Fewer Uninsured Face Fines as Health Law's Exemptions Swell

Almost 90% of Uninsured Won't Pay Penalty Under the Affordable Care Act in 2016

Click here to read the WSJ article by Stephanie Armour. Excerpts:

"Almost 90% of the nation's 30 million uninsured won't pay a penalty under the Affordable Care Act in 2016 because of a growing batch of exemptions to the health-coverage requirement. 

The architects of the health law wanted most Americans to carry insurance or pay a penalty. But an analysis by the Congressional Budget Office and the Joint Committee on Taxation said most of the uninsured will qualify for one or more exemptions."

"The Obama administration has provided 14 ways people can avoid the fine based on hardships, including suffering domestic violence, experiencing substantial property damage from a fire or flood, and having a canceled insurance plan. Those come on top of exemptions carved out under the 2010 law for groups including illegal immigrants, members of Native American tribes and certain religious sects."

"Factoring in the new exemptions, the congressional report in June lowered the number of people it expects to pay the fine in 2016 to four million, from its previous projection of six million. Also bringing down the total: At least 21 states have opted not to expand the Medicaid insurance program for lower earners under the health law, and those residents may be exempt from the penalty."

"The exemptions are worrying insurers. The penalties were intended as a cudgel to increase the number of people signing up, thereby maximizing the pool of insured. Insurers are concerned that the exemptions could make it easier for younger, healthier people to forgo coverage, leaving the pools overly filled with old people or those with health problems. That, in turn, could cause premiums to rise."

"Patrick Getzen, vice president and chief actuary at Blue Cross and Blue Shield of North Carolina, said he saw more "older and sicker people" enrolled in 2014 than projected. He attributed some of that to the weakened mandate."

"While the health law was being written, President Barack Obama had pledged that Americans who liked their insurance plans would be able to keep them. But last year millions of people were informed their plans would be discontinued because their policies didn't comply with minimum-benefit requirements.

The resulting furor caused the administration to allow insurers who had planned to discontinue policies to extend them by a year. Some insurers and states, however, decided not to do so.

In an effort to address the problem without disrupting the roll out, the administration said consumers with canceled plans could qualify for a hardship waiver, then could buy minimal coverage initially intended only for individuals under age 30.

That sparked objections from an insurance industry long concerned the mandate was already too weak. 

"To make these new reforms work, there needs to be broad participation in the system," said Karen Ignagni, president and CEO of American's Health Insurance Plans, the industry's largest trade group.

The exemption was initially for one year. The administration has since extended it for two more years through October 2016.

In December, a hardship application form was released that laid out the 14 exemptions. Among other things, people could avoid the penalty if a close family member had died recently, if they were facing eviction or if they had medical expenses that couldn't be paid in the last 24 months and resulted in substantial debt. 

Critics have assailed one exemption for people who "experienced another hardship obtaining health insurance" as too broad. That exemption asks for documentation if possible but doesn't require it.""