There is a new option on Healthcare.gov — individuals with canceled coverage now qualify for a “hardship exemption,” and can purchase “catastrophic insurance.” Catastrophic plans were originally available for people under 30, or those who had a hardship exemption. By giving the hardship exemption to people who lost insurance as a result of the law, they now qualify for this plan. The announcement was made days before the December 23 deadline for coverage that begins January 1.
A catastrophic policy on the exchange requires up front, out-of-pocket payments for health care, up to a specified dollar amount. Essential benefits after that payment point has been reached are generally paid by insurers. People with this type of coverage will have three free primary care visits per year and free preventative benefits.Catastrophic plans come at a standard price, so income will not lower monthly premiums, or out-of-pocked expenses.
The policy change follows a December 18 letter, sent by a sextet of Senators – five Democrats, and one independent — to Health and Human Services (or, HHS) Secretary Kathleen Sebelius. Senators Mark Warner (D-Va.), Jeanne Shaheen (D-N.H.), Heidi Heitkamp (D-N.D.), Tim Kaine (D-Va.), Mary Landrieu (D-La.), and Angus King (I-Maine) wanted clarification on the hardship exemption. The group desired that, “An individual whose 2013 plan was canceled and considers their new premium unaffordable should qualify for a temporary ‘hardship exemption’ and, thus, be able to purchase a catastrophic plan.”
This was a proper course of action, the Senators said, because although President Obama allowed for canceled 2013 plans to be renewed in 2014. This was contingent upon states, and insurance companies agreeing to the President’s exemption. Over half the states agreed to let insurers renew plans, but in states where this option was denied, people faced a potential gap in coverage.
Secretary Sebelius replied in a letter on December 19. She began by reiterating how the policy announced by the President in November; insurance companies working with individuals who have seen plans canceled; and programs undertaken by HHS — like extending pre-existing plan coverage for a month — the Administration was doing all they could to ensure everyone had coverage.
Despite these efforts, Sebelius said, “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 in the Marketplace.” Sebelius agreed that these individuals should be able to qualify for the temporary hardship exemption, and they will be able to do so, thus allowing them to purchase a catastrophic plan. The premiums for such a plan, Sebelius said, are “are on average about 20 percent lower than premiums for other plans available in the Marketplace.”
Karen Ignagni, president of America’s Health Insurance Plans (or, AHIP) gave her reaction to the new exemption. “This latest rule change could cause significant instability in the marketplace and lead to further confusion and disruption for consumers.” AHIP reiterated this point in several tweets Thursday evening.
The Senators released a statement as well regarding the decision by HHS. “We are pleased that the Administration appears to have responded to the concerns we’ve raised. As a result, this clarifies an option that will help those consumers who have had their plans canceled transition more smoothly into the marketplace. We will closely monitor how the Administration implements this option, and we remain committed to proposing responsible solutions.”
Republicans fired back against the changes. “The Administration is recognizing the grim reality that more Americans have lost health insurance than gained it under ObamaCare. Holding a fire sale of cheap insurance is not a responsible fix for a broken program,” Florida Republican Senator Marco Rubio said in statement. “This is a slap in the face to the thousands of Americans who have already purchased expensive insurance through the ObamaCare exchanges. ObamaCare as originally conceived is a flawed policy and must be repealed.”
House Majority Leader Eric Cantor said that following last night’s changes, it was time for all Americans to be given a delay. ”Our entire healthcare system can’t be fundamentally changed at any given time subject to the random impulses of President Obama. How can anyone make healthcare decisions today knowing that the law may be unilaterally changed again tomorrow?” Cantor, like Rubio, asked how a “bare bones plan that doesn’t offer” proper coverage can fulfill “the promise of ObamaCare?” As a result, Cantor is urging the White House to delay the mandate for everyone. “The White House actions clearly prove ObamaCare can’t work as designed. It’s time for ObamaCare to be delayed for all.”