The Obama administration announced Thursday that it will allow individuals whose health care policies were canceled under the Affordable Care Act's new rules to qualify for a hardship exemption, meaning they are not required to purchase a plan under the new law.
In a letter to six Democratic senators who had requested the change, Health and Human Services Secretary Kathleen Sebelius said that those who had their plans canceled under the law are now eligible for "catastrophic," or bare-bones plans. As The Hill notes, those plans were previously intended for individuals under age 30 and others who qualify for a hardship exemption.
"I agree with you that these consumers should qualify for this temporary hardship exemption and I can assure you that the exemption will be available to them,” Sebelius wrote in the letter. "As a result, in addition to their existing options these individuals will also be able to buy a catastrophic plan to smooth their transition to coverage through the Marketplace."
The letter was sent to Democratic Sens. Mark Warner (Va.), Tim Kaine (Va.), Angus King (Maine), Jeanne Shaheen (N.H.), Mary Landrieu (La.) and Heidi Heitkamp (N.D.).
"This is a common-sense clarification of the law. For the limited number of consumers whose plans have been cancelled and are seeking coverage, this is one more option," Department of Health and Human Services spokeswoman Joanne Peters said of the exemption.
The announcement comes just four days ahead of the December 23 deadline by which individuals must select a plan to ensure no lapse in coverage.
Earlier Thursday, the administration projected fewer than 500,000 individuals whose plans had been canceled would enter 2014 without coverage.
The Huffington Post's Sam Stein reported:
The officials at the briefing said that it was impossible to know the exact number impacted. But, they argued, the group was smaller than what has been reported because many of these individuals were being auto-enrolled into new plans.
All told, the officials projected that fewer than 500,000 people would enter the New Year having had their insurance policy cancelled and not purchased a new plan.
The goal is to reduce that number as much as possible. And to encourage sign-ups after the New Year, the White House is planning a more aggressive public relations campaign. The docket includes cabinet-level visits to targeted districts, more community outreach through administration allies (churches, races and farmer markets were listed as venues where the ACA would be pitched) and paid media.
Below, more from the Associated Press:
The insurance industry immediately criticized the moves.
"This latest rule change could cause significant instability in the marketplace and lead to further confusion and disruption for consumers," said Robert Zirkelbach, spokesman for America's Health Insurance Plans. Only Wednesday, the industry had announced its own accommodation — giving consumers an extra 10 days to pay January's premiums.
The Oct. 1 launch of the HealthCare.gov website became an embarrassment for the administration after problems with the online gateway to coverage froze out millions of potential customers. But the biggest political damage to the president has come from cancellations issued to at least 4 million people who had individual plans they purchased themselves. Those plans did not pass muster under the health care law, which generally requires more robust benefits.
Obama was roundly criticized for reneging on a longstanding promise that if you liked your plan, you would be able to keep it under his health care law. The president apologized, and then said insurers could extend those plans for one more year. Most state regulators followed Obama's lead and gave insurance companies the additional latitude, but it's unclear whether the problem has been fully resolved.
Although the website is now working more smoothly, there's still a concern that technology problems may prevent some people who got cancellations from signing up for a new plan. Consumers have until Dec. 23 — Monday — to pick a plan if they want their coverage to take effect Jan. 1, thus avoiding a break in coverage. The industry says it will accept payment of the first month's premiums until Jan. 10. Timely payment is required for the new plan to take effect.
"There still may be a small number of consumers who are not able to renew their existing plans and are having difficulty finding an acceptable replacement," Sebelius wrote Sen. Mark Warner, D-Va., and several of his colleagues, adding: "These consumers should qualify for this temporary hardship exemption."
Democrats praised the steps as a common-sense backup in a difficult situation. Republicans panned the administration action as another patch to an unworkable law.
Insurers are concerned that healthy customers who potentially would have bought full coverage may now stay out of the market, leaving the companies with a group of patients in worse health overall.
ALSO ON HUFFPOST:
How will Trump’s administration impact you? Learn more