Obama administration announces special ACA hardship waiver for canceled policies

December 20, 2013 at 12:00 AM EST
The Obama administration announced a new offer for individuals who had insurance policies canceled: the chance to buy cheaper, catastrophic coverage if new plans are more expensive. Judy Woodruff discusses the details of the special waiver and how many are expected to sign up for it with Mary Agnes Carey of Kaiser Health News.
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JUDY WOODRUFF: Let’s focus on an issue the president was asked about at length today, the health care law.

Mr. Obama acknowledged the rollout of it was probably his biggest mistake of the year. But he defended the law overall, and pointed to a big increase in enrollment in the exchanges this month as evidence of his efforts to turn things around.

His remarks came after the administration responded last night to the problem of canceled insurance policies with a special exception. Those affected can buy cheaper, bare-bones catastrophic coverage if new plans are more expensive.

Mary Agnes Carey watching all this for Kaiser Health News, an independent news organization.

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Welcome back to the program.

MARY AGNES CAREY, Kaiser Health News: Thank you.

JUDY WOODRUFF: So what exactly did the administration announce last night?

MARY AGNES CAREY: What they said is for these folks in the individual market who may have had their policies canceled — we’re not sure exactly how many have had that. The estimates are maybe three to four million.

If they have not been able to find a policy that they think is affordable, they can qualify for something called the hardship exemption in the health law. Typically, this is for some sort of event, like you’re homeless or you have been evicted in the last six months, that sort of hardship. But they’re saying that by qualifying for the hardship exemption, there’s two things.

Number one, they won’t face the individual mandate penalty in 2014, and they would be allowed to buy something called a catastrophic health care policy, which is usually just open to people under the age of 30.

JUDY WOODRUFF: So they have made some significant changes. Why did they do this?

MARY AGNES CAREY: They received a letter from a handful of lawmakers and senators that were — the letter was written by Mark Warner and signed by some other senators. And he’s a Democrat of Virginia. And they were saying that, in their states, some of the people that had had their policies canceled were having a hard time finding coverage that was affordable to them.

And they looked at this catastrophic issue and they looked at the hardship exemption and said, perhaps that could help their constituents. They wrote to Kathleen Sebelius, who is head of the Department of Health and Human Services. And she wrote back and agreed with them.

JUDY WOODRUFF: Now, how many people, Mary Agnes, are affected by this? 

MARY AGNES CAREY: Well, the individual market overall — now, here, we’re talking about people who buy their own health insurance coverage. That’s about 5 percent of the covered market, about 15 million people.

The estimates are that between three to four million had their policies canceled. Now, many of those people have purchased other coverage on the market. So the question is how many people apply? How many people does this particular announcement cover? The administration has said it’s about 500,000 people that they estimate haven’t been able to find affordable coverage, and that’s who they are thinking about in this particular action.

JUDY WOODRUFF: So is that a number everyone generally accepts then?

MARY AGNES CAREY: No, it is not.

And it’s unclear. As we saw throughout the implementation of health care, there’s all sorts of sets of numbers. This is an estimate, but others have questioned it, have wondered what the true number is. I don’t think we actually really know.

JUDY WOODRUFF: Now, the insurance companies, this was a surprise to them, right?

MARY AGNES CAREY: It was a surprise to them.

JUDY WOODRUFF: How do they respond? What are they saying?

MARY AGNES CAREY: They think it’s going to add further problems to the health insurance market, could in their words it cause significant instability in the marketplace, and lead to further disruption and confusion for customers.

You have to remember that as the insurance companies price their products for 2014, they assumed these in the individual market would go into the marketplace, they would buy a range of plans. That’s how — what we call the risk pool. And so this may have some impact there. And they have been generally upset with some of these last-minute announcements from the administration’s implementation of the law.

JUDY WOODRUFF: So do they just accept this, or do they change their policies? What happens? I mean, do they just automatically go along with what the administration says?

MARY AGNES CAREY: Well, the administration has said that people can qualify for the catastrophic plans.

But people could still decide — they might look at a catastrophic plan and decide, this isn’t really the coverage I want. And they might decide to try to qualify for a subsidy. They might go in — they may or may not qualify for the Medicaid expansion. So there are other options for individuals. And it is unclear exactly what they’re going to do.

JUDY WOODRUFF: Now, Mary Agnes, if you step back and look at the whole health care, the structure of health care reform, does this affect that? Does it — do the marketplaces work? Do the economics of it work with — when you take this change and all the other changes the administration has made?

MARY AGNES CAREY: Well, talk about this change.

If, in fact, it is a group of people around 500,000, how much of an impact would that make when the expectation is that seven million people would get coverage in the exchanges, and another separate group, I think around seven million, get coverage in Medicaid?

So it’s sort of unclear exactly to know how this particular change will affect them. But delays in the employer mandate, for example, this requirement that most employers 50 — who have 50 or more workers provide coverage for their workers, that was delayed a year. There are other delays that have changed. So we have to watch and see how it shapes the market.

JUDY WOODRUFF: And what about what insurance companies do in terms of pricing policy? Can they still rates their prices to get more if they think they’re not going to make as much?

MARY AGNES CAREY: Well, they have made bids currently for the year of 2014, but the question, how does all this affect coverage in 2015? Who signs up for coverage? What is the mix, how many healthy people, how many sick people? What are the other demographics? And those will all affect pricing for 2015.

JUDY WOODRUFF: All right, another bigger-picture question, the president was repeatedly asked today about health care, the problems, he acknowledged big problems with the rollout, he said — in essence, he acknowledged the biggest mistake of the past year.

But he kept coming back to what he said was the fact that many people are being helped. I think he said most people are going to be better off as a result of health care reform. Is there a way to measure that?

MARY AGNES CAREY: I think that people will ultimately measure it for themselves.

For example, let’s say you’re not part of the individual market. He talked about the 85 percent of us that get our health insurance through work. We have preventive services at no out-of-pocket costs. Seniors are getting help with prescription drugs and Medicare. The cost of prescription drugs…

(CROSSTALK)

JUDY WOODRUFF: You mentioned that.

MARY AGNES CAREY: Yes, adult children up to 26 being covered by their parent’s plan until they turn 26. How do you judge that individually as the consumer? Does it matter to you, for example?

I think that people have to have an experience with this health law to make their own decision.

JUDY WOODRUFF: Because the squawking is clearly coming from the people who lost their policies, people who are — don’t like the idea of having to pay a penalty. Some of these other so-called benefits that the president was citing may be things people aren’t even aware of.

MARY AGNES CAREY: Well, that’s the other thing.

And there are people that say this is great that you are adding all these mandatory services to be covered, but I don’t want them and I don’t want to pay for them, and it’s not affordable to me. I liked my old plan. I wanted to keep it. You in fact said, President, that I could keep it.

But, as we know, the president has apologized for that. And, again, the experiences will vary for people.

JUDY WOODRUFF: All right, Mary Agnes Carey joining us once again, thank you.

MARY AGNES CAREY: Sure. Thank you.