers

About 4 million people have enrolled in new health plans offered through insurance exchanges under the Affordable Care Act, while about 1.5 million people remain in plans that don’t comply with the law, according to the Congressional Budget office. An estimated 2.5 million people received letters as the exchanges opened in October from insurers saying their noncompliant plans would be canceled, triggering a political firestorm for the president, who had repeatedly promised that people with plans they like wouldn’t have to change them because of the health law.

Obama issued a policy last November that gave states the option of allowing insurers to extend the noncompliant plans for a year. Yesterday, his administration said the plans could be renewed for two more years, until Oct. 1, 2016, which in some cases may extend the coverage into 2017.

The government also said it would modify a program intended to limit financial losses for insurers who participate in exchanges to accommodate extensions of the old, noncompliant plans. People with coverage that predates the Affordable Care Act are believed to be healthier and younger in general than people who have signed up for exchange plans.

Loss-Mitigation

In states that have allowed old plans to be renewed, insurers will be able to access loss-mitigation programs more easily than insurers in states where people haven’t been allowed to stay on noncompliant plans. About 28 states have allowed renewals of old plans, according to the Commonwealth Fund, a New York foundation that studies health-care issues.

Insurers and their state regulators said the policy may hurt enrollment in exchanges and confuse consumers.

“There is broad agreement that if more young and healthy individuals choose not to participate in the new marketplaces, it could lead to higher premiums for those consumers that remain in the exchanges,” Karen Ignagni, the CEO of America’s Health Insurance Plans, the industry’s main Washington lobby group, said in an e-mail from a spokesman.

Create Confusion

The policy “has the potential to create confusion surrounding available options for health insurance and uncertainty in the restructure marketplace,” Adam Hamm, a Republican who is North Dakota’s insurance commissioner and chairman of the National Association of Insurance Commissioners, said in a statement.

“Creating two tiers of plans – the compliant and noncompliant –- could result in higher premiums overall and market disruptions in 2015 and beyond,” Hamm said.

Additional policies are aimed at benefiting health insurers, companies that offer health insurance or want to, and state lawmakers who may want to build and run their own health-insurance exchanges.

The enrollment period for Affordable Care Act plans in 2015 was extended a month and will run from Nov. 15 through Feb. 15. The enrollment period for this year, which closes March 31, wasn’t extended.

Simpler Form

The administration created a single, “streamlined” form for employers that provide health insurance to report on the coverage they provide and how many workers receive it. The information is necessary for the government to determine whether employers are liable for penalties for not providing coverage and whether workers are eligible for insurance in exchanges. The form was announced by the Treasury Department.

Small businesses that want to buy coverage for their workers in government-run exchanges will be able to give employees a choice of plans for 2015, instead of choosing one for their entire workforce. That feature was supposed to be available this year and was delayed.

State regulators may be allowed to delay the employee-choice feature if they decide it would be disruptive to their insurance markets, although administration officials said they hadn’t yet made that decision.

State lawmakers who may want to establish and run insurance exchanges will have until June 30 each year to decide, instead of a Jan. 1 deadline. Federal officials said the schedule was changed to better align with state legislative calendars.

To contact the reporter on this story: Alex Wayne in Washington at awayne3@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net

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