Plans Not Complying With Obamacare Extended Through 2018

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By Sara Hansard

Health insurance policies that don’t comply with Obamacare’s requirements can be extended for a year through 2018, the Trump administration said Feb. 23.

The transitional health plans, which don’t have to cover people with pre-existing medical conditions or meet other major Affordable Care Act requirements, were initially extended by President Barack Obama in late 2013 after many plans were going to be discontinued. About 1 million policyholders are estimated to be in the plans, which states can choose to allow health insurers to continue.

Continuing the plans allows people to buy cheaper coverage, but also keeps healthier people out of the ACA’s troubled exchanges, where most plans have been losing money and from which major carriers, such as Humana Inc., have pulled back. Katie Allen, executive director of the Council for Affordable Health Coverage, an organization that represents insurers and other health-care industry stakeholders, told Bloomberg BNA Feb. 23, “No matter who was president, this was likely to happen one way or the other.”

Bringing Plans Into Compliance

“We are committed to smoothly bringing all non-grandfathered coverage in the individual and small group markets into compliance” with the ACA, the Centers for Medicare & Medicaid Services bulletin said.

The transitional policies will be extended to policy years beginning on or before Oct. 1, 2018, provided that they end by Dec. 31, 2018, it said. States can elect to extend the transitional policies for shorter periods, it said.

Grandfathered plans are noncompliant plans that existed when the ACA became law in 2010. The transitional plans extended under the bulletin were purchased after the ACA was enacted and before Oct. 1, 2013, and are often called grandmothered plans.

“In the interest of stability during this time of transition, AHIP supports extending the continued availability of grandmothered plans, for those who are currently covered by them, through the end of 2018,” Kristine Grow, spokeswoman for America’s Health Insurance Plans, told Bloomberg BNA in an e-mail Feb. 23. “Every American deserves affordable coverage and robust choices that provide them with access to quality care.”

Health insurers must notify enrollees that the noncompliant plans may charge more based on pre-existing medical conditions, gender and/or rules limiting how much older people can be charged compared with young people, the bulletin said. The plans may not cover essential health benefits required under the ACA, such as maternity care, prescription drugs or mental health, and they may not limit out-of-pocket spending.

Big Effect Not Likely

ACA supporters said the policy won’t help stabilize the ACA individual and small group markets, but it isn’t likely to have a big effect. The ACA exchanges have been losing money because enrollees have been older and sicker than was originally expected.

“If three years isn’t enough to smoothly transition, how will four years be?” Timothy Jost, a consumer representative to the National Association of Insurance Commissioners and a supporter of the ACA, told Bloomberg BNA Feb. 23.

“The bottom line is that you’re keeping people out of the single risk pool market, which you’re trying to stabilize,” Jost said. “Do you want to stabilize the market or do you want to destroy it?”

Ending the transitional plans after 2017 likely would have had “a modest impact on rates for ACA plans,” Sabrina Corlette, a research professor at Georgetown University’s Center on Health Insurance Reforms, told Bloomberg BNA Feb. 23. Corlette also supports the ACA. Extending the plans “means that the modest reduction won’t take place,” she said.

“It’s not particularly helpful to the stability of the marketplaces, but it is not going to be the thing that topples them over,” she said.

Big Rate Increase in Mississippi Stalled

The move by the Department of Health and Human Services “stops a projected rate increase averaging 65 percent,” Mississippi Insurance Commissioner Mike Chaney said in a press release Feb. 23. “This action by HHS will help bring stability to the health insurance market and keep rates affordable for small business and individuals in Mississippi.” Customers in 35 states may have the transitional plans, the release said.

Sen. Roger Wicker (R-Miss.), Sen. Thad Cochran (R-Miss.) and other members of Congress sent a letter to HHS Secretary Tom Price requesting that HHS extend the transitional policies indefinitely, “which would give the states the opportunity to allow individuals and small groups to maintain their current health plans,” the release said.

To contact the reporter on this story: Sara Hansard in Washington at shansard@bna.com

To contact the editor responsible for this story: Kendra Casey Plank at kcasey@bna.com

For More Information

The Extension of Transitional Policy through Calendar Year 2018 bulletin is at http://src.bna.com/msF.

The healthinsurance.org blog posting is at http://src.bna.com/msG.

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

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