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Administration offers 2-year ObamaCare extension for canceled health plans

 

The Obama administration announced Wednesday that it will let people keep health insurance plans that would otherwise be out of compliance with ObamaCare for another two years, in a delay Republicans portrayed as an election-year ploy. 

The administration had already given people a one-year reprieve after millions had their health plans canceled last year, despite President Obama's promises that people could keep their plans if they wanted. The so-called "fix" was meant to ease the transition as well as the political headache for Democrats -- but the "fix," and the latest extension, will have limited impact, since it is up to individual insurance companies and state commissioners whether to re-offer canceled policies. 

Republicans blasted the latest announcement as another sign the health law is faltering and Democrats want political cover. A spokesman for House Speaker John Boehner said the move "reeks of politics." 

Senate Republican Leader Mitch McConnell called it a "desperate move to protect vulnerable Democrats in national elections later this year."

"By announcing a new delay in requiring that policies meet minimum coverage standards, the administration avoids a new round of health policy cancellations set to hit shortly before the November elections," he said in a statement. 

But the Department of Health and Human Services argued that the administration is simply trying to provide "flexibility" while the entire law is being implemented. 

"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," HHS Secretary Kathleen Sebelius said in a statmeent. "This comprehensive guidance will help ensure that consumers, employers and insurers have the information they need to plan for next year and make it easier for families to make decisions to access quality, affordable coverage." 

The extension would be valid for policies issued up to Oct. 1, 2016. 

The cancellation of at least 4.7 million individual policies was one of the most politically damaging issues in the transition to a new insurance system under President Obama's health care law. A wave of cancellations hit last fall, around the time that the new HealthCare.gov website was overwhelmed with technical problems that kept many consumers for signing up for coverage. 

It's not clear how many people would actually be affected by the latest change. About half the states have allowed insurance companies to extend canceled policies for a year under the original White House transition plan. The policies usually provided less financial protection and narrower benefits than the coverage required under the law. Nonetheless, the skimpier insurance was acceptable to many consumers because it generally cost less. 

"It's not likely to affect a large number of people but it certainly avoids difficult anecdotes about people having their policies canceled," said Larry Levitt of the nonpartisan Kaiser Family Foundation, an expert on insurance markets. "I think it's a small and dwindling number of people who are affected." 

It's also not known if policyholders will find any financial relief if they are allowed to stay with their extended policies. Insurers in several states where extensions were allowed for 2014 have said they planned to hike the cost of those plans. 

The insurance cancellations undercut the president's well-known promise that if people liked their plan they would be able to keep it under his health care law. 

The law did include a complicated scheme called "grandfathering" to try to deliver on Obama's pledge. It was intended to shield policies in force at the time of the law's 2010 enactment from many new requirements, provided the policies themselves changed little. But insurers considered it impractical. And many of the canceled individual policies would not have been eligible for relief anyway, since they were purchased after the law's passage. 

At first the White House went into damage-control mode, arguing that many of the canceled plans were "junk" insurance and consumers would be better off with the broader coverage available through the health care law's new insurance markets. 

But soon Obama was forced to reverse course, urging insurers and state regulators to allow policyholders to keep their existing plans for an additional year. 

Meanwhile, the Republican-led House also voted Wednesday for a one-year delay of the penalty that people would have to pay if they fail to sign up for health insurance. 

It was the 50th time that Republicans have forced a vote to repeal, gut or change the law championed by Obama. Wednesday's vote was 250-160, and it came despite a veto threat. 

The Associated Press contributed to this report.