(Bloomberg) — Americans who kept their health plans that didn’t comply with Patient Protection and Affordable Care Act (PPACA) requirements will be able to renew those policies for two more years, according to a person familiar with the matter.
The Obama administration, which has been deliberating the issue since November, is expected to announce today the extension of the health plans, said the person, who asked not to be identified because the decision wasn’t yet public.
Insurers sent letters to policyholders canceling the health plans as the new government exchanges opened Oct. 1. The letters caused a political headache for President Barack Obama, who had promised during the debate on the Patient Protection and Affordable Care Act that people who liked their health plans wouldn’t have to change them. About 2.6 million Americans received the cancellation notices, according to a study published March 3 by the journal Health Affairs.
“It’s clearly been a damaging gaffe that the president doesn’t want to hang around the neck of fellow Democrats this fall,” John Gorman, the executive chairman of Gorman Health Group, a Washington consulting firm, said in a phone interview.
Amid the growing criticism, Obama announced Nov. 14 that state insurance commissioners could allow insurers to extend policies that didn’t comply with the law. Insurance company executives have said they expected the White House would allow renewal of the plans, which don’t comply with rules such as offering coverage for maternity care or limiting out-of-pocket spending.
The Standard & Poor’s Supercomposite Managed Health Care Index of 10 companies fell less than 1 percent at 10:58 a.m. in contrast to a gain in the broader S&P 500 Index. Allowing people to renew old health plans may mean that some young and healthy Americans won’t have to sign up for plans in the Affordable Care Act’s exchanges, leaving a sicker and older population of customers.
“Exchange enrollment will be lower than expected,” Brian Wright, an analyst with Monness, Crespi, Hardt & Co. Inc. in New York said by email.