Thousands of Connecticut residents whose health insurance plans didn’t meet the requirements of the federal health law managed to keep their policies by renewing them in late 2013, before the new Obamacare regulations kicked in.
The expectation was that they’d have to buy new, Obamacare-compliant health plans when their policies expire late this year.
But now the federal government says those people could continue their noncompliant plans for another two years — if their states and insurers allow it.
That sets up Democratic Gov. Dannel P. Malloy’s administration to once again make a politically delicate choice: How to balance the concerns of people who like their old plans with the goal of getting as many people as possible into new policies sold through the state’s health insurance exchange or other plans that comply with the health law.
Connecticut Insurance Department spokeswoman Donna Tommelleo said Thursday that the department is reviewing the federal guidance.
“However, we believe that adopting the transitional extension of noncompliant policies is not in the best interest of our consumers,” she said. “It would likely result in significant premium increases and market disruption.”
A decision against allowing the noncompliant plans to be renewed would be consistent with Malloy’s choice last fall not to allow insurance companies to extend policies slated to be discontinued because of the health law. He said insurers had indicated they wouldn’t continue the plans even if allowed to. And even if the plans were renewed, Malloy said, they would likely come with significant rate increases.
That decision drew criticism from people whose plans were being eliminated and from some Republicans.
A two-year extension
The new federal policy, announced Wednesday, is an extension of the option President Obama made available to states last fall amid a political firestorm over insurance policies that were being discontinued because of the health law, despite his repeated pledges that people who liked their plans could keep them.
The new policy applies to two types of plans that don’t comply with the health law’s requirements: Those that insurers in other states had planned to discontinue but renewed after Obama changed the policy last fall; and those that were started or renewed in late 2013.
People with either type of policy would be allowed to renew it through Oct. 1, 2016, according to the new policy, as long as their state allows it and their insurer wants to continue selling the plan.
If adopted by states, the new policy could push any frustration people have at losing their health plans this fall past the midterm elections.
New insurance requirements
The federal health law includes a host of new insurance requirements that took effect Jan. 1. Some require more benefits and a higher level of coverage than many plans previously had, but even plans with relatively generous coverage were unlikely to comply because of technical requirements about what percentage of a person’s medical care health plans must cover.
At the end of last year, many insurance brokers advised clients to renew their policies early, allowing them to get 12 more months of coverage under 2013 rules. Some insurers also allowed people to buy new plans that started in late 2013.
According to figures released by the Connecticut Insurance Department in late November, 41,169 people who got coverage through the state’s individual insurance market were offered the option of renewing early or starting a plan Dec. 1. Of those, 30,459 had accepted, although it’s not clear how many of them are still covered by those plans.
For some people, the new Obamacare-compliant plans came with more benefits and, if they qualified for federal subsidies made available through the law, lower prices. But for others, particularly those who don’t qualify for financial assistance to buy coverage, the new plans mean paying more.
(There was an exception for plans that existed before the health law passed in 2010 to continue beyond 2014, but insurers weren’t required to keep selling them. Anthem Blue Cross and Blue Shield, Connecticut’s largest insurer, opted to discontinue its 15,000 grandfathered plans at the end of last year.)
Viewed as political
The announcement Wednesday drew skepticism from people on both sides of the health law.
“I think it represents another example of the natural tension between broad social policy change and politics,” said Kevin Counihan, CEO of Access Health CT, the state’s health insurance exchange.
“I think it’s understandable given some of the political issues involved at the midterm,” he said. “But I think it’s less than optimal as policy because of some of the precedent it may set with respect to what future presidents could do to this law or any law.”
Counihan said there’s also the risk of the change being “perceived as haphazard policy creation and what it can do in terms of just communicating stability to residents.”
The ranking House member on the legislature’s Insurance and Real Estate Committee, Rep. Rob Sampson, R-Wolcott, called the extension being offered “purely a political move.”
“I think that’s obvious to everyone,” he said.
Sampson also noted that there have been significant problems in the states that took Obama’s offer last fall to allow previously discontinued policies to be continued, including large premium increases because a relatively small number of people signed up for the policies, reducing the risk pool.
Sampson said he favors letting people keep the plans they had before, but said he doesn’t think it’s doable.
“Had the president made his promise more clearly before the deadline came and all these policyholders got canceled, it would have made sense,” he said. “But to go back and try to undo something that’s already been done is disingenuous and political.”