The White House earlier this year granted large employers a one-year reprieve from having to offer health insurance coverage to their employees. Then last week, President Obama asked insurance companies to reverse their cancellation of millions of individual and small business insurance policies that don’t meet the new Obamacare standards, to belatedly make good on his promise that Americans who liked their old policies could keep them.
This raises the question: Can postponement of the individual mandate – arguably the most controversial facet of the Affordable Care Act – be far behind?
The requirement that uninsured Americans either buy coverage through the new government markets or pay a tax penalty has been a sore point with GOP critics since enactment of the legislation in 2010. Now many prominent Senate Democrats are agitating for a delay because of the large numbers of people who have been thwarted from enrolling for new policies on HealthCare.gov.
The individual mandate was an important concession to the insurance industry to put added pressure on people to sign up for new policies. Ample analysis shows that far fewer Americans – particularly young and healthy people – would sign up for insurance without the penalty, resulting in much higher premiums for the older and sicker people who do purchase coverage.
Obama and other administration officials have promised that the “vast majority” of Americans will be able to sign up for coverage with relative ease starting next month after a government-applied “tech surge” does away with most of the bugs. But that promise rings hollow – especially in light of a Washington Post report last weekend that the administration will consider the online marketplace a success if 80 percent of users can buy health care plans online.
So if one in five people has trouble purchasing policies on HealthCare.gov beginning next month, the White House will still consider that a success. It will be hard for Obama to argue for keeping the individual mandate and penalties in light of that standard – especially given the public outrage over the troubled rollout and insurance policy cancellations.
Approval at New Low
The health care debacle has driven the president’s approval rating to a rock bottom 42 percent, according to a new Washington Post-ABC News poll. Fifty-seven percent say they oppose the president’s health care plan, according to the polls; 63 percent disapprove of Obama’s handling of its rollout.
By almost 2 to 1, Americans oppose the individual mandate, with more than half the respondents strongly opposing it. By contrast, almost 6 in 10 support the employer mandate. Finally, 7 in 10 Americans say the administration should delay the individual mandate, according to the poll.
The Treasury Dept. said last July it would not penalize businesses with more than 50 workers that do not provide health insurance in 2014. The administration said it would postpone the provision after hearing significant concerns from employers about the challenges of implementation.
The administration presumably would use the same administrative authority to postpone implementation of the individual mandate, without congressional approval, if the president decides to go that route. While the White House believes it has the administrative authority to unilaterally delay a key provision of the Affordable Care Act, some conservatives disagree.
The conservative group Judicial Watch filed a suit on behalf of a Florida orthodontist on Oct. 1 – the day the rollout began – seeking to block the one-year delay of the employer mandate. The suit claims that the action violated the Administrative Procedure Act and exceed President Obama’s authority.
“He has no more power to do that than you or I,” said Larry Kawa, the Boca Raton-based orthodontist named as plaintiff in the suit, according to The Hill.
Since the rocky rollout began, Sen. Joe Manchin III (D-WVA) has called for a delay in the individual mandate for one year. Meanwhile, 10 other Senate Democrats – Jeanne Shaheen (NH), Mark Begich (AL), Mark Pryor (AR), Mary Landrieu (LA), Kay Hagan (NC), Dianne Feinstein (CA), Mark Udall (CO), Tom Udall (NM), Michael Bennet (CO) and Martin Heinrich (NM) – wrote to the Obama administration declaring individuals “should not be penalized for lack of coverage” if they are unable to purchase health insurance due to technical problems.
The penalty in the program’s first year is more of a nuisance than an inducement to sign up: The penalty in 2014 is only $95 per adult and $47.50 per child up to $285 per family. But in 20015, the penalty imposed by the IRS will jump to $325 per adult and $162.50 per child up to $975 per family, then more than doubles in 2016 and beyond.
The Obama administration has signaled an openness to at least consider a delay. Asked on Oct. 21 if they were looking for flexibility in applying the individual mandate, White House Press Secretary Jay Carney replied, “Whatever conclusions you draw about the way the law is written, I think you can draw. The law is clear that if you do not have access to affordable health insurance, then you will not be asked to pay a penalty because you haven’t purchased affordable health insurance.”
He also said the administration is looking to provide that access.
The Congressional Budget Office (CBO) has estimated that such a delay in the mandate would cause 11 million more Americans to remain uninsured in 2014 – resulting in higher premiums for many others. The delay would also disrupt the new health insurance exchanges in the midst ofopen enrollment season, according to the agency. A one-year delay of the individual mandate would reduce the expected coverage gains under the Affordable Care Act by nearly 85 percent, relative to current law, CBO estimated. Delaying the individual mandate also would raise premiums for health insurance purchased in the individual market in 2014, according to CBO.
Earlier CBO estimates indicated that permanently repealing the mandate would raise average health insurance premiums in the individual market — inside and outside the new health insurance exchanges — by 15 percent to 20 percent, amounting to hundreds or thousands of dollars a year in higher premium charges for many individuals and families.
“Without the individual mandate, the exchanges may well not be viable over the long run; the higher premiums would discourage many healthier people from enrolling, sending premiums up still more,” the Center on Budget and Policy Priorities noted in an analysis.