Another Rule in Health Law Is Scaled Back - Another effort by Pres.to cushion the impact of the health care law and minimize political damage to himself and Democrats in Congress who adopted the law in 2010 over solid Republican opposition

From The New York Times: 

 

Millions of people facing the cancellation of health insurance policies will be allowed to buy catastrophic coverage and will be exempt from penalties if they go without insurance next year, the White House said Thursday night.

Kathleen Sebelius, the secretary of health and human services, disclosed the sudden policy shift in a letter to Senator Mark Warner, Democrat of Virginia, and five other senators.
 

 It was another effort by President Obama to cushion the impact of the health care law and minimize political damage to himself and Democrats in Congress who adopted the law in 2010 over solid Republican opposition.
      

In recent weeks, insurers have told many people that their insurance policies were being canceled because they did not comply with the minimum coverage requirements of the law. Insurers usually offer to replace the coverage with new policies that do comply, providing more benefits at higher cost.

 

The Department of Health and Human Services issued a bulletin on Thursday advising consumers, “If you have been notified that your individual market policy will not be renewed, you will be eligible for a hardship exemption and will be able to enroll in catastrophic coverage.” 

The help for people with canceled policies was offered late Thursday, just four days before the deadline for people to sign up for coverage that starts on Jan. 1.

      

Ms. Sebelius said the goal was to ensure “the smoothest possible transition” for people seeking new coverage after cancellation of their policies.

      

Mr. Obama initially tried to address a furor over the cancellations by asking carriers to reinstate the policies. But some insurers and some state officials did not go along with his request, so the White House looked for other ways to address the problem.

      

Before the action announced Thursday by the White House, Republicans had said it was likely that the number of cancellations would exceed the number of people obtaining private coverage through the new insurance exchanges this year. Nearly 365,000 people selected health plans in the exchanges in October and November, before a big increase reported early this month.

      

Catastrophic plans provide basic coverage and are generally available on the exchanges only to people who are under 30 or qualify for a hardship exemption from the requirement to carry insurance.

      

The White House action is sure to embolden Republicans clamoring for a broader exemption that would be available to all Americans. The White House opposes such an exemption, saying it would blow up the keystone of the 2010 law.

      

Mr. Warner and the five other senators said the hardship exemptions would provide “transition relief” to constituents who they said were upset about the cancellation of insurance policies.

      

The Obama administration broadly defined who can qualify. “If the consumer believes that the plan options available in the marketplace in their area are more expensive than their canceled health insurance policy, they will be eligible for catastrophic coverage through a hardship exemption,” the administration said.

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.

      

Another insurance executive said that insurers had not expected a significant number of people over 30 to enroll in catastrophic plans, so their costs were not factored into the premiums.

      

Moreover, the executive said, the exemptions undermine the requirement for people to have coverage. That requirement, often called an individual mandate, is needed to guarantee that insurers attract young healthy people to help offset the costs of covering older Americans who require more medical care, insurers say.

      

Ms. Sebelius said the premiums for catastrophic plans were, on average, about 20 percent lower than premiums for other plans available in the marketplace. Catastrophic policies cover three primary care visits a year at no cost and provide free preventive health benefits, but typically require consumers to pay most other medical costs up to a certain amount, usually several thousand dollars a year.

      

The move Thursday followed delays in many other parts of the health care law.

      

On July 2, the White House abruptly announced a one-year delay, until 2015, in a provision that requires larger employers to offer coverage to their workers or pay penalties.

       

On Nov. 27, it deferred a major element of the law that would allow small businesses to buy insurance online for their employees through the federal exchange.
      

Earlier, in April, the administration said that the federal exchan

ge would not offer employees of a small business the opportunity to choose from multiple health plans in 2014.

      

And in October 2011, the administration scrapped a long-term care insurance program created by the new law, saying it was too costly and would not work.