Expected Extension for Insurance Policies Not Meeting Law

According to an article in the Wall Street Journal (WSJ), the Obama administration plans to make an announcement as early as next week to continue to let insurers sell policies that don’t comply with the new federal health law for at least 12 more months. This would be the second such delay, and some believe the effort is being made to avert another wave of policy cancelations and negative press for the administration.

The original delay came on the heels of the rocky rollout the health insurance exchange experienced last fall. In addition to website woes preventing enrollments, millions of insured individuals received cancelation notices from their existing health plans because the plans did not meet the requirements specified under the new law. Insurers experienced high complaints and people claiming that the President said, “If you like your plan, you can keep it” under the new law.  Pressure was put on insurers by the administration to repeal the cancelations, and offered insurers a reprieve to grandfather the policies that were canceled, allowing them to remain in effect despite their lack of adherence to provisions set by the new health law.

The length of the extension of this reprieve is still unknown, but it is speculated that it could last an additional year, or longer. According to the article, health officials wouldn’t confirm there would be another extension, but did make a statement on the matter.

“The administration has committed to doing all we can to smooth the transition for hardworking Americans. We’ve taken steps already and are continuing to look at options,” said Health and Human Services Department spokeswoman, Joanne Peters. She said the administration would provide final guidance on the matter soon.

The plans in question, originally considered “junk” insurance by supporters of the new health law, varied in terms of coverage; some covered only a relatively small proportion of costs, some did not cover hospital stays, maternity care or prescription drugs. Many of these policies were held by younger, relatively healthy individuals; the very profile that the administration predicted would be reflected in the new patients enrolling in the exchange.  This would leave a patient population with more complex health issues to be covered by the exchanges, which would drive up rates.

Extending the reprieve is merely an announcement that will be made by the administration. State insurance commissioners would likely have to agree again to allow the policies to be upheld, and the companies themselves would have to be willing to continue offering them.