A rough count puts the number of [ObamaCare] delays enacted by the administration over the last year in double figures.
From the employer mandate to the online enrollment system for small businesses, the deferrals have substantially changed how the law will operate in 2014.
What has remained largely untouched is the individual mandate. Most people will still be required to carry health insurance next year or face fines.
But even this bedrock principle of the healthcare law was slightly modified this week.
The individual mandate includes a “hardship exemption.” People who qualify can either ignore the individual mandate altogether or purchase a cheap, bare-bones catastrophic insurance plan that’s typically only available to people under 30…
Today, the administration agreed with a group of senators, led by Mark Warner of Virginia, who argued that having your insurance plan canceled counted as “an unexpected natural or human-caused event.” For these people, in other words, Obamacare itself is the hardship…
This puts the first crack in the individual mandate. The question is whether it’s the last.
What an incredible political turnabout. Mr. Obama and HHS used to insist that the new plans are better and less expensive after subsidies than the old “substandard” insurance. Now they’re conceding that at least some people should be free to choose less costly plans if they prefer—or no plan—and ObamaCare’s all-you-can-eat benefits rules aren’t necessary for quality health coverage after all…
Pulling the thread of the individual mandate also means that the whole scheme could unravel. Waiving ObamaCare rules for some citizens and continuing to squeeze the individual economic liberties of others by forcing them to buy what the White House now concedes is an unaffordable product is untenable. Mr. Obama is inviting a blanket hardship amnesty for everyone, which is what Republicans should demand.
The new political risk that the rules are liable to change at any moment will also be cycled into 2015 premiums. Expect another price spike late next summer. With ObamaCare looking like a loss-making book of business, a public declaration of penance by the insurance industry for helping to sell ObamaCare is long overdue.
One has to wonder how this can’t other than further undermine how people feel about Obamacare––particularly its fairness––and taking their “social responsibility” to sign-up seriously…
When it’s all done, will this make those who lost their health plans happy?
Well, they had a health plan they presumably liked and/or could afford. Obamacare forced its cancellation. Now the administration is saying they will not fine them for being uninsured and will make a very high deductible plan available to them.
It’s hard to see how they will see this as an improvement.
Up until this point, there was a plausible argument to be made that most of the other ACA exceptions, exemptions and delays announced in the last year were made in the name of fairness. Employers were supposedly having trouble getting their paperwork and computers systems in line to comply with the employer mandate, so it was delayed a year — for all employers. Consumers trying to buy new plans through HealthCare.gov were struggling to navigate a dysfunctional website, so the deadline to sign up for coverage was extended from Dec. 15 to Dec. 23 — for everyone shopping through HealthCare.gov.
In contrast, the Obama administration’s changes in response to political fallout from individual market plans being canceled this fall — allowing states to extend existing plans for an extra year and this new hardship exemption — are something else. Thursday’s change puts those with canceled policies in a unique category that offers them a different kind of coverage and the ability to disregard the individual mandate, a major tenet of the law, which does not seem fair to those who did not have insurance prior to the law and who would very much like to buy a catastrophic plan but cannot. Republicans have already pounced on this latest change to argue that if Obamacare rules are simply too onerous for the small subset of Americans whose policies were canceled this fall, then they are too onerous for everyone else as well.
Let’s just take a real-world example. An uninsured 31-year-old male living in Los Angeles and earning a salary of $32,000 would only qualify for $1 per month in subsidies through Obamacare, according to a search on the California exchange. Because he is 31, he wouldn’t be eligible for cheaper catastrophic insurance. Thus, the most inexpensive plan available to him would be a “bronze” L.A. Care plan costing $178 per month, or $2,136 per year, with a $5,000 annual deductible.
If he chooses to remain uninsured, he’ll be subject to the mandate of 1 percent above the tax filing threshold, meaning around $220.
In contrast, let’s say there is a 31-year-old male in California who earns $100,000 per year. He had insurance through United Healthcare, but his plan was canceled once the insurer decided to leave the California market. Under the HHS rule change, he would have the option of purchasing a plan for $148 per month, or about 17 percent less than the lowest option available to the man earning less than a third of his income. Additionally, the higher-income individual would have the option of skipping insurance altogether without being subject to a fine.
The way it treats almost everyone else is unfair: The exchanges have been open for three months now, and plenty of Americans have committed to buy plans that were either more expensive than they want or that they didn’t want in the first place. If people whose individual-market plans have been canceled knew this was going to happen, they could have waited to buy a catastrophic plan, or bought one on the non-exchange market, or gone without insurance entirely. Marco Rubio put it reasonably on Thursday: “This is a slap in the face to the thousands of Americans who have already purchased expensive insurance through the Obamacare exchanges.”
This is a sign the administration is desperate to avert the very real likelihood that millions more people will be uninsured next year than before…
It will mean that an even greater number of healthy people will have an incentive to not participate in the standard exchange plans, further eroding the risk pools.
It shows that the products designed in the ACA were not selling well; so, at the last minute, the administration is going to offer a very different product. Basically, the president is holding a fire sale on a failed launch.
And it suggests that conservatives were right all along in saying that the most important thing is for people to have catastrophic coverage.
Insurers like Aetna and Humana, when they priced their plans for the Obamacare exchanges, did so by averaging the expected health spending by the people who would sign up for those plans. This new “hardship exemption” will encourage healthier individuals, whose expected spending would be low, to drop out of the pool. As a result, average spending per enrollee on the exchanges is likely to be substantially higher than the insurers had planned for, forcing them to lose money on their policies.
“This latest rule change could cause significant instability in the marketplace and lead to further confusion and disruption for consumers,” said Karen Ignagni, president of AHIP, the insurer trade group, last night. That’s especially true if enterprising Americans generate fake cancellation letters, in order to avoid Obamacare’s individual mandate.
And the catastrophic plans, as I noted above, were priced by the insurers on the assumption that the vast majority of enrollees would be under the age of 30. If healthy but older people sign up for these plans, insurers will lose money on them, too. “Panic mode” is how insurance executives are describing the administration’s moves—but the insurers themselves are going to have to wonder about the financial viability of their exchange-based plans.
I’d ask this: What do you do for an encore? Will the administration force these folks to buy insurance next year? Or will they keep allowing special exceptions rather than take the political heat for changing health insurance that people liked?…
However incoherent these fixes may seem, they send two messages, loud and clear. The first is that although liberal pundits may think that the law is a done deal, impossible to repeal, the administration does not believe that. The willingness to take large risks with the program’s stability indicates that the administration thinks it has a huge amount to lose — that the White House is in a battle for the program’s very existence, not a few marginal House and Senate seats.
And the second is that enrollment probably isn’t what the administration was hoping. I don’t know that we’ll start Jan. 1 with fewer people insured than we had a year ago, but this certainly shouldn’t make us optimistic. It’s not like people who lost their insurance due to Obamacare, and now can’t afford to replace their policy, are going to be happy that they’re exempted from the mandate; they’re still going to be pretty mad. This is at best, damage control. Which suggests that the administration is expecting a fair amount of damage.
[T]he individual mandate is probably done for.
I would now assume that no one will pay the individual mandate fine for 2014. The administration may give up on the mandate in the course of the ongoing enrollment period if the political pressure is great enough, or they may keep up the pretense of it through the end of the enrollment period in March (when it will have finished its work, so to speak, since its purpose is to influence choices made during that period) but then exempt everyone from it as they did with the employer mandate for this year. Having now exempted from the fine people whose policies were canceled and who haven’t spent the money to get more expensive and less appealing new coverage, the politics of still applying the fine to everyone else who is uninsured this year will probably just not be sustainable, and the politics of exempting people from it (especially if they can hold out on doing so until after March 31) will be far too appealing for this White House to resist. They may claim the mandate will be back in 2015, but if they do exempt everyone from it in 2014 it will be hard to bring it back.
The administration claimed in court in 2012 that the mandate was absolutely essential to Obamacare’s implementation, and maybe it was. But they have come to realize over the past few months that Obamacare as they envisioned it is not really going to happen, and their goal now is to enable the survival of whatever elements of it can survive, so that they can regroup when the dust settles and try to rebuild some form of the liberal approach to health financing. The mandate is becoming an impediment to that goal, and it strikes me as reasonably likely now that it will not survive.
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