Last night, the Department of Health and Human Services (HHS) announced that it was delaying the individual mandate for those whose health insurance policies were cancelled and allow them to purchase catastrophic coverage on the exchange.
This is yet another example where the White House is too worried about the politics of the law rather than the substance of implementation.
The Affordable Care Act allows HHS to grant a ‘hardship waiver‘ to anyone who experiences “an unexpected natural or human-caused event” that causes an increase in their expenses and makes it difficult to purchase insurance. This waiver exempts them from the individual mandate for a year and allows them to purchase catastrophic coverage, something previously only available to people under the age of 30. Last night, HHS said that having your plan cancelled qualifies for a ‘hardship waiver.’
On policy grounds, this accomplishes nothing. The problem for those whose insurance was cancelled is not that they are unfairly forced to buy a new plan by the March 31st deadline. On the contrary, these are people who already bought health insurance on their own before the mandate even existed. The mandate is not what concerns these Americans.
The true problem facing people whose plan was cancelled is that they might face an unexpected gap in coverage if they have trouble enrolling in the federal marketplace. The White House estimates that there will be 500,000 such people come January 1.
But granting hardship waivers to everyone whose plan was cancelled does nothing to fix that problem. It doesn’t make it any easier for them to purchase a new plan.
In fact, it makes implementation more difficult. Delaying the individual mandate only for those whose insurance was cancelled, but not everyone else is an inconsistent reading of the law. People whose insurance was cancelled face no more of a ‘hardship’ purchasing coverage than anyone else. The cancellation notices some Americans received did not make it any more difficult for them to buy a new plan. This will put huge pressure on the administration to delay the individual mandate for everyone.
The only conceivable policy rationale for this change is to offer relief to those people whose insurance was unexpectedly cancelled and who would now rather go uninsured than enroll in any of the new plans. This exemption offers them that opportunity for the next year. If that is the rationale, then it makes sense to offer this exemption only to those whose plans were cancelled.
But when does this end? Those Americans will see their premiums again next year and likely have the same feeling. Will Obama endlessly grant them exemptions? Of course not. If the goal of these waivers was to offer them relief, then it would make sense for the administration to do so forever. Why should a person whose policy was cancelled be exempted this year, but not the next? In that case, the policy rationale for these waivers is not to offer them relief due to their cancelled coverage, but to do so because they dislike their new plans. That returns us to the original inconsistency with this decision. Why should people whose plans were cancelled receive relief because they don’t like their new options, but not everyone else?
It is also a distraction from the fact that enrollment in the law is steadily improving. Earlier yesterday, California announced that it had enrolled more than 50,000 people in three days this week. There was no reason to make this move now as everyone has until March 31 to sign up for insurance before they must pay the penalty. The administration unnecessarily chose to make this announcement right when coverage of the law began to turn positive.
So why did HHS make this move? Politics, of course.
Those people whose insurance were cancelled and are having trouble buying a new plan rightfully feel unduly hurt by the law. They had insurance they thought they could keep and now they may face a gap in coverage due to the Affordable Care Act. They are a vocal constituency that is furious with the Democratic Party for lying to them and creating this problem.
In response to this political pressure, six Democratic senators sent a letter to HHS Secretary Kathleen Sebelius arguing that she should grant hardship waivers for everyone whose plan was cancelled. This increased the pressure on the administration to act, but it did not force their hand.
If Sebelius had ignored the letter and continued to implement the law, it wouldn’t have been a problem. There isn’t an imminent rebellion in the Senate that could create a political nightmare and put the law at risk as there was in November when Democrats were panicking over President Obama’s “if you like your plan, you can keep it” lie. Then, there was mounting Democratic support for legislation that would have undermined the law. The White House’s fix was necessary to calm the fears of congressional Democrats.
No such fix is necessary now, but the administration created one anyways.
This perfectly represents everything wrong with how the White House has handled implementation of the law. Whenever a decision needs to be made, the administration is motivated by politics, not policy.
For instance, it delayed important rules regarding insurance premiums and ‘essential health benefits’ until after the 2012 election, giving insurers little time to comply — and HHS and its contractors too little time to build a working website.
It also made a last-minute change with the website that forced people to create an account before they could see their expected premium. HHS didn’t want people seeing the costs of insurance before factoring in the subsidies. But this put unnecessary stress on the website and exacerbated its problems.
In addition, the White House has been frustratingly vague about the true extent of problems with the website during the past few months. It has spent more time trying to spin negative stories instead of giving honest assessments of the exchange. This stoked fears that the site had more problems than people imagined.
These are all unnecessary political solutions from a White House too concerned with its image and not focused enough on implementing the law. Obamacare’s political success depends on its policy merits. Anyone whose plan was cancelled won’t remember their anger over these initial speed bumps if they end up finding cheaper, more comprehensive coverage on the exchange. If their new plan is more expensive and restrictive, that will be what makes them angry, not the cancellation notices.
Which is to say, the same thing that will make other Americans angry at their new options is what will anger those who had their insurance cancelled.
Since the administration is not prepared to grant endless exemptions, there is no reason for those who lost their coverage to deserve that relief over anyone else who dislikes their new plan options. Choosing to exempt them, but not everyone else is a political calculation.
As long as nothing threatens to obstruct the implementation of the law, the White House should not be making any such moves for political purposes.
In this case, they made one that is not only motivated entirely by politics, but will actively make implementation more difficult. It once again puts the long-term success of the law at risk in return for a short-term political gain. That’s a terrible tradeoff to make.
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