Insurance Plans Not in Compliance with ACA Get Three-Year Reprieve

But waiver of beefed-up coverage required under Obamacare won’t affect many people in NJ

Barack Obama
The Obama administration decided this week that people with skimpy health insurance plans can keep them for up to three more years, a move that drew heat from Republicans and could affect thousands of New Jersey residents who have small-group insurance through a United Healthcare subsidiary.

Still, the move is expected to have minimal impact in New Jersey. That’s because while Gov. Chris Christie said in November that the state would leave it to insurers to decide if they wanted to continue offering transitional plans that did not fully comply with the Affordable Care Act, most insurers declined to do so this year.

The decision to allow insurers to continue selling plans that do not fully comply with the ACA was widely described as an effort to shield Democratic candidates from political attacks tying them to the ACA. The next wave of plan cancellations had been expected to come in October, just before the fall congressional elections.

The announcement came just as the House took the latest of several symbolic votes to delay enforcement of the penalty for not having health insurance. Rep. Leonard Lance (R-7th Dist.), a member of the House Energy and Commerce Committee, blasted the administration’s decision.

The move “is a blatant attempt to protect politically vulnerable Democrats from the president’s increasingly unpopular health care law,” Lance said Wednesday.

“For months the President failed to act as millions of Americans lost health care coverage under his broken promise of, ‘If you like your plan, you can keep it.’ Now, on the day when the House acted in a bipartisan capacity to delay the individual mandate under Obamacare, the President has once again, through unilateral executive action, circumvented Congress and announced a new delay that will allow some consumers to keep health plans until past the end of the Obama presidency,” Lance said.

The decision follows a similar announcement last November, when the administration said people with noncompliant plans could renew them for one year.

Administration officials downplayed the effect of the new delay, saying that only an estimated 1.5 million Americans have such plans and the number will continue to decline through 2016, when the plans may be renewed for the last time.

The insurers decided that the benefits of keeping the old plans did not justify scrambling to reorganize their offerings in the last few weeks of 2013, before the new plans went into effect in January, said Wardell Sanders, president and CEO of the New Jersey Association of Health Plans.

“They had, one, the operational challenges of trying to do this in such a very, very short period of time. And number two, they had to ask, if we’re going to go through this heavy lift, does it help our customers? It had to meet those two tests,” Sanders said yesterday.

The one exception was United Healthcare’s small-group subsidiary, Oxford Health Plans, which has about 100,000 members. In December it gave companies and organizations the option of renewing noncompliant plans for a year. Small-group employers generally have up to 50 workers.

It is unclear whether the insurer will now allow those plans to be extended again through 2017. A spokeswoman for United Healthcare, which has 1.5 million customers in New Jersey, said yesterday that the company was still reviewing the Obama administration’s announcement.

Even if United Healthcare does keep the old plans for another two or three years, high turnover rates in the small-group sector mean that many employers will switch to ACA-compliant plans anyway and few will remain with the noncompliant ones, said Joel Cantor, director of the Rutgers Center for State Health Policy.

“There’s generally a lot of shifting. People change plans frequently in the small-group market, so over time this becomes a nonissue,” Cantor said. “Nobody can jump into one of these noncompliant plans. This is not a big deal here in New Jersey.”

Cantor and Sanders said they were not aware of any other insurers that might consider offering noncompliant plans. Horizon Blue Cross Blue Shield and AmeriHealth, which offer plans through the state’s healthcare marketplace, both reaffirmed their earlier decisions to only sell and renew compliant plans.

“Late last year, Horizon BCBSNJ announced that after three and a half years of ACA preparation work, it was not feasible to renew individual and small group policies that were not compliant with the Affordable Care Act, as well as sell compliant plans,” Horizon spokesman Thomas Rubino said in a statement. “Additionally, the federal government has required significant changes to non-compliant Basic and Essential health plans that make them much less affordable.”

Before the ACA went into effect more than 100,000 New Jersey residents had bare-bones “basic and essential” plans, which represented nearly two-thirds of individual market enrollment and attracted mostly younger enrollees, according to Cantor.

“AmeriHealth New Jersey stands by its decision to move forward with the suite of ACA-compliant health plans we have worked so diligently to create over the last several years,” AmeriHealth spokeswoman Jill Roman said in an email yesterday. “Our new plans provide a variety of options at various price points as well as more comprehensive benefits, which we believe will help further enhance the health and well-being of our members.”

A spokeswoman for Aetna, which is not in the ACA marketplace, said the company had no comment. Health Republic of New Jersey, a new insurance cooperative, only began selling policies on the marketplace and to small-group customers this year and does not offer any noncompliant plans.

Plans are considered noncompliant if they deny treatment for preexisting conditions, do not cover preventive care at no additional cost, allow cancellation of coverage for any reason other than fraud or nonpayment, or do not meet other Affordable Care Act requirements.

However, state officials have said that some ACA provisions apply even to the old plans, including the removal of annual limits on benefits.