海角大神

海角大神 / Text

Is Obamacare individual mandate cracking?

The White House loosened the rules for Obamacare on Thursday, telling people whose health insurance plans got canceled that they won't have to comply with the law's individual mandate in 2014. How is that fair? critics ask. Many foresee more changes ahead.

By Peter Grier, Staff writer

Good news for people who鈥檝e lost their health insurance because it doesn鈥檛 meet "Obamacare" standards: The White House announced Thursday night that it鈥檚 going to cut these folks something of a break.

They won鈥檛 be subject to the Affordable Care Act鈥檚 individual mandate for 2014, meaning they won鈥檛 have to pay a tax penalty if they don鈥檛 get coverage for next year. They鈥檒l also be eligible to buy so-called catastrophic insurance plans, which are inexpensive but cover only big medical expenses.

鈥淭he President and I want to do everything we can to ensure that individuals with canceled plans have as many options as possible,鈥 wrote Secretary of Health and Human Services Kathleen Sebelius in a letter to Sen. Mark Warner (D) of Virginia that outlined the changes.

The cancellation of policies purchased in the individual health insurance market, for not meeting ACA regulations, caused a political uproar that forced the Obama administration鈥檚 hand on this issue. The White House said about 500,000 people who lost plans but have not yet found new insurance will be helped by these changes. Other estimates put the number of individuals who lost insurance due to the onset of Obamacare in the millions.

President Obama previously said that insurers could restore these policies if they wished. Some insurers and states said it was too late to go back, however, making Thursday鈥檚 move almost inevitable.

The question now is whether the individual mandate to buy insurance, the heart of Mr. Obama鈥檚 signature domestic achievement, will be further softened in the months ahead. The administration has been adamant that it won鈥檛 delay the requirement, saying it鈥檚 needed to get people to sign up in large enough numbers to make Obamacare work. But now they鈥檒l face renewed political pressure to allow others to opt out for 2014.

鈥淭his puts the first crack in the individual mandate. The question is whether it鈥檚 the last,鈥 writes Ezra Klein at the Washington Post鈥檚 "Wonkblog."

In fact, even prior to Thursday鈥檚 move the individual mandate was not an absolute requirement. The Affordable Care Act as passed contained substantial mandate exemptions.

For instance, people whose employers don鈥檛 offer an adequate plan don鈥檛 have to have health insurance if the cheapest ACA 鈥渂ronze鈥 policy available on the state exchange marketplaces would cost more than 8 percent of their annual income. There鈥檚 also a generalized 鈥渉ardship exemption鈥 that exempts you from the mandate if you鈥檙e facing an unforeseen difficulty, such as homelessness or divorce.

For the purposes of the law, the administration has now defined losing your previous health insurance due to its noncompliance with ACA as a 鈥渉ardship.鈥 That鈥檚 how it managed Thursday鈥檚 move. But that raises a difficult question, the law鈥檚 critics note. If people who had insurance, but lost it, are now exempt from Obamacare due to hardship, what about people who didn鈥檛 have insurance in the first place? Isn鈥檛 their situation just as difficult?

Plus, what if you lost your insurance, but have managed to make it through the hoops of HealthCare.gov and purchase a new policy? Can you ditch that and buy a cheaper catastrophic plan?

鈥淗ow can anyone make health care decisions today knowing that the law may be unilaterally changed tomorrow?鈥 complained House majority leader Eric Cantor (R) of Virginia in a statement after the White House announcement.

On the other side of the issue, insurers aren鈥檛 happy. Given the realities of the ACA, they want as many people to sign up for new policies as possible, and particularly as many healthy young people as possible. Softening the individual mandate threatens their economic projections.

鈥淭his latest rule change could cause significant instability in the marketplace and lead to further confusion and disruption for consumers,鈥 says Karen Ignani, head of America鈥檚 Health Insurance Plans, an industry Washington trade group.

In that context, it鈥檚 important that the administration announced this change in a letter to a purple state Democratic senator. As Ezra Klein points out, congressional Democrats will be a key to what happens next on the mandate. If they believe that Thursday鈥檚 move is enough to end their political problem from canceled plans, they won鈥檛 push for more exemptions. But if they don鈥檛, look for a tumultuous January on Capitol Hill.