Individual Mandate Delayed for People Whose Plans Were Canceled

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When President Obama apologized last month to people whose health insurance plans were canceled, he vowed "we are going to do everything we can" to help. However, few expected his administration to exempt those Americans from the individual mandate, just four days before the deadline to get covered by 2014. On Thursday night, the White House said people whose old plans didn't meet the standards set by the Affordable Care Act would be allowed to buy catastrophic coverage, and even if they choose to forgo coverage entirely for the next year, they won't be penalized.

Catastrophic plans, which offer lower premiums but only bare-bones coverage, were previously only available on most exchanges to people under 30, or those who qualified for a hardship exemption. This week, six Senate Democrats pushed for those options to be made available to people whose plans were discontinued as "transition relief." The administration agreed, saying, "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 change doesn't affect many people. While the numbers are murky, the administration said there are fewer than half a million people who haven't found coverage since their plans were canceled. However, many still balked at the abrupt policy shift. "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 America’s Health Insurance Plans, a trade group. The group probably contains younger, healthier people who are needed to balance out the costs incurred by the old and sick, and insurers said the change throws off their calculations on premium costs.

Aside from the practical concerns, others say it undermines the justification for the individual mandate. As the Washington Post's Ezra Klein explains:

This puts the administration on some very difficult-to-defend ground. Normally, the individual mandate applies to anyone who can purchase qualifying 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.

And of course, Republicans were quick to point to the delay as another sign that Obamacare isn't working. Senator Marco Rubio was among the first. "The Administration is recognizing the grim reality that more Americans have lost health insurance than gained it under Obamacare," he said. "Holding a fire sale of cheap insurance is not a responsible fix for a broken program. This is a slap in the face to the thousands of Americans who have already purchased expensive insurance through the Obamacare exchanges."