By David Morgan
WASHINGTON (Reuters) - The Obama administration will allow consumers to extend health insurance plans that fail to comply with President Barack Obama's healthcare law beyond 2014, according to three people familiar with the matter.
In a move that could help Democrats avoid a repeat of last autumn's public outcry over canceled health policies, administration officials are expected to announce the change within the next few days, according to the sources.
The sources, who spoke on condition of anonymity, said the administration has considered a number of alternatives and could opt to allow renewals of up to three years, which could postpone a new round of cancellations until after the 2016 presidential election.
The administration on Tuesday said it had nothing to announce.
But an official indicated that policy "final guidance" on the issue would come soon.
"The administration has committed to doing all we can to smooth the transition for hard-working Americans. We've taken steps already and are continuing to look at options," said Joanne Peters, a spokeswoman for the U.S. Department of Health and Human Services (HHS).
The possibility of a new administration directive was first reported by the congressional newspaper, The Hill.
Obama and his Democratic allies were rocked last autumn by a political uproar over millions of people who received cancellation notices from their insurers because their plans did not meet consumer safeguards, including minimum benefit requirements set by Obama's Patient Protection and Affordable Care Act.
The administration responded in November by saying it would not enforce the law's provisions for those who received notices. That gave state insurance regulators, insurers and consumers the option to renew noncompliant plans for a year.
At the time, the administration said HHS said it would consider extending the option for Americans to renew old plans beyond this year.
"We will provide final guidance on this issue soon," Peters said.
Insurance regulators in at least 23 states have allowed renewals to go through. Other states have required consumers to buy new policies that comply with the healthcare law.
The outcry over cancellations has become a top campaign issue for Republicans who hope to persuade voters that Obama's healthcare law is bad for the nation and that Democrats should be punished at the ballot box for supporting it.
Without an extension, analysts say a new round of cancellation notices is likely to begin this October, just weeks before the poll.
But a longer extension would also exacerbate insurer concerns about the risk pool for new online health insurance marketplaces that have been set up in all 50 states under Obamacare.
More than 4 million people have signed up for coverage so far through the marketplaces. Open enrollment is scheduled to close March 31. The marketplaces need younger, healthier beneficiaries to compensate for the costlier prospect of insuring people who are older or sick.
Analysts believe the current extension has already encouraged large numbers of healthier people to remain outside the marketplaces.
(Reporting by David Morgan; Editing by Jan Paschal)