Loophole Could Allow Insurers To Avoid ACA Mandates Through 2014

Some health insurers are planning to let millions of U.S. residents renew their current coverage to avoid new requirements under the Affordable Care Act, a move that critics say could temporarily derail efforts to reform the insurance market, the Los Angeles Times reports.

Although it is widely believed that all health insurers must immediately comply with the ACA beginning in 2014, a loophole in the law allows insurers to extend existing coverage through the end of 2014 without following the new rules.

While the move could provide a short-term benefit for certain customers -- shielding them from potentially large premium increases -- observers note that it could be detrimental to other U.S. residents.

For example, insurers could focus on renewing younger and healthier beneficiaries, thereby withholding them from the broader insurance pool in 2014, which could lead to higher costs for sicker and older populations in government health insurance exchanges.

In addition, observers say that insurers might rush to enroll more people in individual policies before December so that they then can extend those policies through next year.

Christine Monahan, a senior analyst at the Georgetown University Health Policy Institute, said, "This could undermine the [ACA], and it opens the door for exacerbating potential rate shock in the exchanges."

The strategy could affect millions of people who will purchase health coverage through government exchanges or who buy their own insurance. However, it will not affect those with employer-sponsored health plans, according to the Times.

UnitedHealth Group -- the largest U.S. insurer -- said it still is determining how to move forward.

WellPoint has said its renewal policies will vary by state, while Kaiser Permanente said it will not renew policies beyond Jan. 1, 2014, in California and in most other states where it offers coverage (Terhune, Los Angeles Times, 4/2).