Dec. 20 (Bloomberg) -- For a law as complicated and controversial as the Affordable Care Act, the line between sensible tinkering and panicked retreat is hard to find. After months of trying, though, the administration of President Barack Obama seems to have crossed it.
The administration announced last night that people whose health-insurance plans have been canceled because of Obamacare will get a one-year exemption from the law’s mandate to carry insurance if they think their new options cost more than what they have been paying. A spokeswoman for the Department of Health and Human Services declined to say how many people might qualify; other government officials predicted fewer than 500,000 -- which is still more than had signed up for insurance policies on the state exchanges by the end of November.
This is only the latest in a string of changes the administration has made in the frenzied countdown to 2014, when most of the law’s provisions take effect. In July, the requirement that large employers provide health insurance was delayed for a year. In October, the deadline for people to buy insurance without paying a penalty was extended until March 31. Last month, insurers were allowed to extend “subpar” policies for one year, if state regulators agreed.
Those changes were mostly cosmetic. This new one risks undermining the law it’s meant to protect.
Insurers have spent months estimating the cost of policies sold on state exchanges, and this throws off those estimates. It isn’t just that an uncertain number of people can now choose not to buy insurance without penalty; they also can now purchase low-cost catastrophic plans, which were previously limited mainly to those younger than 30. In other words, they are being drawn out of the risk pools at the last minute, and smaller risk pools mean prices that may not reflect insurers’ costs.
Those are just the policy problems with yesterday’s announcement. The politics are even worse. That the individual mandate should begin on schedule has been the Affordable Care Act’s most inviolable tenet. Over the past year, Republicans have made delaying the mandate their highest goal, on the logic that doing so would loosen the screws holding the law together. They’re now closer to that goal.
It’s not hard to see why the administration would feel political pressure to take this step, given all the recent bad news for Obamacare. The launch of HealthCare.gov was disastrous; Obama’s pledge that you could keep your health-care plan proved to be false; half the states have refused to expand Medicaid; and exchange enrollment lags far behind projections. The prospect is now very real that, on Jan. 1, more people will have lost health coverage because of the law than will have gained it.
There are signs of progress, however: The website is working better. Some Republican-led states are accepting a face-saving compromise on Medicaid. The pace of enrollment on the state exchanges has increased.
At this point, allowing people to avoid the mandate only because they think their new options are too expensive is an unnecessary concession. If the new exchange plans are truly good for consumers, the requirement to carry insurance should apply to everyone equally.
This is a particularly inopportune moment for the administration to cave to pressure, because the law’s greatest challenges are still ahead. As people begin using their new insurance coverage, there will be no shortage of complaints -- from consumers, from health-care providers and from insurers.
The law can still work to get more Americans decent and affordable health insurance, if it’s allowed to work the way it was designed to. This is no time for the administration to lose its nerve.
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