By Elise Viebeck and Justin Sink - 11/14/13 01:04 PM EST
President Obama announced Thursday that insurance companies can offer health policies canceled under ObamaCare to the customers holding them for an additional year. [WATCH VIDEO]
The move could prevent existing plans from being canceled until after the 2014 midterm elections, a political decision designed to provide relief to Democrats worried the issue could cost them at the polls.
Millions of people have been told by their insurers that their plans will be canceled under the new healthcare law, despite Obama’s promises that no one who liked their plan would lose it under the Affordable Care Act.
Obama said Wednesday he heard “loud and clear” why individuals were upset over receiving the cancellation notices despite his promise.
“I completely get how upsetting this could be ... particularly after assurances they heard from me,” the president told reporters at a press conference.
The president also sought to explain the problems of the HealthCare.gov website. The administration announced Wednesday that only 106,000 people had enrolled so far in the exchanges, with just above a quarter of them going through the troubled federal website, which has been plagued with delays.
The administration had hoped as many as 500,000 would enroll in the first month.
"I think it's fair to say the rollout has been rough so far, and I think everybody understands that I'm not happy that the rollout has been wrought with a whole range of problems that I'm deeply concerned about," Obama said.
The president said the problems with cancellation notices and a website still beset by technical problems was "on me."
"We fumbled the rollout on this healthcare law," Obama said.
Obama had previously suggested signing up for the exchanges would be as simple as visiting online travel and music websites, but on Thursday acknowledged that providing health insurance online was proving to be much more difficult.
“Buying health insurance is never going to be like buying a song on iTunes," Obama said.
Officials said the change will be done administratively, drawing heavy fire from Republicans who called the move an abuse of the White House's discretion on the rollout.
“I just don’t see, within the law, their ability to do that,” Speaker John Boehner (R-Ohio) said at a Capitol Hill press conference.
The White House was under enormous pressure from congressional Democrats to come up with a fix in the face of political backlash over the canceled plans.
House Republicans are focused on passing a bill from Rep. Fred Upton (R-Mich.) allowing insurers to offer existing plans to all of their customers even if they do not comply with new rules under ObamaCare. The vote is scheduled for Friday.
Obama blasted Upton's bill as an attack on the healthcare law.
“I will not accept proposals that are just another brazen attempt to undermine or repeal the law,” he said.
The plan could benefit consumers disappointed about losing their current health coverage or concerned about the cost of alternative plans.
But the policy represents a marked shift under the Affordable Care Act away from guaranteeing certain medical benefits to everyone who has health insurance.
Insurance companies and state regulators will ultimately decide which health policies remain on the individual and small-group markets next year, as they are under no obligation to follow ObamaCare's coverage requirements.
On a call with reporters, senior administration officials said their move came in response to calls for flexibility from insurance companies and state insurance regulators in the last week.
The White House characterized the plan as a way to ensure a "smooth transition" between the existing market rules and the new standards established by the healthcare law.
A key trade group for health insurers threw cold water on the policy shift while Obama was still speaking.
Karen Ignagni, president of America's Health Insurance Plans (AHIP), said the administration's move could damage the insurance market.
"The only reason consumers are getting notices about their current coverage changing is because [ObamaCare] requires all policies to cover a broad range of benefits that go beyond what many people choose to purchase today," Ignagni said in a statement.
“Changing the rules after health plans have already met the requirements of the law could destabilize the market and result in higher premiums for consumers."
The administration's move could come with serious consequences for ObamaCare's new health insurance marketplaces.
There is fear that allowing old plans to continue will draw patients away from the exchanges, where millions of young, healthy people must sign up in order to keep premiums stable.
The stakes are high given that technical problems are already preventing many users from registering for coverage on HealthCare.gov.
Administration officials promised to prepare regulations ensuring that the fix only minimally affects premiums. This opens the possibility that the government will increase its payments to insurance companies to mitigate the risk.
Insurers will have to abide by two new requirements under Obama's proposal when it comes to cancellation letters.
The companies must disclose the benefits not included in old plans if consumers choose to retain them. The Affordable Care Act creates new coverage requirements that some policies might not meet in 2014.
Insurers must also tell customers about the new coverage options and assistance available under the healthcare law, such as marketplace plans, premium tax credits and expanded Medicaid eligibility.
The administration emphasized that the fix was only for one year, but left the door open to extending the plan again at the end of 2014.
—This story was posted at 12:07 p.m. and updated at 1:08 p.m.