The Obama administration is doing everything it can to save the Affordable Care Act in advance of tomorrow’s deadline to sign up for coverage, and the panic is showing. For weeks now the administration has been delaying provisions, tweaking standards, and exempting people from the law’s initial rules (e.g. here), and now it has delivered the coup de grace. The New York Times reports that people who have had their insurance cancelled will be exempt from any penalties for non-compliance with the individual mandate in the coming year. They will also be allowed to purchase catastrophic insurance, even if they are over thirty. Insurers are furious that they may now see less healthy customers sign up for plans this year:
Insurers, already struggling with problems caused by the chaotic debut of the federal insurance exchange in October, expressed surprise and dismay.
“This latest rule change could cause significant instability in the marketplace and lead to further confusion and disruption for consumers,” said Karen M. Ignagni, the president of America’s Health Insurance Plans, a trade group.
Megan McArdle has a good roundup of the reactions here, as well as her own good commentary. Perhaps the most important link in there is to Ezra Klein’s column. Klein has long been a cheerleader for the law, and his nervousness about this announcement shows through. As he points out, Republicans have just been given a very easy argument for delaying the mandate in its entirety, and it will be very hard for Democrats to argue against it. Just as the administration’s quickness to dole out certain kinds of exemptions undermined its case for the contraception mandate in a recent case, so too will this announcement make it hard for the administration to explain why it’s exempting some parties and not others.
It’s still very unclear where all this is going to lead, but this is one of the clearest signs of crisis we’ve seen yet from the administration.