Understanding the latest fight over the individual mandate


HHS Secretary Kathleen Sebelius faced questions about the mandate exemptions this week. (Photo by Andrew Harrer/Bloomberg)

In the latest war over Obamacare, the GOP is essentially trying to encourage Americans everywhere to seek an exemption from the individual mandate, the health law provision that requires everyone to get insurance by March 31 or face a penalty.

The Obama administration says exemptions to the mandate are much more limited than the GOP and opponents of the law would have you believe.

Separately, the Republican-controlled House on Friday voted 238-131 in favor of bill that would delay the individual mandate until 2018. The impact of this legislation, which was tied to reform of Medicare physician reimbursements, would mean 13 million fewer people would have insurance in 2018 than if the mandate were kept in place, the Congressional Budget Office said this week.

Behind these renewed attacks are the GOP's hatred of the mandate. The provision is indeed unpopular, but administration officials and insurers view it as a critical component of the law. Its main purpose is to prevent people from waiting until they’re sick to sign up for insurance – a scenario that would drive up insurance costs for everyone else. Whether this will work is a separate question.

The twin attacks aren't surprising. The GOP has been trying to undermine the individual mandate from the moment Obamacare was signed into law. The vote in the House is of little consequence – it has almost no chance of passing the Senate.

But the GOP's exemption argument has the potential to be a little more disruptive. These exemptions are real – back in December, the administration spelled out 14 types. This week, the GOP has focused on two in particular.

The first one has to do with canceled plans. The administration said in December that anyone whose individual health plan was canceled last year wouldn’t have to pay the penalty in 2014 if they remain uninsured.  Those people also have the option of purchasing cheaper catastrophic plans. Just last week, the White House extended that exemption for another two years. The GOP said the White House tried to sneak through that latest exemption.

The other focus has been on a vague hardship exemption. People can avoid any penalties if they “experienced another hardship in obtaining health insurance.” This language is pretty broad. And those who claim hardship don’t have to provide documentation. So, doesn’t this mean anyone can just claim hardship and avoid the penalty for not having insurance? The GOP is arguing as much.

But the administration says these exemptions are limited, and just applying for one doesn’t guarantee you’re going to get it. Each request is processed manually, and people could be asked to provide more information or be denied outright.

“The Affordable Care Act requires people who can afford insurance to buy it, so that their medical bills are not passed onto the rest of us, which drives up health care costs for everyone,” said HHS spokeswoman Joanne Peters. “This form, which was published last December, allows a limited number of individuals who are facing hardship to apply for an exception. This exception also makes it easier to find insurance by allowing those individuals to access catastrophic-level plans.”

Washington and Lee University law professor Tim Jost, a supporter of the health law, agrees that the exemptions are supposed to be limited. Still, he said the confusion over exemptions could create a problem.

“The administration is opening itself up to having to deny a lot of frivolous claims,” he said.

Before this latest flap, CMS had already predicted 12 million exemption applications would be filed by 2016. The administration hired Serco last summer to process this paperwork, but as HHS has not said how many have been filed or how many people at the company were reviewing applications.

The exemption battle aside, Jonathan Cohn of the New Republic writes that the administration never intended to enforce the mandate all that strictly in Obamacare’s first year. He argues that a gradual approach makes sense in the rollout of a major program like this.

Still, the administration has to deal with a weird balancing act. With the March 31 enrollment deadline approaching, the administration and states running their own health insurance exchanges are hoping the mandate can be an effective motivator for getting coverage. They don’t want to make the mandate a focus of their enrollment push, but they’re starting to incorporate it into their messaging more.

Lisa Sbrana, counsel for New York’s exchange, said emails from the exchange this month are letting potential customers know they could face a tax penalty for skipping coverage. Kevin Counihan, the head of Connecticut’s exchange, had set up a press call for Friday afternoon to raise mandate awareness. Minnesota’s exchange started running commercials this week about the “requirement” to have insurance.

Officials are hoping that the message about the mandate can counter GOP efforts to undermine it.

 

Jason Millman covers all things health policy, with a focus on Obamacare implementation. He previously covered health policy for Politico.
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