The Obama administration announced Wednesday that it has rewritten an array of far-reaching rules under the Affordable Care Act, the most significant of which will let people keep bare-bones health insurance policies for three more years.
The rule changes will touch essentially every sector affected by the 2010 health-care law. It will buffer more health plans in insurance exchanges from high patient costs, give states more time to decide whether to run their own marketplaces, and spare certain unions from a fee they have resented.
The administration also is raising the possibility that small-business workers in some states might not be given a choice of health plans — potentially undermining a significant aspect of the law that federal health officials already have delayed once.
In announcing many rules at the same time, senior administration officials portrayed it as a move to address early in the year every major issue that needed to be resolved about how exactly the health-care law will work for 2015 — in contrast to the chaos and lurching policy shifts that surrounded the launch of the exchanges last fall.
“I think we have turned the corner on that,” one official told reporters, speaking at the White House’s insistence on the condition of anonymity. “We are putting out the policies early. They are clear. People can rely on them.”
The official said that the administration will not extend the March 31 deadline for consumers to sign up for coverage this year under HealthCare.gov, the federal insurance marketplace on which three dozen states are relying. The next open-enrollment period will run from Nov. 15 to Feb. 15.
The law’s Republican critics swiftly denounced the new rules, singling out for particular criticism the decision to let insurers continue to sell — and customers continue to buy — skimpy health plans that fail to provide all the benefits required under the law.
Those plans triggered a political uproar in the fall, when a few million Americans with such insurance began to receive notices that their plans would be canceled in January, when the new benefits requirements took effect. Angry customers, with congressional Republicans acting as a megaphone, accused Obama of reneging on a promise that, under the law, people who liked their health plans could keep them.
In November, the president bowed to the pressure, giving states the latitude to allow people to renew noncompliant insurance policies until this October, which means that they could be in effect through September 2015.
The rule announced Wednesday extends what administration officials are calling a “transitional policy” for two more years, so that people can buy these noncompliant plans through October 2016 and be covered by them until the following September, when Obama’s tenure in the White House will have ended.
“The administration cannot run fast enough away from its broken promises,” Rep. Fred Upton (R-Mich.), chairman of the House Energy and Commerce Committee, said on Twitter. House Oversight and Government Reform Committee Chairman Darrell Issa (R-Calif.) said: “This move is a cynical ploy that delays thousands of insurance policy cancellations until after the elections.”
The senior administration officials denied political motives and played down the practical effect of preserving the skimpy health plans longer than expected. One official told reporters that, based on the estimates of congressional budget analysts, 1.5 million people have such plans that they bought individually or through small employers. With natural attrition — because people may renew such policies if they already have them but cannot buy them if they do not — the number of Americans with such policies by 2016 will probably be “a very small number of people,” one official said.
As of late January, 24 states had decided to extend the sale of noncompliant health plans through the fall, according to America’s Health Insurance Plans, the industry’s main trade group. The idea had been rejected in 23 states, including throughout the Washington region, and a few states had not decided.
Sandy Praeger, Kansas’s insurance commissioner and a leader on health-care issues among the nation’s commissioners, said that her state is allowing the extension this year but will not do so beyond that. “The whole goal [under the federal law] is to have some standardized coverage,” Praeger said. Prolonging the “skinny plans,” she said, would mean that relatively healthy people could choose such coverage, leaving health plans within the new insurance marketplaces with a higher proportion of people who are less healthy and thus more expensive to insure.
Among the changes announced Wednesday, one will make it easier for insurers to qualify for financial help under a three-year program intended to cushion insurers’ costs as they adjust to the fact that the law forbids them from rejecting applicants who are sick. For the rest of this year, insurers will be able to qualify for the help — known as “reinsurance” — at a lower threshold than had been set initially.
Another change will exempt unions, universities and other self-insured employers from paying a fee — $63 per person this year — that creates the reinsurance fund. Critics accused the administration of doing so as a favor to unions, who are Democratic allies but have complained about the fee and other aspects of the law’s impact on them. But Gretchen Young of the ERISA Industry Committee, an organization that advocates for large employers on pay and benefits, said that the number of unions that will benefit from the rule change probably will be fairly small.
The administration also issued long-awaited rules for employers with at least 50 workers, to accompany the law’s requirement that they offer insurance to full-time workers. The rules define how these employers must report information to the government about their employees’ working hours and the coverage offered to them. Employers have complained that these requirements would force them to incur new technology and human resources costs. At least one business group, the National Restaurant Association, said the administration failed to give businesses enough flexibility, calling the reporting requirements “overwhelming.”
In addition, the administrator of the federal Centers for Medicare and Medicaid Services announced the resignation of Gary Cohen, the director of the agency’s branch assigned to monitor insurers in the exchanges and provide help to consumers. Cohen, director of the Center for Consumers Information and Insurance Oversight, has been the third director of the center and its predecessor in the nearly four years since the health-care law was enacted.