That’s how a senior White House official characterized the reasoning behind the announcement today that people with existing individual-market insurance plans will be able to renew them through 2014. State insurance regulators and insurance companies will be informed that any existing insurance plans can be renewed for the next year, but they won’t have to do so. If insurers do decide to extend plans, when communicating this to customers, they’ll have to inform them, as the White House put it, of “the protections [the plans] do not have,” and of the options available on the marketplace (as most state insurance regulators have required cancellation letters to say, too).
Several states have already announced that all non-compliant plans, regardless of the ACA’s other grandfathering provisions, must be canceled, and nothing in the White House’s announcement will compel them to reverse that decision. Further, the approximately 5 million Americans who’ve seen their plans canceled already won’t necessary get to renew them. That’ll be up to insurance companies, though as the White House noted, it is simpler for both regulators and insurers to continue or adjust existing plans than cancel them and write new ones, so some people whose plans were going to be canceled will surely be offered the chance to renew them. The White House said that the renewal option, made possible by the White House’s “suspending enforcement” of the ACA’s relevant provisions this year, “may not be taken by all state insurance commissioners” — in other words, some may still enforce the regulations on their own, since they have broad discretion to run their own state insurance markets.
Officials characterized it as an “administrative fix” — HHS will be deferring enforcement of the ACA’s minimum-coverage provisions that had caused so many insurance companies to cancel non-compliant plans for 2014. She defended this “enforcement discretion” as a strategy that’s “been used both in transition and as a predecessor to legislation” in the past, though the only example she adduced was also a legally dubious Obama-administration maneuver, the White House’s enactment of the DREAM Act.
When asked whether HHS was going to determine how much premiums could increase in these plans, or otherwise regulate them, an official said “that’s a question best directed to insurance companies and insurers.” House minority leader Nancy Pelosi announced this morning that House Democrats would be introducing legislation to allow people to keep their plans as well, calling it “really good,” but she said she would prefer an administrative fix to a legislative one, as the former can be accomplished more quickly.
The White House said they believed there was a “clear contrast” between the administration’s fix and the legislative proposal introduced by House Republicans this week, which would allow new customers to buy existing plans that are not compliant with the ACA. Senate Republicans and Democrats have introduced bills that are somewhere in the middle, extending a two-year grandfather period or preserving plans indefinitely, but just for existing customers.