As it has done in the past, late yesterday took the opportunity to include in a late afternoon news dump on a day when many people are already beginning to tune out in preparation for Christmas the news that they were creating yet another exception to the requirements of the Affordable Care Act:
WASHINGTON — Millions of people facing the cancellation of health insurance policies will be allowed to buy catastrophic coverage and will be exempt from penalties if they go without insurance next year, the White House said Thursday night.
Kathleen Sebelius, the secretary of health and human services, disclosed the sudden policy shift in a letter to Senator Mark Warner, Democrat of Virginia, and five other senators.
It was another effort by President Obama to cushion the impact of the health care law and minimize political damage to himself and Democrats in Congress who adopted the law in 2010 over solid Republican opposition.
In recent weeks, insurers have told many people that their insurance policies were being canceled because they did not comply with the minimum coverage requirements of the law. Insurers usually offer to replace the coverage with new policies that do comply, providing more benefits at higher cost.
The Department of Health and Human Services issued a bulletin on Thursday advising consumers, “If you have been notified that your individual market policy will not be renewed, you will be eligible for a hardship exemption and will be able to enroll in catastrophic coverage.”
The help for people with canceled policies was offered late Thursday, just four days before the deadline for people to sign up for coverage that starts on Jan. 1.
Ms. Sebelius said the goal was to ensure “the smoothest possible transition” for people seeking new coverage after cancellation of their policies.
Mr. Obama initially tried to address a furor over the cancellations by asking carriers to reinstate the policies. But some insurers and some state officials did not go along with his request, so the White House looked for other ways to address the problem.
Before the action announced Thursday by the White House, Republicans had said it was likely that the number of cancellations would exceed the number of people obtaining private coverage through the new insurance exchanges this year. Nearly 365,000 people selected health plans in the exchanges in October and November, before a big increase reported early this month.
Catastrophic plans provide basic coverage and are generally available on the exchanges only to people who are under 30 or qualify for a hardship exemption from the requirement to carry insurance.
The White House action is sure to embolden Republicans clamoring for a broader exemption that would be available to all Americans. The White House opposes such an exemption, saying it would blow up the keystone of the 2010 law.
Mr. Warner and the five other senators said the hardship exemptions would provide “transition relief” to constituents who they said were upset about the cancellation of insurance policies.
The Obama administration broadly defined who can qualify. “If the consumer believes that the plan options available in the marketplace in their area are more expensive than their canceled health insurance policy, they will be eligible for catastrophic coverage through a hardship exemption,” the administration said.
Insurers, already struggling with problems caused by the chaotic debut of the federal insurance exchange in October, expressed surprise and dismay.
“This latest rule change could cause significant instability in the marketplace and lead to further confusion and disruption for consumers,” said Karen M. Ignagni, the president of America’s Health Insurance Plans, a trade group.
Ezra Klein notes that this places the entire individual mandate in a very shaky position:
6. But this puts the administration on some very difficult-to-defend ground. Normally, the individual mandate applies to anyone who can purchase qualifyin”hg insurance for less than 8 percent of their income. Either that threshold is right or it’s wrong. But it’s hard to argue that it’s right for the currently uninsured but wrong for people whose plans were canceled.
7. Put more simply, Republicans will immediately begin calling for the uninsured to get this same exemption. What will the Obama administration say in response? Why are people who plans were canceled more deserving of help than people who couldn’t afford a plan in the first place?
(…)
10. This puts the first crack in the individual mandate. The question is whether it’s the last. If Democratic members of Congress see this as solving their political problem with people whose plans have been canceled, it could help them stand against Republican efforts to delay the individual mandate. But if congressional Democrats use this ruling as an excuse to delay or otherwise de-fang the individual mandate for anyone who doesn’t want to pay for insurance under Obamacare, then it’ll be a very big problem for the law.
There are provisions in the PPACA that permit the President, acting through the HHS Secretary to create exemptions based on “hardship,” but it’s unclear that that the circumstances at play here — people who have lost their health insurance because of the PPACA’s minimum coverage rules — is anything close to what Congress had in mind when it created the “hardship rule. Indeed, it seems clear from the language in the statute that the exemption for “hardship” is meant to be something that people who having to making application for eligibility based on individual circumstances, not something that applies to a large group of people because of the requirements of the law. In that respect, Seth Chandler wonders what Obamacare defenders will think about all this, especially as it applies to broader principles like the Rule of Law:
I look forward to hearing from others, and in particular from people with a commitment to the rule of law who previously have supported the ideas behind the ACA, but it is not clear to me that any of the pre-existing bases contained in this regulation for claiming a hardship exemption would apply to having a predicted cancellation in one’s individual insurance policy. Maybe at this late hour there are arguments and other documents I am not considering. Surely, however, the existence of the ACA itself can not be the human-caused event creating the hardship. Moreover, I have trouble seeing how the cancellation of a plan makes it more difficult for these individuals — as opposed to others in similar circumstances — from obtaining coverage under a qualified health plan. I can well imagine cynics saying that the only real hardship involved here is having believed President Obama when he said that if you liked your health plan you could keep it and thus not having saved up for the higher prices that often exist in policies with “Essential Health Benefits.” Of course, if , as the Obama administration has claimed, many of these cancelled policies were junk that the policyholder should be glad to be rid of, it becomes yet more challenging to see much of a hardship at all in being offered real insurance coverage with all of its greater benefits.
In any event, it does not take a fertile imagination to foresee legal challenges to this limited exemption from those not fortunate enough to have had health insurance in the past but who are not being given a similar exemption from the individual mandate. I can easily see challenges based on failures of administrative procedure and equal protection.
And Dave Schuler reminds us of an old Supreme Court case:
In Kendall v. United States (1838), the court said:
To contend that the obligation imposed on the president to see the laws faithfully executed implies a power to forbid their execution is a novel construction of the Constitution, and is entirely inadmissible.
There are limits to executive discretion, the Obama Administration is stretching them, and the likelihood that the Administration’s seat-of-the-pants approach to governance will be tested in the courts seems to grow with every passing day.
This isn’t the first time that the Administration has used the delay strategy to paper over issues with the PPACA in recent years, of course. Through various administrative means, they have provided exemptions to large employers, unions, and several states in response to lobbying and complaints from those group. They have delayed the enforcement of the employer mandate by at least a year based on complaints from business regarding the administrative difficulties of compliance. They have delayed similar requirements for small businesses until after the 2014 midterms. Just about a month ago, they created a special exemption that would allow people who had lost their policies to keep those policies for an additional year assuming that insurance companies and state insurance regulators were willing to allow it. Now, they’ve made use of a “hardship” exemption to the law’s requirement to exempt at the very least hundred of thousands of people from the laws requirements..And they’ve done this as the clock ticks down to Monday when people must purchase insurance if they want to have insurance effective on January 1st. Looked at from the outside, it all creates the impression that they are continually kicking the can down the road because they are noticing that the law and the system it is supposedly creating aren’t at all close enough to being ready for prime time. Already, for example, supporters of the law are openly worrying that the story of January will be the number of people who suddenly discover that they don’t really have insurance because the insurance companies didn’t get the data that they needed from the Federal and State exchanges in order to properly create policies.
Beyond the logistical problems, though, there are also the issues that Chandler and Schuler raise in their posts. Innumerable times now, the Executive Branch has used its administrative rule-making powers to create workarounds to the specific requirements of a law that was duly passed by both Houses of Congress and signed into law by the President. This isn’t how the system is supposed to work, of course. If there are problems with the law, then the proper procedure is or the President to request that Congress reopen debate on the law to try to fix it. Politically, of course, this would be difficult for the Administration because it would give the GOP exactly what it wants, and what it spent the summer and the time leading up to the October shutdown trying to obtain, the chance to make major substantive changes to the PPACA if not fundamentally alter it altogether. The fact that it would be difficult, though, is not an excuse ignore the Rule of Law, though, and anyone who cares about those principles ought to be profoundly disturbed when a President decides to rewrite legislation in a manner that the representatives of the people in Congress cannot participate in.
