Trump admin extends life of 'transitional' health plans

In a move that some insurers will welcome, the federal government has announced that states will be allowed to continue offering “transitional” individual and small-group insurance policies for at least another year.

States may permit issuers that have renewed their transitional insurance policies continually since 2014 to renew such coverage for a policy year starting on or before Oct. 1, 2018, the Center for Consumer Information and Insurance Oversight (CCIIO) said in a memo released Thursday. But any policies renewed under this transitional policy must not extend past Dec. 31, 2018.

Amy Gordon

Transitional or “grandmothered” plans first came about in response to political backlash, as many thought President Barack Obama broke his promise that consumers who like their insurance plans could keep them under the Affordable Care Act, Amy Gordon, a partner at the law firm McDermott Will & Emery, said in an interview.

Thus, the Obama administration said in 2013 that states could allow insurers to extend coverage plans that were not ACA-compliant, as the the CCIIO memo explains. Later, it extended the transitional policy for two more years, allowing consumers to keep such plans through 2017.

Now the Trump administration will allow states to extend transitional policies for yet another year. “This approach will facilitate smooth transitions from transitional coverage to Affordable Care Act-compliant coverage, which requires a calendar year policy year in the individual market,” according to the memo.

Yet the states that opted to require all individual and small-group plans to be ACA-compliant did so because they believe people who buy non-compliant policies tend to be healthier, Gordon noted.

“So to even out the risk pool, they would like all individuals who are purchasing coverage and subject to the Affordable Care Act mandate to actually purchase full compliant ACA policies,” she said.

Still, Gordon noted that the Trump administration’s decision to extend such transitional plans likely is an attempt to stabilize the exchanges while Republicans decide how to repeal and replace the ACA. It’s also consistent with the GOP’s call for more choices for consumers and more state flexibility.

Leading trade group America’s Health Insurance Plans, meanwhile, views the move as a positive sign, spokeswoman Kristine Grow said in an emailed statement.

“In the interest of stability during this time of transition, AHIP supports extending the continued availability of grandmothered plans, for those who are currently covered by them, through the end of 2018,” she said.

And in a recent conference call with investors, Anthem CEO Joseph Swedish said extending grandmothered plans indefinitely was among several policy changes he would recommend to ensure both risk pool integrity and plan affordability.

Indeed, insurers that sell less comprehensive coverage are likely to be “jumping for joy,” according to Gordon.

However, “those insurers that are writing only the ACA-compliant insurance are not going to be as happy,” she added. “I think they’re going to be angry that they’re going to lose some possible good risk to those mini-med or non-compliant policies."